UKRAINE RAPID DAMAGE AND NEEDS ASSESSMENT FEBRUARY 2022 – FEBRUARY 2023 UKRAINE RAPID DAMAGE AND NEEDS ASSESSMENT FEBRUARY 2022 – FEBRUARY 2023 © March 2023, the World Bank, the Government of Ukraine, the European Union, the United Nations. Disclaimer The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent, or those of the European Union (EU) or United Nations (UN). The World Bank, EU and UN do not guarantee the accuracy, completeness, or currency of the data included in this work and do not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS 6 ACKNOWLEDGMENTS 8 FOREWORD 9 EXECUTIVE SUMMARY 10 INTRODUCTION 15 SUMMARY OF DAMAGE, LOSSES, AND NEEDS 19 ESTIMATION OF 2023 IMPLEMENTATION PRIORITIES 26 MACROECONOMIC IMPACTS 30 HUMAN IMPACT ASSESSMENT / VULNERABLE GROUPS 35 SOCIAL SECTORS 40 Housing 41 Education and Science 45 Health 49 Social Protection and Livelihoods 53 Culture and Tourism 58 PRODUCTIVE SECTORS 62 Agriculture 63 Irrigation and Water Resources 67 Commerce and Industry 72 Finance and Banking 77 INFRASTRUCTURE SECTORS 81 Energy and Extractives 82 Transport 88 Telecommunications and Digital 95 Water Supply and Sanitation 98 Municipal Services 103 CROSS-CUTTING AREAS 108 Environment, Natural Resource Management, and Forestry 109 Emergency Response and Civil Protection 114 Justice and Public Administration 118 Explosive Hazards Management 122 TOWARD RECOVERY AND RECONSTRUCTION 126 Guiding Principles for Recovery and Reconstruction 128 Building Back Inclusively 130 Maximizing Private Financing for Green and Resilient Reconstruction 131 ANNEX 1. RDNA2 TEAM 134 LIST OF TABLES Table 1. Total damage, loss, and needs by sector (US$ billion) 22 Table 2. Damage, loss, and needs by oblast for select sectors (US$ billion) 23 Table 3. Total recovery and reconstruction needs by sector (US$ billion) as of February 24, 2023 24 Table 4. 2023 implementation priorities by sector and expenditure type (US$ billions) 29 Table 5. Damage, loss, and needs by oblast (US$ million) 43 Table 6. Recovery and reconstruction needs (US$ million) as of February 24, 2023 44 Table 7. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 44 Table 8. Damage, loss, and needs by oblast (US$ million) 47 Table 9. Recovery and reconstruction needs (US$ million) as of February 24, 2023 48 Table 10. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 48 Table 11. Damage, loss, and needs by oblast (US$ million) 51 Table 12. Recovery and reconstruction needs (US$ million) as of February 24, 2023 52 Table 13. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 52 Table 14. Damage, loss, and needs by oblast (US$ million) 56 Table 15. Recovery and reconstruction needs (US$ million) as of February 24, 2023 57 Table 16. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 57 Table 17. Damage, loss, and needs by oblast (US$ million) 60 Table 18. Recovery and reconstruction needs (US$ million) as of February 24, 2023 61 Table 19. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 61 Table 20. Damage, loss, and needs by oblast (US$ million) 65 Table 21. Recovery and reconstruction needs (US$ million) as of February 24, 2023 66 Table 22. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 66 Table 23. Overview of prioritization categories and corresponding oblasts 69 Table 24. Damage, loss, and needs by oblast (US$ million) 70 Table 25. Recovery and reconstruction needs (US$ million) as of February 24, 2023 71 Table 26. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 71 Table 27. Damage, loss, and needs by oblast (US$ million) 75 Table 28. Recovery and reconstruction needs (US$ million) as of February 24, 2023 76 Table 29. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 76 Table 30. Estimated government, IFI, and donor contribution to 2023 implementation priorities (US$ million) 76 Table 31. Damage, loss, and needs by oblast (US$ million) 79 Table 32. Recovery and reconstruction needs (US$ million) as of February 24, 2023 80 Table 33. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 80 Table 34. Damage, loss, and needs by oblast (US$ million) 86 Table 35. Recovery and reconstruction needs (US$ million) as of February 24, 2023 87 Table 36. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 87 Table 37. Damage, loss, and needs by oblast (US$ million) 92 Table 38. Recovery and reconstruction needs (US$ million) as of February 24, 2023 93 Table 39. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 94 Table 40. Damage, loss, and needs by oblast (US$ million) 96 Table 41. Recovery and reconstruction needs (US$ million) as of February 24, 2023 97 Table 42. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 97 Table 43. Damage, loss, and needs by oblast (US$ million) 101 Table 44. Recovery and reconstruction needs (US$ million) as of February 24, 2023 101 Table 45. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 102 Table 46. Damage, loss, and needs by oblast (US$ million) 106 Table 47. Recovery and reconstruction needs (US$ million) as of February 24, 2023 107 Table 48. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 107 Table 49. Damage, loss, and needs by oblast (US$ million) 112 Table 50. Recovery and reconstruction needs (US$ million) as of February 24, 2023 113 Table 51. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 113 Table 52. Damage, loss, and needs by oblast (US$ million) 116 Table 53. Recovery and reconstruction needs (US$ million) as of February 24, 2023 117 Table 54. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 117 Table 55. Damage, loss, and needs by oblast (US$ million) 120 Table 56. Recovery and reconstruction needs (US$ million) as of February 24, 2023 121 Table 57. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 121 Table 58. Explosive ordnance contamination and estimated clearance cost (US$ million) 124 Table 59. Recovery and reconstruction needs (US$ million) as of February 24, 2023 125 Table 60. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 125 Table 61. RDNA2 Team 134 LIST OF FIGURES Figure 1. Extent of damage by region as of February 24, 2023 12 Figure 2. Spatial evolution of the war between February 2022 and February 2023 12 Figure 4. Priority investments for 2023 (US$ billions): US$14 billion 13 Figure 5. RDNA2 key results: damage, needs, and 2023 priorities 14 Figure 6. War intensity between February 24, 2022, and February 24, 2023 16 Figure 7. Spatial evolution of the war between February 2022 and February 2023 16 Figure 8. Total damage (US$ billion): US$135 billion 20 Figure 9. Total loss (US$ billion): US$290 billion 20 Figure 10. Total recovery and reconstruction needs (US$ billion): US$411 billion 21 Figure 11. Extent of damage by region as of February 24, 2023 24 Figure 12. Priority needs for 2023 by expenditure type and sector (US$ billions) 28 Figure 13. Ukraine GDP by quarter, year-on-year (YoY) 32 Figure 14. Assessment of industrial production performance, December 2021 – November 2022 (index) 32 Figure 15. Fiscal financing needs and sources in 2022 by source (US$ billion) 34 Figure 16. RDNA2 priorities for government expenditure in 2023 (US$ billion equivalent) 34 Figure 17. Number of registered IDPs in Ukraine (million), March 25–February 13, 2023 36 Figure 18. Reference map and areas exposed to war used as baseline 123 Figure 19. Oblast exposure to war (percentage) 124 LIST OF BOXES Box 1. RDNA2 definitions 18 Box 2. War’s human impacts and impacts on select SDGs 25 Box 3. Maximizing private financing for development in the Ukraine context 132 6 ABBREVIATIONS AND ACRONYMS ACLED Armed Conflict Location and Event Data CCI cultural and creative industries CHA Confirmed Hazardous Areas DALY disability-adjusted life year DDP Digital Development Partnership DFC International Development Finance Corporation DG NEAR Directorate-General for Neighborhood and Enlargement Negotiations DGF Deposit Guarantee Fund EBRD European Bank for Reconstruction and Development EE energy efficiency ERW explosive remnants of war EU European Union FAO Food and Agriculture Organization of the United Nations FPI Service for Foreign Policy Instruments (European Commission) GDP gross domestic product GFDRR Global Facility for Disaster Reduction and Recovery GHG greenhouse gas GIS geographic information system GMI Guaranteed Minimum Income ha hectare HACC High Anticorruption Court HUS Housing Utility Subsidy I&D irrigation and drainage IDP Internally Displaced Persons IFC International Finance Corporation IFI international financial institution ILO International Labour Organization INFF Integrated National Financing Framework IOM International Organization for Migration IT information technology ITU International Telecommunication Union KSE Kyiv School of Economics LGBTI+ Lesbian, Gay, Bisexual, Transgender, and Intersex MCTID Ministry for Communities, Territories and Infrastructure Development MIGA Multilateral Investment Guarantee Agency MoF Ministry of Finance MSME micro, small, and medium enterprises NABU National Anticorruption Bureau of Ukraine NACP National Agency for Corruption Prevention NBFI nonbank financial institution NBU National Bank of Ukraine NMAA National Mine Action Authority of Ukraine NPL nonperforming loan Abbreviations and Acronyms 7 NTS nontechnical survey OHCHR Office of the High Commissioner for Human Rights OPG Office of the Prosecutor General PEACE Public Expenditures for Administrative Capacity Endurance PHC primary health care PPP public-private partnership RDNA Rapid Damage and Needs Assessment SAPO Special Anticorruption Prosecutor’s Office SDGs Sustainable Development Goals SECO Swiss Secretariat for Economic Affairs SESU State Emergency Service of Ukraine SMEs small and medium enterprises SoB state-owned bank SoE state-owned enterprise TPP Thermal power plant TS technical survey TSO transmission system operator UCPM Union Civil Protection Mechanism UN United Nations UN Women United Nations Entity for Gender Equality and the Empowerment of Women UNDP United Nations Development Programme UNECE United Nations Economic Commission for Europe UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNFPA United Nations Population Fund UN-Habitat United Nations Human Settlements Programme UNHCR United Nations High Commissioner for Refugees UNICEF United Nations International Children’s Fund UNMAS United Nations Mine Action Service UNODC United Nations Office on Drugs and Crime UNOPS United Nations Office for Project Services URC2022 Ukraine Recovery Conference UVF Ukrainian Veteran Fund WFP World Food Programme WHO World Health Organization WRM water resource management WSS water supply and sanitation YoY year-on-year 8 ACKNOWLEDGMENTS The second Ukraine Rapid Damage and Needs Assessment February 24, 2022 – February 24, 2023 (RDNA2) was jointly prepared by the World Bank Group, the Government of Ukraine, the European Union services, and the United Nations in coordination with humanitarian and development partners, academia, civil society organizations, and the private sector. Annex 1 includes a list of main contributors. On the part of the Government of Ukraine, the RDNA2 was led by the Ministry for Communities, Territories and Infrastructure Development (MCTID) of Ukraine. All relevant line ministries have participated in the assessment, with support also from the Kyiv School of Economics (KSE). The European Union service’s contribution was led by the Delegation of the European Union to Ukraine and the Directorate-General for Neighborhood and Enlargement Negotiations (DG NEAR), in coordination with the Service for Foreign Policy Instruments (FPI) and other European Union’s services. From the United Nations, the report benefited from support and inputs from the United Nations Development Programme (UNDP), United Nations Children’s Fund (UNICEF), United Nations High Commissioner for Refugees (UNHCR), International Organization for Migration (IOM), United Nations Office for Project Services (UNOPS), World Health Organization (WHO), United Nations Educational, Scientific and Cultural Organization (UNESCO), International Labor Organization (ILO), United Nations Human Settlements Programme (UN-Habitat), Office of the United Nations High Commissioner for Human Rights (OHCHR), United Nations Population Fund (UNFPA), United Nations Entity for Gender Equality and the Empowerment of Women (UN Women), United Nations Economic Commission for Europe (UNECE), United Nations Office on Drugs and Crime (UNODC), United Nations Environment Programme (UNEP), World Food Programme (WFP), International Telecommunication Union (ITU), and Food and Agriculture Organization (FAO). The World Bank Group’s technical assistance was provided by the World Bank’s Ukraine and Moldova Country Management Unit, Global Practices and Cross-Cutting areas, as well as the International Finance Corporation (IFC), coordinated by the Europe and Central Asia Region. This report benefited from the generous financial support of the Global Facility for Disaster Reduction and Recovery (GFDRR), the Swiss Secretariat for Economic Affairs (SECO), and Digital Development Partnership (DDP). 9 FOREWORD This Rapid Damage and Needs Assessment (RDNA2) is part of an ongoing effort—undertaken jointly by the World Bank, the Government of Ukraine, the European Commission, and the United Nations, and supported by other partners—to take stock of Ukraine’s damage and losses from Russia’s invasion. Just as importantly, it aims to assess the scale of economic and social needs for Ukraine’s survival during the war and its prospering afterward. Considering a full year of war, as of February 24, 2023, direct damage in Ukraine has reached over US$135 billion, with housing, transport, energy, and commerce and industry the most affected sectors. Damage is concentrated in the frontline oblasts, particularly Donetska, Kharkivska, Luhanska, Zaporizka, Khersonska, Mykolaivska, and in oblasts that were brought back under government control, such as Kyivska and Chernihivska. Disruptions to economic flows and production, as well as additional expenses associated with the war, are collectively measured as losses and amount to some US$290 billion. Ukraine’s gross domestic product (GDP) shrank by 29.2 percent in 2022, and poverty increased from 5.5 percent to 24.1 percent in 2022 (based on the poverty line of US$6.85 per person per day). Reconstruction and recovery needs, as of February 24, 2023, are estimated at about US$411 billion. Integrated into these needs are critical steps toward becoming a modern, low-carbon, disaster- and climate-resilient country that has aligned with European Union policies and standards in view of being ready to join the European Union, and where the population’s vulnerabilities are addressed and people live in prosperity. While the financing envelope is overwhelming, experience from other countries shows that a phased approach to reconstruction is critical. The report also estimates the implementation priorities for 2023 at around US$14 billion. These are focused on the most urgent needs, including restoration of energy, housing, critical and social infrastructure, basic services for the most vulnerable, explosive hazard management, and private sector development. Around US$9 billion in direct government expenditure will lay the groundwork for a safe, prioritized, achievable, and efficient reconstruction and recovery. This will be complemented by investments by state-owned enterprises (SOEs) and support to sustain and catalyze the private sector, including de-risking investment and trade. While the government has already taken steps to meet some of these needs, this report identifies a need for an additional US$11 billion in financing, including around US$6 billion in further funding of the government budget and close to US$5 billion to facilitate critical investments by SOEs and the private sector. This report offers a strong analytical foundation for a comprehensive financial and operational strategy and plan to support the early recovery and long-term reconstruction of Ukraine, to which we are strongly committed. This next phase of planning should consider the options for scaling up absorptive and institutional capacity of national and subnational authorities in Ukraine so it is commensurate with financing availability, the development of common systems and processes to ensure maximum efficiency, the development and expansion of the managerial and technical capacity of implementation units, the mobilization of funds for project preparation, the development of private and public financial strategies for different sectors, and long- term planning and financing frameworks. The World Bank Government of Directorate General for United Group Ukraine Neighbourhood Policy and Nations Enlargement Negotiations 10 EXECUTIVE SUMMARY Mykolaiv Oblast State Administration building. Photo from Mykolaiv City Council. EXECUTIVE SUMMARY 11 The Russian Federation’s invasion of Ukraine, which have sustained the greatest direct damage (Figure began February 24, 2022, has caused significant 1). The energy, housing, and transport sectors have civilian casualties and damage to infrastructure had the greatest increase in direct damage since the and productive assets, and has taken a severe RDNA1 estimates, commensurate with the trajectory human, social, and economic toll. The early months of war since June 1, 2022.2 Agricultural damage is also of the war were characterized by battles in critical significantly higher, reflecting both increased asset cities, such as Mariupol, and around Kyiv, areas destruction and more precise data. But the damage where the Government of Ukraine temporarily did since June 1, 2022, has not escalated as much as could not have control of significant territory. However, have been expected. This is because despite notable starting from April 2022, the government brought intensification of the war in frontline regions—with more than half of this territory back under its control, Kharkivska, Khersonska, Donetska, and Zaporizka with limited loss of control in new areas. On the oblasts having sustained the greatest increase in both other hand, since September 2022, there has been war events and damage (Figure 2)—there has been an increase in damage due to the use of remotely much more limited change in frontline areas than in delivered explosives (e.g., missiles, drones) to target the first three months of the invasion, as reflected in critical infrastructure, such as energy. These shifts RDNA1.3 in the trajectory of war are reflected in the updated assessment of damage and needs presented here, Total estimated reconstruction and recovery needs and in the changes since the first damage and needs exceed US$411 billion (Figure 3, Figure 10), which assessment (RDNA1), which assessed impacts up is 2.6 times the actual GDP of Ukraine in 2022. until June 1, 2022.1 Costs — estimated for 10 years — consider inflation, market conditions, surge pricing in construction The second Rapid Damage and Needs Assessment commonly seen in areas of mass construction, (RDNA2)—jointly developed by the World Bank higher insurance premiums, and a shift toward Group, the Government of Ukraine, the European lower energy intensity and more resilient, inclusive, Commission, and the United Nations—presents and modern design. The highest estimated needs an assessment of one year of war impacts, in are in transport (22 percent), housing (17 percent), line with a globally accepted methodology. The energy (11 percent), social protection and livelihoods assessment quantifies direct physical damage to (10 percent), explosive hazard management (9 infrastructure and buildings and quantifies the percent), and agriculture (7 percent). The needs needs as the costs for recovery and reconstruction. for explosive hazard management have decreased To support the Government of Ukraine and partners since RDNA1, due to an improved assessment of the with urgent recovery and reconstruction planning, land area considered as potentially contaminated the RDNA2 also estimates 2023 implementation by explosives, clearance of some areas, and a shift priorities and costs, which consider urgent recovery toward more cost-efficient approaches given the and reconstruction needs, government priorities, significant contaminated area. Other areas — such absorptive and implementation capacity of different as human development sectors (including health sectors, and to some extent available financing. Due and education) as well as commerce and business to the ongoing war, there are inherent data limitations — contribute substantially to the remaining needs. and assumptions, which are noted in the report. Across all sectors, the cost of debris clearance and management (and demolition where needed) The full year of war has resulted in more than exceeds US$5 billion. Since June 2022, sectors with US$135 billion in direct damage to buildings and the greatest increase in needs are energy, social infrastructure. The most affected sectors have been protection and livelihoods, transport, agriculture, housing (38 percent), transport (26 percent), energy and housing. The geographic areas with the greatest (8 percent), commerce and industry (8 percent), increase in needs are Donetska, Kharkivska, and agriculture (6 percent). Donetska, Kharkivska, Luhanska, and Khersonska. Luhanska, Zaporizka, Kyivska, and Khersonska oblasts 1 World Bank, Government of Ukraine, and European Commission, “Ukraine Rapid Damage and Needs Assessment,” August 2022, Link. 2 Between RDNA1 and RDNA2, there was a 25 percent decrease in the exchange rate, so that Ukrainian hryvnias translate to fewer US dollar equivalents; this means that the changes between RDNA1 and RDNA2 are more significant than the absolute numbers show. 3 For example, many of the roads and fields completely damaged by heavy and/or tracked vehicles in the early months of the war and counted in RDNA1 are not double-counted under RDNA2. 12 EXECUTIVE SUMMARY Figure 1. Extent of damage by region as of February 24, 2023 Source: Assessment team. Note: The map draws on damage data as collected and assessed under the RDNA2. There were data limitations for certain regions, including Khersonska oblast. Figure 2. Spatial evolution of the war between February 2022 and February 2023 February 24, 2022 – May 31, 2022 June 1, 2022 – August 31, 2022 September 1, 2022 – November 30, 2022 December 1, 2022 – February 24, 2023 Source: Armed Conflict Location and Event Data Project (ACLED), processed by assessment team. For ACLED, see Clionadh Raleigh et al., “Introducing ACLED-Armed Conflict Location and Event Data,” Journal of Peace Research 47, no. 5 (2010): 651–60, Link. Note: Conflict events include battles and explosions/remote violence as classified per ACLED methodology. EXECUTIVE SUMMARY 13 It is also important to recognize that since Considering urgent needs and implementation RDNA1, some of the needs have been met by the capacities, and aligning with the government’s Government of Ukraine with the support of its recovery and reconstruction priorities, the RDNA2 partners. For example, in the health sector over 500 estimates implementation priorities for 2023 at affected assets have been partially or fully repaired; around US$14 billion, or close to 3.5 percent of and the energy and transport sectors have benefited total needs identified (Figure 5). The total needs for from the provision of equipment, materials, and 2023 across all RDNA2 sectors covered are close to financing to make rapid repairs. The Government US$18 billion. But the government has already taken was also supported with a significant humanitarian steps to provide for the urgent needs of its citizens response of US$3.4 billion in 2022.4 through its budget, most notably supporting IDPs and the broader provision of social protection and Meeting the overall estimated needs will be has established a core set of investment priorities critical for the long-term recovery, but all needs for 2023. Taking account of these government cannot be immediately met. The timeframe will priorities as of March 2023, the RDNA2 identifies depend on the availability of financing, but also on US$14 billion in implementation priorities for the absorptive capacity of the Ukrainian budget, 2023. Three sectors dominate investment needs: implementation capacity and coordination among transport, energy, and housing (Figure 4). Beyond line ministries, subnational authorities, civil society, these sectors, significant support (US$2.7 billion) is and community-based organizations, and other prioritized to catalyze investment from the private implementing agencies; the readiness of the private sector, including agriculture, to sustain productive sector to support and help implement capital capacity and catalyze recovery and reconstruction. investments; the availability of materials and labor; This support includes a combination of grants and the future trajectory of the war. However, there and subsidized credit along with guarantees and will be a tremendous social and economic cost, borne insurance instruments to de-risk private investment especially by the poorest and most vulnerable, if the and trade. most urgent needs are not met in the short term. Figure 3. Total recovery and reconstruction Figure 4. Priority investments for 2023 (US$ needs (US$ billion): US$411 billion billions): US$14 billion Finance and Banking $7 Private sector- Energy- core Irrigation and Private sector- Commerce and infrastructure, Water Resource Management of Explosive Hazards $38 Agriculture, 0.6 Industry, 2.1 2.1 Management $9 Energy- payments to Commerce and Housing $69 Critical and operators, 1.2 Industry $23 Social Infrastructure- Agriculture Education $11 Digital, 0.5 Humanitarian $30 Demining, 0.4 Health $16 Municipal Services $6 Water Supply and Sanitation Social Critical and $7 Protection and Social Livelihoods $42 Infrastructure- Utility Services, Culture and 0.4 Housing, 1.9 Telecommunications Tourism $7 and Digital $5 Transport $92 Critical and Social Critical and Social Infrastructure- Infrastructure- Energy and Extractives $47 Social & Admin, 1.3 Transport, 3.5 Source: Assessment team. Source: Assessment team. Note: Needs relate to total estimated needs covering the Note: Sectoral definitions used in this figure are aligned with period 2023–2033. government priorities and do not match exactly with the structure of the RDNA2; colors of sectors are aligned with RDNA definitions. 4 United Nations Office for the Coordination of Humanitarian Affairs (OCHA) Ukraine. Ukraine: 2022 Flash Appeal Funding Snapshot - 21 February 2023. Link. 14 EXECUTIVE SUMMARY Meeting the 2023 priorities will require close to deploy scarce public funding to leverage additional US$11 billion in additional financing. This includes private investment. An opportunity exists to develop US$6 billion in unfunded direct budget needs and innovative financing structures to mitigate risks and nearly US$5 billion in financing needs to support enable more private finance. SOEs and catalyze the private sector. Of the US$14 billion in priorities identified, US$9.3 billion require The July 2022 Lugano Declaration for the direct government spending through capital and Reconstruction of Ukraine outlined guiding current expenditures and transfers. Of this US$9.3 principles for recovery and reconstruction.5 billion, US$3.3 billion can be addressed through Based on international experience, this report existing provisions in the 2023 budget. This leaves highlights principles that complement those outlined US$6 billion in unfunded government-implemented in Lugano, including (i) ensuring a pragmatic, and -financed priorities. Government will also need differentiated, and flexible approach to balancing to support financing of SOEs, which require a further the most urgent needs with what can be achieved US$3.3 billion, while another US$1.5 billion is needed in the medium term, considering the impact of to support financing mechanisms to sustain and de- war in different geographic areas; (ii) focusing on risk private investment. building back better for a more sustainable future, including harmonization of Ukraine’s legislation and The scale of investment required for Ukraine’s policies with European Union law and standards reconstruction will be substantial and will necessitate and the acquis communautaire; and (iii) ensuring the leveraging limited public and donor funding with readiness of Ukrainian institutions, systems, and private investment. Development partner support for regulations for transparent and efficient long-term public investment is key, but this public investment recovery and reconstruction programs, taking into will have to be complemented by significant private consideration external and private support and the investment to maximize the available financing for still recent reforms on the devolution of power and reconstruction. Some sectors and situations could decentralization in Ukraine. Figure 5. RDNA2 key results: damage, needs, and 2023 priorities 4% 3% 24% 15% $14.1 B 2023 14% IMPLEMENTATION 9% PRIORITIES 4% 9% 3% 15% CRITICAL AND SOCIAL INFRASTRUCTURE HOUSING Transport, $3.0 B Housing, $2.0 B $135 B $411 B Social & Admin (Health, Education, Municipal Services), $1.1 B PRIVATE SECTOR Telecom and Digital, $0.5 B DAMAGE RECOVERY AND Utility Services (Water Supply & Sanitation), $0.3 B Commerce and Industry, $1.9 B RECONSTRUCTION NEEDS Agriculture, $0.4 B ENERGY INFRASTRUCTURE HUMANITARIAN DEMINING Quantifies direct physical Estimates needs considering damage to infrastructure building back better Energy Infrastructure, $2.1 B Explosive Hazards and buildings Payments to operators, $1.2 B Management, $0.4 B Source: Assessment team. Note: US$14billion reflects 2023 investments in government-prioritized sectors. Total 2023 implementation needs across all RDNA2 sectors is US$18 billion. 5 URC2022, “Lugano Declaration,” 2022, Link. The Lugano Declaration’s principles include partnership, reform focus, transparency, accountability, and rule of law; democratic participation; multistakeholder engagement; gender equality and inclusion; and sustainability. 15 INTRODUCTION 2022 Invasion of Ukraine Russia’s invasion of Ukraine in February 2022 There have been different phases of war intensity. has caused widespread civilian casualties and The initial months of the 2022 invasion included a significant damage to infrastructure. The war has high number of war-related events, correlated brought hardship for the population, as livelihoods with large-scale destruction and disruption across have been lost and access to basic services, such several regions and different sectors. Missile and as healthcare and education, have been severely drone attacks on Ukrainian critical infrastructure, disrupted. The 2022/2023 winter has posed especially on energy infrastructure and housing, significant challenges for the population, especially started in early October 2022 and continued through for those affected by the ongoing fighting in the the autumn and winter of 2022/2023, resulting in eastern and southern regions. The invasion has power outages across the country and shortages caused economic disruption, job loss, and low of food, heating, and water. Since winter, active investor confidence, affecting public and private warfare has been concentrated mostly in the financing. Given the scale of destruction and eastern and southern areas, and the Government of disruptions, the war is expected to have far-reaching Ukraine has regained control over several regions human development impacts. — approximately one-quarter of the land previously not under government control.6 War intensity over the year is illustrated in Figure 6. The change in war intensity since June 1, 2022, is highlighted in Figure 7. 6 Data are from Institute for the Study of War and American Enterprise Institute’s Critical Threats Project, as presented in the Washington Post, February 21, 2023, Link. 16 INTRODUCTION Figure 6. War intensity between February 24, 2022, and February 24, 2023 Source: Assessment team. Note: Map is based on ACLED, considering average monthly conflict events. For ACLED, see Clionadh Raleigh et al., “Introducing ACLED-Armed Conflict Location and Event Data,” Journal of Peace Research 47, no. 5 (2010): 651–60, Link. Figure 7. Spatial evolution of the war between February 2022 and February 2023 February 24, 2022 – May 31, 2022 June 1, 2022 – August 31, 2022 September 1, 2022 – November 30, 2022 December 1, 2022 – February 24, 2023 Source: ACLED, processed by assessment team. Violent events include battles/remote violence and violence against civilians as classified per ACLED methodology. Note: Conflict events includes battles and explosions/remote violence as classified per ACLED methodology. INTRODUCTION 17 RDNA2 Objectives and Methodology This second Rapid Damage and Needs Assessment the relevance of the estimations, substantial (RDNA2) considers social, infrastructure, and efforts have been made to improve to the extent productive sectors as well as cross-cutting possible the accuracy of the information that was sectors and issues. The RDNA2 assesses the collected, analyzed, and verified. The RDNA2 does impact between February 24, 2022, and February not provide asset-level information. Damage to 24, 2023. In doing so, it builds on the foundations asset types considers three levels: fully destroyed, and analytics of RDNA1, which covered the period damaged, and no/minor damage. Since loss is between February 24 and June 1, 2022, and which typically measured until “normality” is restored, estimated US$97 billion in direct damage, US$252 the calculation includes an additional 18 months billion in losses, and US$349 billion for Ukraine’s following the 12 months between February 24, 2022, recovery and reconstruction needs.7 and February 24, 2023. The report’s assumptions will have to be carefully reviewed and validated in The RDNA2 follows a globally established and the case of future assessments. The geographic recognized methodology jointly developed by scope includes all areas under government control the World Bank, the European Union, and the on February 1, 2022. The RDNA2 is not intended United Nations. This approach has been applied for legal or compensatory claims. While the globally in post-disaster and war contexts to assessment considers human impacts of the war, inform recovery and reconstruction planning. The there are many gaps and the report can serve as report uses standard terminology, with key terms basis for further analysis. Future analyses may also highlighted in Box 1. The use of the global approach consider assessing in more depth the deterioration and standard terminology facilitates any future of infrastructure and services in areas with limited assessments. Building back better and principles of or no fighting and increased investment needs, both green, resilient, inclusive, and sustainable recovery of which are beyond the scope of this assessment. and reconstruction form an integral part of the assessment across all sectors. The exchange rate used in RDNA2 is significantly different from that in RDNA1. The RDNA1 report Complementary to the standard methodology and used the exchange rate of US$1 = UAH 27.28, which the estimation of short- and long-term needs, was the exchange rate in December 2021. The this RDNA2 report also includes an estimation of RDNA2 report uses the exchange rate of US$1 = realistic implementation priorities for recovery UAH 36.5686, given devaluation of the hryvnia in and reconstruction investments for 2023. This July 2022 of 25 percent. The change of value affects estimation considers government strategic priorities, calculations for the period between February 24, delivery instruments, market and institutional 2022, and June 1, 2023, in those sectors that used constraints to implementation at the sector level, and unit costs in hryvnia. For those affected sectors, the degree to which financing is already available to all values have been recalculated with the RDNA2 facilitate implementation. This initial estimate, to be exchange rate for the period February 2022– monitored and refined over time, can further inform February 2023. investment planning, mobilization of resources, and implementation. The RDNA2 also includes an In the report, regions are organized according to overview of key risks related to engagement of the groupings presented by the Government of Ukraine private sector in recovery and reconstruction efforts. at the Ukraine Recovery Conference in Lugano, Switzerland, in July 2022, updated based on the The RDNA2 faced several constraints and relied current situation. Frontline regions are those areas on several specific assumptions. The sector temporarily not under government control and/ assessments were produced in a short time frame or areas of active war; support regions are those with sometimes significant limitations related to data providing logistics for defense and humanitarian availability (such as for data related to the private cargo; backline regions are those protecting export/ sector or geographic areas, or for data related to import logistics hubs and evacuated enterprises; and environmental impacts) and data sensitivity (such as regions where the government has regained control for critical energy infrastructure). Field verification are areas recovering from sustained damage. was not possible due to the ongoing war. To ensure 7 World Bank, GoU, and EC, “Ukraine Rapid Damage and Needs Assessment,” August 2022, Link. 18 INTRODUCTION Box 1. RDNA2 definitions Damage: Direct costs of destroyed or damaged physical assets and infrastructure; valued in monetary terms with costs estimated based on replacing or repairing physical assets and infrastructure, considering the replacement price prevailing before the war. Loss: Changes in economic flows resulting from the war; valued in monetary terms, for example, increased operating cost, loss of revenue for authorities/private sector, etc. Needs: Value associated with the resumption of prewar normality through activities such as repair and restoration, including a premium linked to building back better principles (e.g., improved energy efficiency (EE), modernization efforts, and sustainability standards), as well as factors such as global inflation, surge pricing due to volume of construction, higher insurance, and so forth. Needs are expressed in monetary value according to market prices prevailing as of February 24, 2023. Needs do not equal the sum of damage and losses. Build back better: Relates to measures that the government decides should be integrated into rehabilitation and reconstruction of damaged assets, including improved functionality, EE, universal access, disaster and climate resilience, and critical modernization measures, including right-sizing and right-siting of infrastructure and services. This costing is added in the needs calculation, and each sector uses appropriate standards and costing assumptions. Implementation priorities for 2023: The estimation considers government strategic priorities, delivery instruments, market and institutional constraints to implementation at the sector level, and the degree to which financing is already available to facilitate implementation. 19 SUMMARY OF DAMAGE, LOSSES, AND NEEDS Borodyanka City, Kyiv Oblast. Photo by Julia Burlachenko. 20 SUMMARY OF DAMAGE, LOSSES, AND NEEDS The total damage across sectors covered in the Figure 8. Total damage (US$ billion): US$135 RDNA2 is estimated at approximately US$135 billion billion (Figure 8, Table 1). The most damage- affected sectors are housing (38 percent of total Finance and Banking $0 damage), transport (26 percent), energy (8 percent), Environment and Commerce and Industry $11 Foresty, $2 commerce and industry (8 percent), and agriculture Agriculture $9 (7 percent). The most affected oblasts are Donetska, Municipal Kharkivska, Luhanska, Zaporizka, Kyivska, and Services $2 Khersonska (Table 2, Figure 11). Housing $50 Water Supply and Sanitation The sectors with largest increases compared to $2 the RDNA1 results include energy, housing, and transport, reflecting the number of attacks, but also agriculture, given increased destruction of assets as well as improved information. Geographic areas Education $4 where damage has increased the most since June Telecommunications 1, 2022, are Kharkivska, Donetska, Khersonska, and and Digital $2 Health $2 Zaporizka regions, which are considered frontline Transport $36 Culture and Tourism $3 and/or have faced the most attacks on energy Energy and Extractives $11 infrastructure (Figure 11). Source: Assessment team. Aggregate economic, social, and other monetary Note: Damage covers the period February 24, 2022, to loss totals almost US$290 billion (Table 1, Figure February 24, 2023. 9). Loss is dominated by commerce and industry (30 percent of total loss), explosive hazard management (covering landmines and unexploded ordnance, Figure 9. Total loss (US$ billion): US$290 13 percent), transport (11 percent), agriculture (11 billion percent), and energy (9 percent). Across all sectors, debris clearance and management (and demolition Housing $17 Education $1 where needed) exceeds US$5 billion. It should be Management of noted that losses in one sector flow into and intersect Explosive $38 Health $16 with those in other sectors, though calculations Social Protection and avoid double-counting. For example, reduction Finance and Livelihoods $4 Banking $7 in agricultural production affects transportation Culture and needs, and loss of electricity affects commerce and Tourism $15 industry in areas that are otherwise unaffected by Energy and the war. Under total loss figures, household income Extractives $27 loss valued at US$61.5 billion is not included to avoid potential double-counting in relation to other sectors. Transport Commerce and $32 Industry $86 Compared with RDNA1 results, the energy sector Telecommunications and commerce and industry sector have seen a and Digital $2 Agriculture $31 significant increase in losses. For the energy sector, Water Supply and Municipal Services $3 RDNA2 estimated U$27 billion in losses compared Sanitation $7 to US$12 billion in RDNA1, corresponding to the targeting of energy infrastructure facilities since Source: Assessment team. autumn 2022. For the commerce and industry sector, Note: Loss includes an additional 18 months beyond the RDNA2 estimated U$86 billion in losses, linked also 12 months between February 24, 2022, and February 24, to disruptions in utilities services, compared to U$48 2023. Under social protection and livelihoods, household income loss valued at US$61.5 billion is not included to avoid billion in RDNA1. Notable net changes in losses for potential double-counting in relation to other sectors. regions are recorded for Kyiv City and Kharkivska and Donetska oblasts. SUMMARY OF DAMAGE, LOSSES, AND NEEDS 21 The total reconstruction and recovery needs are Meeting the overall estimated needs will be critical estimated at about US$411 billion (Table 3). The for the long-term recovery from the war, but all considerable magnitude of the needs arises from needs cannot be met immediately. The timeframe for a war that has spanned a large geographical area covering these needs will depend on the availability (including urban areas). As shown in Figure 10, of financing, but also on the absorptive capacity of the sectors with the highest estimated needs are the Ukrainian budget, and implementation capacity transport (22 percent of total needs), housing (17 and coordination among line ministries, subnational percent), energy (11 percent), social protection authorities, civil society and community-based and livelihoods (10 percent), explosive hazard organizations, and implementing agencies; the management (9 percent), and agriculture (7 percent). readiness of the private sector to support capital Other sectors, including commerce and industry (6 investments; and the trajectory of the war. The percent), health (4 percent), and education (3 percent) critical role of private sector investments in meeting contribute substantially to the remaining needs. these needs should be noted; further information is provided in the final chapter. An estimation of Since the RDNA1, sectors that have faced the most implementation priorities for 2023 is discussed in significant increase in needs are energy, social the next section. protection and livelihoods, transport, agriculture, and housing. The geographic areas with the greatest The war has had widespread macroeconomic increase in needs are Donetska, Kharkivska, and social impacts. The war inflicted significant Luhanska, and Khersonska as a result of the war losses of jobs and income in the private sector, loss since June 1, 2022, but also as a result of improved of purchasing power, and loss of assets among data collection in some areas. It is also important to Ukrainians, particularly the most vulnerable. recognize that since RDNA1 some of the needs have Ukraine’s GDP shrank by 29.2 percent in 2022. 9,655 been met by the Government of Ukraine with the civilians have lost their lives, including 461 children; support from its partners, for example, as regards thousands have been injured; 13.5 million people to the ongoing repairs in the energy and transport have been displaced within Ukraine and across sectors. Europe; and millions have lost their homes. 7.1 million people have been pushed into poverty,8 as poverty increased from 5.5 to 24.1 percent, reversing Figure 10. Total recovery and reconstruction 15 years of progress. The impacts of war are uneven, needs (US$ billion): US$411 billion with the greatest effects on women, children, and people with disabilities. Overall, there have been Irrigation and Finance and Banking $7 dramatic set-backs on many of the Sustainable Management of Explosive Water Resource Hazards $38 Development Goals (SDGs), especially those related Management $9 to poverty, health, education, energy, industry, peace Commerce and Housing $69 and justice (see Box 2).9 Industry $23 Agriculture Education $11 $30 Health $16 Municipal Services $6 Water Supply and Sanitation Social $7 Protection and Livelihoods $42 Culture and Telecommunications Tourism $7 and Digital $5 Transport $92 Energy and Extractives $47 Source: Assessment team. Note: Needs relate to total estimated needs covering the period 2023–2033. 8 Based on the global poverty line of US$6.85 per person per day. 9 United Nations, Our Work on the SDGs in Ukraine, Link. 22 SUMMARY OF DAMAGE, LOSSES, AND NEEDS Table 1. Total damage, loss, and needs by sector (US$ billion) Sector Damage Loss Needs Social sectors Housing 50.4 17.2 68.6 Education and science 4.4 0.8 10.7 Health 2.5 16.5 16.4 Social protection and livelihoods 0.2 4.2 a 41.8 Culture and tourism 2.6 15.2 6.9 Infrastructure sectors Energy and extractives 10.6 27.2 47.0 Transport 35.7 31.6 92.1 Telecommunications and digital 1.6 1.6 4.5 Water supply and sanitation 2.2 7.5 7.1 Municipal services 2.4 3.0 5.7 Productive sectors Agriculture 8.7 31.5 29.7 Commerce and industry 10.9 85.8 23.2 Irrigation and water resource management 0.4 0.3 8.9 Finance and Banking 0.0 6.8 6.8 Cross-cutting sectors Environment, natural resource management, and forestryb 1.5 0.5 1.5 Emergency response and civil protection 0.2 0.5 1.5 Governance and public administration 0.3 1.4 0.6 Explosive hazard management - 37.6 37.6 Total 134.7 289.1 410.6 Source: Assessment team. Note: Damage covers the period February 24, 2022, to February 24, 2023; loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023; needs relate to total estimated needs covering the period 2023–2033. a. Under social protection, household income loss valued at US$61.5 billion is not included to avoid potential double-counting in relation to other sectors. b. Under environment and forestry, due to data limitations, only damages, losses and needs related to forest fires and mined forest areas, along with needs related to capacity building for environmental governance are included. SUMMARY OF DAMAGE, LOSSES, AND NEEDS 23 Table 2. Damage, loss, and needs by oblast for select sectors (US$ billion) Oblast Damage Loss Needs Frontline regions, subtotal 103.5 133.2 231.8 Donetska 35.2 43.1 67.4 Zaporizka 9.7 15.7 29.0 Luhanska 18.1 17.9 41.6 Mykolaivska 5.6 7.6 13.7 Kharkivska 25.8 36.5 50.2 Khersonska 9.1 12.4 29.8 Support regions, subtotal 2.7 22.3 15.9 Vinnytska 0.2 3.8 2.6 Dnipropetrovska 1.7 7.0 6.0 Kirovohradska 0.1 2.5 1.6 Odeska 0.6 4.8 3.7 Poltavska 0.1 4.1 2.2 Backline regions, subtotal 0.4 16.8 11.4 Volynska 0.1 1.4 1.2 Zakarpatska 0.0 1.0 0.9 Ivano-Frankivska 0.0 1.3 0.9 Lvivska 0.1 3.9 1.9 Rivnenska 0.1 1.5 1.3 Ternopilska 0.0 1.6 1.0 Khmelnytska 0.0 2.2 1.7 Chernivetska 0.0 0.9 0.7 Cherkaska 0.1 3.1 1.7 Regions where government has regained control, subtotal 19.8 60.4 56.4 Kyiv City 1.3 15.8 6.1 Zhytomyrska 0.8 2.9 3.7 Kyivska 9.2 19.8 20.4 Sumska 2.8 7.5 9.3 Chernihivska 5.7 14.5 16.8 Not specified—nationwide, subtotal 8.3 56.5 95.1 Source: Assessment team. Note: Damage covers the period February 24, 2022, to February 24, 2023; loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023; needs relate to total estimated needs covering the period 2023–2033. Loss and needs are not quantified for all sectors in the assessment; and for Kyiv City, not all sectors separate damage, loss, and needs. 24 SUMMARY OF DAMAGE, LOSSES, AND NEEDS Figure 11. Extent of damage by region as of February 24, 2023 Source: Assessment team. Note: The map draws on damage data as collected and assessed under the RDNA2. There were data limitations for certain regions, including Khersonska oblast. Table 3. Total recovery and reconstruction needs by sector (US$ billion) as of February 24, 2023 Short term Medium to long Total Sector (2023–2026) term (2027–2033) (2023–2033) Social sectors Housing 31.5 37.1 68.6 Education and science 4.3 6.4 10.7 Health 3.6 12.7 16.4 Social protection and livelihoods 17.8 24.0 41.8 Culture and tourism 2.3 4.6 6.9 Productive sectors Agriculture 10.2 19.5 29.7 Irrigation and water resource management 0.1 8.8 8.9 Commerce and industry 12.1 11.1 23.2 Finance and banking 6.5 0.3 6.8 Infrastructure sectors Energy and extractives 5.7 41.3 47.0 Transport 14.1 78.0 92.1 Telecommunications and digital 3.0 1.5 4.5 Water supply and sanitation 3.9 3.3 7.1 Municipal services 1.7 4.0 5.7 Cross-cutting sectors Environment, natural resource management, and forestry 0.4 1.0 1.5 Emergency response and civil protection 0.5 1.0 1.5 Justice and public administration 0.2 0.4 0.6 Explosive hazard management 10.0 27.6 37.6 Total 128.0 282.6 410.6 Source: Assessment team. SUMMARY OF DAMAGE, LOSSES, AND NEEDS 25 Box 2. War’s human impacts and impacts on select SDGs SDG 1: No poverty: Poverty increased from 5.5 percent in 2021 to 24.1 percent in 2022, pushing an additional 7.1 million people into poverty and setting back 15 years of progress. War-affected regions are expected to experience higher poverty rates, with the highest monetary poverty rates in Odeska, Luhanska, Khersonska, and Kharkivska regions.10 The projected share of children living below the national definition of poverty increased from 43.5 percent to 65.2 percent in 2022.11 SDG 2: Zero hunger: The share of households with insufficient food consumption increased over 2022. By the end of 2022, the share of households with insufficient food consumption was around one in four for nondisplaced households and one in three for displaced households.12 SDG 3: Good health and well-being: Per official records, the war has led to the death of 9,655 civilians, including 461 children, and has injured 12,829 civilians.13 There are 24,613 families and facilities being supported by the government to provide care for orphaned children. The RDNA2 estimates a loss of US$13.2 billion in DALYs, for 12 months since the invasion and additional 18 months following, resulting in the estimated loss from additional health burden more than tripled compared to RDNA1. Per World Health Organization estimates, up to 10 million Ukrainians are at risk of some form of mental disorder, from anxiety and stress to a more severe condition. SDG 4: Quality education: At least 2 million children have left Ukraine and are expected to remain abroad in other countries in Europe, contributing to brain drain of human resources. The war’s impact on education will negatively affect Ukraine’s human capital, with Harmonized Learning Outcome scores potentially declining from 481 to 420 points. This translates to future earnings losses estimated to be in the trillions of dollars. SDG5: Gender equality: Assessed female-headed households were more likely to report “extreme” or “extreme+” needs (46 percent), compared to male-headed households (38 percent).14 A Regional Gender Task Force found that pregnant and breastfeeding women, young single women, and women from minority groups (such as Roma and stateless women) are particularly vulnerable to protection risks, gender-based violence, and security risks during displacement.15 Among those receiving State Employment Service support with the status of unemployed, the majority were women (68 percent in January 2023). The share of male internally displaced persons (IDPs) relying on regular wages as the main source of income declined from 50 percent to 38 percent between August 2022 and January 2023. The conditions for women are much worse as only 25 percent of women rely on regular wages as their main source of income.16 SDG 16: Peace, justice, and strong institutions: The war has exacerbated preexisting vulnerabilities of certain large social groups: There are about 13.5 million IDPs, including 8.1 million displaced across Europe and 5.4 million internally displaced within Ukraine.17 People with disabilities number 3 million, and veterans number 1 million, and the latter group is expected to triple in size during the course of war. According to the Office of the Prosecutor General of Ukraine, as of February 22, 2023, the war has led to the death of 9,655 civilians, including 461 children; 12,829 injured civilians, including 926 children; and more than 68,000 war crimes, including 2,600 committed against children.18 The National Information Bureau has reported that as of February 2023, the total number of deported and illegally displaced citizens of Ukraine was 143,239, including 16,221 children.19 The war has also had an impact on access to information and freedom of expression. UNESCO reported that 10 journalists have lost their lives in the exercise of their profession in Ukraine since February 2022.20 10 UNDP, “Ukraine: A Rapid Assessment of the Impacts of the War on Poverty and its Mitigation Potential,” Development Future Series, Policy Brief, Forthcoming. 11 UNICEF, “Child Poverty: Initial Estimates of the Impact of the War on the Situation of Households with Children,” 2023. 12 IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January),” Link. 13 Government of Ukraine, press conference on the work of the prosecutor’s office, February 22, 2023, Link. 14 REACH and World Food Programme, “2022 MSNA Bulletin: Ukraine,” February 2023, Link. 15 Regional Refugee Response for the Ukraine Situation, “Making the Invisible Visible: An Evidence-Based Analysis of Gender in the Regional Response to the War in Ukraine,” October 2022, Link. 16 IOM General Population Surveys. 17 UNHCR Operational Data Portal for Ukraine, Link; IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January 2023),” Link. 18 Government of Ukraine, press conference on the work of the prosecutor’s office, February 22, 2023, Link. 19 The bureau was established in March 2022; see Cabinet of Minister Decree #228-р as of March 17, 2022, Link. 20 UNESCO Observatory of Killed Journalists, as of 15 March 2022, Link 26 ESTIMATION OF 2023 IMPLEMENTATION PRIORITIES State University, Irpin City, Kyivska Oblast. Photo by Julia Burlachenko. ESTIMATION OF 2023 IMPLEMENTATION PRIORITIES 27 Meeting needs in Ukraine will require financing on facilities, and other social and administrative a very large scale, but an organized, sequenced infrastructure response can help ensure immediate needs 5. Private sector development,24 including grants, are met, while also setting the groundwork for credit lines, and risk facilities to support small and recovery. To this end, RDNA2 assesses the urgent medium enterprises (SMEs), microenterprises, implementation priorities for 2023, taking into agriculture sector, and exports consideration government strategic priorities and existing financing and implementation capacity.21 The RDNA2 estimates implementation priorities for 2023 at US$14 billion, or close to 3.5 percent With large needs across all sectors of the economy of total needs identified in the RDNA2. The total and members of society, the Government of Ukraine needs for 2023 across all RDNA2 sectors covered is making hard choices to prioritize spending are close to US$18 billion. However, as noted above, to safeguard lives and welfare and support the government has already taken steps to provide for the economy. In this context, the top priority is to urgent needs of its citizens, most notably supporting ensure the government is able to finance its core IDPs and the broader provision of social protection functions and provide critical services to its citizens, (US$3.5 billion in transfers identified in the RDNA2), including delivering fully on the social protection as well as ensuring the ongoing government activity, needs identified in the RDNA2. Beyond this, focus is through the existing budget. Moreover, given the on five key recovery and reconstruction investment focus on a core set of investments for 2023, another priorities: US$0.5 billion in RDNA2-identified needs are not included in the 2023 priorities.25 1. Energy infrastructure, including restoration and repair of transmission and distribution lines and The majority of 2023 priorities are expected to be restoration and decentralization of generation executed directly through the state budget26, but capacity, including development of renewables SoEs and the private sector will also carry out a and protection of the power grid significant share of investments. Implementation of 2. Humanitarian demining,22 with a focus on the 2023 priorities is expected to be distributed as building the strategic and operational capacity for follows: demining operations (in particular the governance and implementation of survey, clearance, and • US$7.8 billion in capital investments and other land-release operations) project-type expenditures27 for restoring services 3. Housing, including light repair and capital repairs and initiating reconstruction, mainly in critical 4. Critical and social infrastructure23 and basic and social infrastructure, housing, and energy service delivery to vulnerable populations, (Figure 12). including renewal of provision of utilities • US$1.5 billion in current expenditures, consisting services, repair and reconstruction of transport mainly of grants and subsidies to facilitate infrastructure (roads, railways, bridges, ports), investment from the private sector. and repair and reconstruction of schools, health • US$1.2 billion in payments to energy operators, including a provision of US$1 billion for gas 21 The analysis aims to identify the urgent priorities that can be implemented in 2023, considering factors such as instruments (e.g., projects requiring complex procurement at one end of complexity versus cash transfers at the other); absorption capacity of implementing agencies; supply-side and demand-side constraints in the market; geographical constraints to implementation (i.e., the inability to implement projects in zones where war is ongoing); typical project implementation timelines; and likelihood of private financing and implementation. 22 Referred to as explosive hazard management in this report. 23 Note that this definition is based on the scope of activities planned for support under the government’s priorities for “critical and social infrastructure” and is not based on any legal definition of “critical infrastructure” or “social infrastructure” in Ukraine. It covers the following RDNA2 sectors: transport; education; health; water supply and sanitation; telecom and digital; and municipal services. 24 Includes agriculture and commerce and industry in this report. 25 These include culture and tourism; irrigation and water resources management; finance and banking; environment and forestry; justice and public administration; and emergency response and civil protection. 26 There may be cases where donors provide in-kind machinery, equipment, and other materials that would be off-budget, but for the purposes of the RDNA2, it was assumed that public sector executed activities would be financed through the state budget. 27 This report refers to “capital expenditures” in a broad sense to encompass all types of project-type expenditures; it is not restricted to acquisition of tangible assets. 28 ESTIMATION OF 2023 IMPLEMENTATION PRIORITIES Figure 12. Priority needs for 2023 by expenditure type and sector (US$ billions) Private sector- Commerce Private sector: lines of and Industry, 2.1 credit, guarantees, Government: current Private sector- Energy- core , and insurance, $1.5 expenditures, $1.5 Agriculture, 0.6 infrastructure, 2.1 Critical and Social Energy- SOE investments, - Infrastructure- payments to $2.1 Digital, 0.5 operators, 1.2 Humanitarian Demining, 0.4 Critical and Social Infrastructure- Utility Services, 0.4 Housing, 1.9 Payments to energy operators, $1.2 Government: Critical and Social capital / project Infrastructure- Critical and Social expenditures, $7.8 Social & Admin, 1.3 Infrastructure- Transport, 3.5 Source: Assessment team. Note: Sectoral definitions used in this figure are aligned with government priorities and do not match exactly with the structure of the RDNA2; colors of sectors in the figure on right are aligned with RDNA2 definitions. purchase for the winter heating season28 and significant support (US$2.7 billion) is prioritized for additional provisions to purchase electricity and sustaining productive capacity and for recovery to meet liquidity needs of systems operators; and reconstruction of the private sector, including payments to energy operators would not be on the agriculture, which is critical to ensure a sustainable government budget but likely require government recovery for Ukraine. This support includes a support, for example, through guarantees. combination of grants and subsidized credit but also • US$2.1 billion in investments to be implemented includes guarantees and insurance instruments to by SoEs; investment by SoEs is not on the de-risk private investment, given the challenging government budget but likely require government environment. Finally, it is important to emphasize support, for example, through guarantees. that the figures presented in Figure 12 and Table • US$1.5 billion29 to support financial instruments, 4 consider only sectors defined in the government including credit lines, guarantees, and risk priorities. Other sectors also have needs that instruments to provide the private sector with are critical to support as soon as possible—for access to working capital and to de-risk private example, maintaining and reconstructing irrigation investment and trade. infrastructure and safeguarding cultural assets and the environment. Priorities in these sectors Transport, housing, and energy account for more are included in the individual sectoral overviews in than 60 percent of 2023 priorities, while significant this report. Table 4 provides further details on 2023 support is needed to facilitate private investment implementation priorities by government-defined (Figure 12). The largest expenditure priorities priority sectors by expenditure type. for 2023 are in transport (US$3.5 billion), energy (US$3.3 billion, including US$2.1 billion of capital Delivering on these urgent priorities in 2023 will investments), and housing (US$1.9 billion)—together, require overcoming key market and institutional these sectors account for around 70 percent capital/ constraints. While the 2023 priorities account for a project investments. Other areas that account small subset of total needs, implementation will be for significant 2023 post-budget priority needs challenging and the figures presented here likely include: social and administrative infrastructure, represent the ceiling of what can be delivered on the mainly from education and health (US$1.3 billion); ground in 2023. Significant supply-side constraints, digital infrastructure (US$0.5 billion); utilities including constraints on local manufacturing capacity, (US$0.3 billion); and humanitarian demining (US$0.4 access to inputs, and in some cases contractors and billion). Beyond these infrastructure sectors, labor, will limit implementation of infrastructure 28 Purchase of gas would need to be made by Naftogaz. 29 This figure does not include the capital provisioned by IFIs for lines of credit (IFC, EBRD) and reinsurance (Multilateral Investment Guarantee Agency (MIGA), Development Finance Corporation (DFC). ESTIMATION OF 2023 IMPLEMENTATION PRIORITIES 29 projects in some sectors. Early procurement, shifts in the housing, land, and property systems innovative approaches to materials management, (including cadasters), in building regulations (in and regional markets can help overcome supply- light of EU accession), and debris management. side constraints, while instruments to help de-risk It is important to underline that the government is trade and investment will be important to stimulate expected to increase its absorption capacity beyond a response from the domestic and foreign private the first year of reconstruction, which will allow for sector. Addressing institutional constraints that slow an acceleration of implementation over time. implementation will be even more important and urgent. The 2023 budget law allows a streamlined Despite the implementation challenges, there are process for adoption of projects when donor funding opportunities for all parties to help close the gap. is identified; this process will support a quick and While implementation in 2023 will be challenging, it flexible approach to initiating new projects. Further is important to secure commitments against these steps to speed procurement and implementation priorities in order to mobilize investments, even if are needed, including reducing the barriers that these are not fully implemented in 2023. It is also slow the channeling of project funds for subnational important also to emphasize that not meeting these implementation, reforming planning processes, urgent needs will have significant economic and and strengthening the capacity of local government social costs for Ukraine. While the government has institutions. Sectoral policies to drive recovery already made significant efforts to finance some and reconstruction will also be needed. A housing of the priorities discussed in this section, with the recovery policy, for example, should set priorities support of IFIs and donors, further support is needed for reconstruction of the housing stock while also to close the funding gap (see next Chapter). setting the direction for key reforms and policy Table 4. 2023 implementation priorities by sector and expenditure type (US$ billions) Priorities implemented Priorities implemented by SoEs and and financed by the the private sector government Total Govt- Govt- Payments IFI lines of Direct govt SoE currenta capitalb to energy credit and expense investment expense expense operators insurance Energy infrastructure - 0.7 - 1.4 1.2 - 3.3 Humanitarian demining - 0.4 - - - - 0.4 Housing - 1.9 - - - - 1.9 Critical and social 0.3 4.8 - 0.7 - - 5.8 infrastructure Transport - 2.8 - 0.7 - - 3.5 Social and administrative 0.1 1.2 - - - - 1.3 infrastructure Utility services 0.2 0.2 - - - - 0.4 Digital infrastructure - 0.5 - - - - 0.5 Private sector - - 1.2 - - 1.5 2.7 Agriculture - - 0.6 - - - 0.6 Commerce and industry - - 0.6 - - 1.5 2.1 Total 0.3 7.8 1.2 2.1 1.2 1.5 14.1 Source: Assessment team. Note: IFI = international financial institution. Sectoral definitions used in this table are aligned with government priorities and do not match exactly with the structure and nomenclature of the RDNA2. a. Current expense considers social transfers, grants and subsidies, and other expenses. b. Capital expense considers investments to acquire tangible assets as well as other project-type expenditures that do not involve asset acquisition as per the accounting definition of “capital expenditure.” 30 MACROECONOMIC IMPACTS Lyceum, Velyki Prohody Village, Dergachi Community, Kharkivska Oblast. Photo by Roman Nesterenko, Dergachi City Council. MACROECONOMIC IMPACTS 31 Summary Ukraine’s economic trajectory has been derailed by potential recovery. GDP declined by 29.2 percent in the Russia’s invasion in February 2022, which has 2022, and—with the continued duration of the war taken a severe toll on the population and resulted uncertain—is expected to grow by only 0.5 percent in the large-scale destruction of productive capital in 2023. With the support of the international and infrastructure. Economic priorities have community, Ukraine has been able to maintain shifted, increasing demand for war-related goods macroeconomic stability and to deliver key social and services while creating supply and production services. Going forward, Ukraine will need to build bottlenecks for other sectors. In mid-2022, as active a strong foundation to accelerate reconstruction by combat became more localized in the east and focusing on a set of policies that catalyze external south, economic activity stabilized at levels lower financing and enhance implementation capacity. than prewar levels; but attacks on Ukraine’s energy Continued donor support will be fundamental to infrastructure from October 2022 onward have maintain these gains as well as ensure critical disrupted economic activities and undermined the recovery needs are met. Economic and poverty update While Ukraine’s economy has gradually adjusted According to the World Bank’s preliminary to the wartime needs, attacks on the country’s estimate and based on the global poverty line of electricity network undermined a potential US$6.85 per person per day, poverty increased recovery. As a result of the invasion, Ukraine’s GDP from 5.5 percent in 2021 to 24.1 percent in 2022, declined by 29.2 percent in 2022. Still, the economy pushing an additional 7.1 million people into contracted in 2022 by less than initially expected, poverty and setting back 15 years of progress. as the UN-brokered Black Sea Grain deal and the War-affected regions are expected to experience return of nearly 4 million migrants helped to support even higher poverty rates. The UNDP estimates economic activity in the third quarter. Proven the highest monetary poverty rates in Odeska, adaptability of the private sector, which explored new Luhanska, Khersonska, Kharkivska, and Rivnenska, logistic routes and reoriented supply to the wartime which were among the poorest oblasts before the needs, also aided growth. While Ukraine’s economy war. High inflation, particularly food inflation, eroded has gradually adjusted to the new conditions, attacks purchasing power disproportionately for low- on the power infrastructure starting in October 2022 income households, given food’s large share in their damaged the country’s power grid significantly, budgets. In Khersonska oblast, for example, food and thereby exacerbating production constraints for the non-alcoholic beverage prices had increased by 73.5 key sectors. Significant production disruptions and percent YoY in December 2022, compared to 34.4 rolling electricity blackouts led to a 31.4 year-on-year percent for Ukraine as a whole.30 The war’s impacts (YoY) contraction in the fourth quarter of 2022, while on child poverty could have long-term consequences imposing additional external pressure by limiting if not mitigated. According to a UNICEF study,31 the export capacity and increasing demand for energy- projected share of children living below the national related imports (Figure 13, Figure 14). Ukraine’s definition of poverty (consumption below the actual economic outlook will depend on the evolution of the subsistence minimum estimated at UAH 5,458 per war and the country’s ability to adjust to continued person per month) increased from 43.5 percent to fighting. Currently, GDP is expected to grow by only 65.2 percent in 2022. 0.5 percent in 2023 as a recovery in domestic services and war-related industries is projected to be mostly War-related supply shocks drove inflation during offset by a 15 percent decline in agricultural output 2022. Consumer prices grew by 26.6 percent YoY in and continued low-level stagnation of metals and 2022. Inflation was predominantly driven by supply- mining production. side factors, including higher production costs 30 Regional consumer price index data published by State Statistics Service of Ukraine, Link. 31 UNICEF, “Child Poverty: Initial Estimates of the Impact of the War on the Situation of Households with Children,” 2023. 32 MACROECONOMIC IMPACTS Figure 13. Ukraine GDP by quarter, year-on-year (YoY) 6.0% 6.1% 10% 2.8% 5% -0.9% -0.1% -3.3% -2.2% 0% -5% -11.0% -10% -15% -15.1% -20% -25% -30.8% -30% -35% -40% -37.2% -35.5% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Source: State Statistics Service of Ukraine. Figure 14. Assessment of industrial production performance, December 2021 – November 2022 (index) 30 20 10 0 -10 -20 -30 -40 -50 -60 Dec-21 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Industry average Manufacture of other transport equipment Manufacture of wearing apparel Source: State Statistics Service of Ukraine. related to logistical and energy disruptions and to 16 percent of GDP, as annual exports declined by higher global commodity prices. Mitigating factors 30 percent compared to 2021 while imports only include the introduction of an exchange rate peg to contracted by 4 percent. The export contraction was the US dollar by the National Bank of Ukraine (NBU), led by metals and minerals exports, which declined thus providing for a nominal anchor, and unchanged by 63 percent and 48 percent, respectively. While energy tariffs. While the NBU monetized a large part agricultural exports also contracted substantially of government spending, this step did not result in immediately after the invasion, they recovered a significant increase in money supply; it effectively during the main export season following the Black absorbed excess liquidity through the large-scale Sea Grain Initiative, thus limiting their contraction sale of certificates of deposit. Going forward, supply- to 16 percent. The decline in imports was led by side inflationary pressures are expected to remain machines and chemicals that are used as critical elevated as the war continues to cause production production inputs. By contrast, demand for war- and supply disruptions, whereas an end to related imports as well as fuel, diesel and energy monetization in 2023 and continued tight monetary equipment remained high. The capital and financial policy will contain demand-side pressures. accounts, while initially bolstered through capital controls, have been under increasing pressure Ukraine’s external trade deficit broadened due to the withdrawal of foreign exchange by significantly in 2022 and was financed through Ukrainian refugees and outflows of trade financing. large inflows of international aid. Ukraine recorded This situation was counterbalanced by foreign a current account surplus of 5.7 percent of GDP in loan inflows, which helped to restore international 2022, with foreign grant inflows compensating for a reserves to US$29.9 billion at the end of 2022, close rapidly growing trade deficit. The trade deficit grew to the prewar level. In 2023, exports are expected to MACROECONOMIC IMPACTS 33 remain under the pressure due to weaker harvests Financing needs were covered by external financial and logistical problems, whereas imports will assistance and NBU monetization, while domestic continue to grow due to higher demand for energy banks reduced their holding of government debt. and equipment. In the medium term, limited exports Fiscal financing needs in 2022 reached US$54 and the economy’s large need for imports to carry billion equivalent. Ukraine has filled these needs out reconstruction drive a projected higher current from two sources: official bilateral and multilateral account deficit. assistance through grants and loans; and the NBU, which has stepped up as a lender of last resort and The war has generated unprecedent fiscal financing has purchased any residual government bonds. By needs. The consolidated budget deficit excluding contrast, domestic banks have opted to roll over less grants amounted to 26.5 percent of GDP in 2022. Tax than their existing holdings of government securities, revenue declined by 8 percent in nominal terms (30 even though they had large excess liquidity available. percent in real terms) as proceeds from value added While the reliance on monetization has induced risks taxes and excises suffered sharp contractions of 13 related to demand-side inflation pressure, the NBU percent and 39 percent, respectively. Expenditure has effectively managed to absorb the resulting grew by 65 percent in nominal terms (39 percent in excess liquidity in the economy through foreign real terms), with authorities prioritizing war-related exchange market interventions and the issuance of spending as well as essential public and social high-yielding overnight certificates of deposits. For services. By contrast, capital expenditure declined 2023, a central challenge will involve increasing by 37 percent. Amortization payments for Ukraine’s rollover rates for domestic banks to eliminate the existing debt also add to financing needs, mostly for need for monetization and to reduce the associated domestic debt, as commercial debt (Eurobonds) and inflation risks. official external public and publicly guaranteed debt are subject to a two-year moratorium (agreed to after the invasion). Macroeconomic Risks Overview and Policy Recommendations Going forward, Ukraine will have to balance the In the near term, it is critical to maintain the stable need to sustain the war economy in the near term functioning of the war economy. This involves with the need to create conditions for a sustainable identifying opportunities to finance the elevated economic recovery in the future. The authorities fiscal deficit—driven by the need to ensure defense have deployed resources to sustain essential and social expenditure during a period of reduced public services (including social transfers) while tax collection—and debt amortization. Annual debt maintaining broadly sound macroeconomic policies service payments (interest and amortization) remain to avert the most immediate fiscal, monetary, and high in 2023 at US$18 billion equivalent (Figure 15). financial sector risks of the wartime economy. Yet As of March 2023, Ukraine will at least US$3 billion Ukraine faces difficult decisions on how to fund equivalent per months to close its fiscal deficit and other activities, including emergency restoration of meet debt repayment obligations. Any suspension or critical infrastructure. Additional compression of delay in external funding may lead to broad negative social expenditures could risk breaking the social economic and social consequences. Continued contract, already stretched to the limit amidst rising reliable foreign grant and loan inflows are an poverty and unemployment. At the same time, a essential lifeline, as they help meet financing needs, successful transition toward a sustainable economic balance the current account, and provide a lever for recovery will depend on a combination of targeted Ukraine to control inflation. public investments to restore critical assets and policy interventions that reduce risks for donors and In the medium term, Ukraine will need to set the private investors. necessary conditions for a sustainable economic 34 MACROECONOMIC IMPACTS Figure 15. Fiscal financing needs and sources in 2022 by source (US$ billion) 12.5 7.7 32.2 -19.2 -24.9 31.1 -40.5 Debt service Military Non-military expenditure External financing Domestic revenue Domestic borrowing NBU monitization Expenditure Source: World Bank estimates based on Ministry of Finance (MoF) data. recovery in the future (Figure 16).32 The RDNA2 sector may need capitalization to offset losses identifies US$14.1 billion equivalent in priority incurred during the war. Ukraine will not be able expenditure to meet reconstruction and recovery to cover immediate and long-term reconstruction needs in 2023, of which US$9.3 billion equivalent needs without coordinated donor support. While have a direct government spending implication. Of international financing support is vital, Ukraine’s this, US$3.3bn equivalent are already included in the government needs to ensure transparency and budget, including US$1.6 billion equivalent through accountability of capital expenditure to bolster donor allocated budget expenditures and US$1.7 billion support as well as private sector participation. equivalent through the fund for the liquidation of the consequences of the invasion (“Damage Liquidation Figure 16. RDNA2 priorities for government fund”). A reprioritization of existing projects could expenditure in 2023 (US$ billion equivalent) potentially provide additional resources. The remainder can be met either by additional donor financing, the private sector or through SOEs, 9.0 8.0 7.8 potentially facilitated through a donor or government US$ bn. equivalent guarantee. As such, the RDNA2 identifies a total of 7.0 US$ 10.8 billion equivalent for additional support 6.0 needs executed by government (US$6 billion 5.0 5.1 equivalent) and non-government entities (US$ 4.8 4.0 billion equivalent). 3.0 2.0 1.7 1.5 Attracting this additional funding is critical, because 1.0 0.9 if Ukraine’s productive capacity is not sustained 0.0 1.0 0.6 or even boosted during the war, the country risks Capital Current settling into a situation of low or no growth and expenditure expenditure facing huge social challenges once the war ends. Existing plan Liquidation fund Public intervention may also be needed to restore Donor opportunities private assets, including housing. Productive sectors such as agriculture may require additional public Source: World Bank estimates based on MoF data. financing for recovery and the banking and financial Note: US$ equivalent using the RDNA2 exchange rate. 32 For consistency with the report, this section uses the RDNA2 exchange rate of 1US$ = UAH 36.5686. 35 HUMAN IMPACT ASSESSMENT / VULNERABLE GROUPS 77-year-old Hanna spends her nights at a collective centre for displaced people in Chernihiv but comes back each morning to her yard where IOM’s team is currently rebuilding her house. Photo IOM Viktoriia Zhabo. 36 HUMAN IMPACT ASSESSMENT / VULNERABLE GROUPS Figure 17. Number of registered IDPs in Ukraine (million), March 25–February 13, 2023 March 25, 2022 April 1, 2022 May 1, 2022 June 1, 2022 July 1, 2022 August 1, 2022 September 1, 2022 October 1, 2022 November 1, 2022 December 1, 2022 January 1, 2023 February 24, 2023 Registered IDPs, total IDPs displaced after February 24, 2022 Registered for the first time since February 24, 2022 Source: Ministry of Social Policy of Ukraine, “Dynamics of Key Indicators That Characterize the State of Registration, Re‑registration and Record Keeping of Internally Displaced Persons for the Period of Martial Law.” Russia’s invasion has affected all Ukrainians, Displaced Persons and Returnees whether directly or indirectly. According to the Office of the Prosecutor General of Ukraine, as of February The UN High Commissioner for Refugees (UNHCR) 22, 2023, the invasion has led to the death of 9,655 estimates that 8.1 million people are displaced civilians, including 461 children; has injured 12,829 across Europe as of the end of February 2023.35 civilians, including 926 children; and has been the According to the International Organization for occasion of more than 68,000 war crimes, including Migration (IOM), an estimated 5.4 million people 2,600 committed against children.33 The Office of the were internally displaced within Ukraine as of the Prosecutor General is also investigating 171 cases of end of January 2023, a decrease from 5.9 million sexual violence; this figure includes violence against as of December 5, 2022.36 The estimated number of 39 men and 13 minors, including one boy.34 The World internally displaced persons (IDPs) in Ukraine has Health Organization (WHO) estimates that up to 10 been steadily declining since August 2022. However, million Ukrainians (or a quarter of the population) the number of individuals officially registered as are at risk of some form of mental disorder, ranging IDPs with the Ministry of Social Policy has been from anxiety and stress to a more severe condition. increasing since February 2022, reaching a peak of For children who have become orphaned since slightly under 4.9 million in December 2022; after February 2022 or due to other circumstances before this the numbers have very slightly decreased that time, the government is currently supporting (Figure 17).37 Protracted displacement is becoming 24,613 families and facilities to provide care. 33 Government of Ukraine, press conference on the work of the prosecutor’s office, February 22, 2023, Link. 34 First Lady of Ukraine Olena Zelenska referred to this work by the Prosecutor General’s Office in her remarks during the Uniting for Justice conference, March 4, 2023, Link. 35 UNHCR Operational Data Portal for Ukraine, Link. 36 IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January 2023),” Link. 37 Whereas the IOM survey is an estimate of the total number of IDPs based on a survey of the population, the number of individuals registered with the Ministry of Social Policy is an actual number of individual registered to receive support from government as a result of their situation of displacement. HUMAN IMPACT ASSESSMENT / VULNERABLE GROUPS 37 more prevalent, and 58 percent of all IDPs had been the families of illegally detained Ukrainian citizens. displaced for six months or more according to the Altogether, 1,448 people released from captivity and January 2023 IOM report. 462 families of persons who were, or are, in captivity received one-time cash assistance of UAH 100,000.41 Displaced persons continue to face similar challenges over time, which partly differ from the The number of collective centers across Ukraine challenges faced by the overall population and by has increased from 160 in 2021 to 7,200, with people who have returned to their places of origin. capacity to host almost 500,000 people.42 These Seventy-five percent of IDPs need cash support collective centers are based in educational or compared to 62 percent of the general population physical education/sports institutions, health and 59 percent of returnees. Around one in four camps, and sanatoriums belonging to communal IDP respondents (24 percent) stated that monthly owners (53 percent), state owners (28 percent), and livelihood cash assistance for IDPs was their primary private owners (19 percent). Older persons, persons source of household income. While the share of with disabilities, and female-headed households households with insufficient food consumption are the most frequent users of the centers. Among increased among both displaced and nondisplaced collective centers in all oblasts, the reported top- people over 2022, the gap between the two groups has three priority needs were generators (67 percent), widened since the beginning of the winter season. In food (35 percent), and kitchen appliances (25 the fourth quarter of 2022, the share of households percent); centers also needed washing machines or with insufficient food consumption was around one in driers (22 percent) and repairs to water or sanitation four for nondisplaced people but was one in three for systems (20 percent). displaced people.38 Finally, according to the January 2023 IOM General Population Survey, 17 percent of IDPs require accommodation, compared to 4 percent Gender-Specific Impacts of the general population and 3 percent of returnees. Among those receiving State Employment Service Given that IDPs predominantly rent housing or support with the status of unemployed, the majority stay with relatives and friends, only 18 percent of were women (61 percent in December 2022 and IDPs need construction supplies, compared to 26 68 percent in January 2023). According to the IOM percent of the general population and 23 percent of General Population Surveys, the share of male IDPs returnees.39 relying on regular wages as the main source of income declined between August 2022 and January The National Information Bureau40 has reported 2023, from 50 percent to 38 percent. Among female that as of February 2023, the total number of IDPs, the share is only 25 percent in January 2023. In deported and illegally displaced citizens of Ukraine addition, female IDPs rely more frequently than male was 143,239, including 16,221 children. Since IDPs on monthly assistance (29 percent versus 10 the first weeks of the invasion, 165 humanitarian percent). As of August 2022, larger shares of female corridors have been organized, through which more IDPs than male IDPs reported reducing food and than 350,000 civilians—mostly women, children, and health expenditures in their households as a coping older persons—were evacuated between March and strategy for financial distress. Male IDPs were more May 2022. In 2022, the Ministry of Reintegration of likely to mention labor market coping strategies, Temporarily Occupied Territories transferred more including accepting a low-paid job (24 percent) or than UAH 190 million to those in captivity or formerly lower- qualified job (23 percent). In a November in captivity. More specifically, the Ministry directed 2022 survey, the higher prevalence of health-related UAH 144.8 million to persons who were released coping strategies among female IDPs was found to from captivity. Another UAH 46.2 million went to apply to returnee and nondisplaced women as well.43 38 World Food Programme, “Ukraine Food Security Trend Analysis: Key Trends 2022 (February 2023).” 39 IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January),” Link. 40 The bureau was established in March 2022; see Cabinet of Minister Decree #228-р as of March 17, 2022, Link. 41 As of October 2022, 413 families had received payments, and an additional 49 additional families of individuals who were in captivity have received payments as of February 2023 according to the Ministry of Reintegration of Temporarily Occupied Territories, Link. 42 UN OCHA Camp Coordination and Camp Management (CCCM) as of February 11, 2023, Link 43 IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January 2023),” Link. 38 HUMAN IMPACT ASSESSMENT / VULNERABLE GROUPS In October 2022, a Regional Gender Task Force implies that the partners of Lesbian, Gay, Bisexual, found that pregnant and breastfeeding women, Transgender, Queer, and Intersex (LGBTQI+)48 young single women, and women from minority soldiers cannot visit their loved ones in the hospital groups (such as Roma and stateless women) when they are wounded or retrieve their bodies are particularly vulnerable to protection risks, when they have fallen.49 gender-based violence, and security risks during displacement.44 As of November 2022, 64 percent of collective center residents were female. In 70 Persons with Disabilities percent of assessed collective centers, bathrooms In April 2022, the UN Committee on the Rights of and showers lacked separation and security, Persons with Disabilities warned that 2.7 million increasing the risk of gender-based violence, sexual persons with disabilities in Ukraine were at risk of exploitation, and abuse. An October 2022 survey being abandoned in their homes or in residential by IOM on human trafficking revealed that one in care, with “no access to life-sustaining medications, two Ukrainians—53 percent of women—are ready oxygen supplies, food, water, sanitation, support to accept at least one risky job offer, which could for daily living and other basic facilities.”50 The task lead to exploitation or violence across all population of caring for persons with disabilities has increased groups. An estimated 46,000 Ukrainians were dramatically as casualties mount from combat, land trafficked during 2019–2021, 29,000 abroad and mines, and attacks on civilians. 17,000 in Ukraine. This situation is expected to have been exacerbated since February 2022.45 As of January 2023, roughly 1.3 million IDPs (25 percent of the total 5.4 million IDPs) report having Massive and protracted displacement and one or more household members with a disability.51 conscription into military service have caused The lack of accommodations to meet the needs of gendered impacts, led to the separation of families,46 IDPs with disabilities exacerbates their vulnerability, and increased the size of Ukrainian households. adding to the challenges of displacement. A majority Many women have become the sole breadwinners (73 percent) of respondents to a survey on bomb and caregivers in their families, putting them in a shelters near their residences indicated the absence vulnerable financial and social position. There has of accessible bomb shelters.52 Accessibility of the also been an effect on family composition: according newly available modular housing for IDPs is a growing to IOM, the average size of the Ukrainian household concern. A study by civil society organizations has increased since February 2022 (among host, IDP, League of Strong and Help Age International and returnee populations), likely due to the reunion identified noncompliance on 10 out of 16 minimum of the extended family members.47 However, the requirements for accessible shelters developed by absence of same-sex civil partnerships in Ukraine CBM International.53 44 Regional Refugee Response for the Ukraine Situation, “Making the Invisible Visible: An Evidence-Based Analysis of Gender in the Regional Response to the War in Ukraine,” October 2022, Link. 45 IOM, “National Survey on Migration, Human Trafficking and Other Forms of Exploitation,” Link. 46 More than a third of Ukrainians reported separation from their family, based on a SHARP, Wave 1, 2022 survey (pending publication). 47 The IOM reports that the average household size for IDP families increased from 3.21 as of October 27, 2022, to 3.30 as of January 23, 2023. This is in contrast to the average household size for all of Ukraine in 2021, which was 2.60. IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January 2023),”Link. 48 Social tolerance toward minorities and marginalized groups, including LGBTQI+, seems to have increased in 2022. The tolerance score for LGBTQI+ was 5.1 out of 10 in 2022 compared to 3.7 out of 10 in 2021; see “Social Cohesion in Ukraine Part II: Towards a Tolerant, Cohesive and Inclusive society,” 2022, Link. 49 See Berghof Foundation, “It Will Be Harder to Deny LGBTQI+ Members of the Military Equal Rights After They Have Risked Their Lives for the Country,” February 22, 2023, Link. 50 Cited in European Parliament, “Russia’s War on Ukraine: People with Disabilities,” November 2022, Link. 51 IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January 2023),” Link. 52 National Assembly of People with Disabilities Ukraine, “Analytic Report on the Results of the Survey on the Access of People with Disabilities to Various Types of Aid and Services Provided at their Permanent Places of Residence During the Wartime,” Link. 53 HelpAge International, “Finding Housing for People with Disabilities Who Are Fleeing War: Humanitarian Needs of Men and Older Women among IDPs in Lviv and the Region” (in Ukrainian), October 2022, Link. HUMAN IMPACT ASSESSMENT / VULNERABLE GROUPS 39 Veterans and Their Families According to the UVF survey, most veterans plan to return to their previous workplace after the The number of veterans as of January 2022 was completion of their service. However, a 2021 IREX between 851,068 and 896,568, according to the study on veteran reintegration showed that more official estimates of the Ministry of Veterans than a quarter of veterans’ pre-deployment jobs Affairs. The share of women among veterans were not secured for them; even among those who was estimated at 9 percent. While official data on understood their jobs to be secure, only 70 percent combatants and veterans who have participated in were allowed to return. Among female veterans, the war since February 2022 are not available, a only 45 percent were allowed to return.55 survey administered by the Ukrainian Veteran Fund (UVF) in August 2022 found that nearly 60 percent of The UVF survey found that 17 percent of veterans were in active service, having returned to respondents were interested in psychological help, serve in the Armed Forces of Ukraine following the and 38 percent of the surveyed family members invasion.54 The Ministry of Veterans Affairs expects of veterans were in need of it. Conversely, only the total number of veterans to triple to about 3 14 percent of veterans and their family members million at the war’s end. indicated that they used psychological rehabilitation services.56 According to the SCORE (2021) study, In the UVF survey, respondents identified the challenges that compound mental health issues following needs as the most urgent: support to for veterans include the complexity of returning to veterans’ family (27 percent), help with housing (24 civilian life after combat, the inaccessibility of health percent), legal support (22 percent), psychological care systems, and the lack of a comprehensive support (17 percent), and medical assistance (15 psychosocial rehabilitation policy.57 It may be percent). Among surveyed veterans, 23 percent assumed that the need for mental health services indicated that they did not require any special is significantly underreported, and that information support. Requests for support to veterans’ families regarding the availability of such support is limited. primarily related to the need for information on benefits and psychological support (39 percent and Recovery Needs, Including Building 38 percent respectively). Additional areas of support to families include financial support (21 percent), Back Inclusively legal support (20 percent), and assistance with housing (15 percent). Priorities to address the needs identified for each impacted group described above is included in the “Towards Recovery and Reconstruction” Chapter. 54 The survey was conducted online among 469 veterans of the war in July–August 2022. UVF, “Portrait of a Veteran in Russian-Ukrainian War 2014–2022 pp.,” 2022, Link. 55 IREX, “Veterans Reintegration Survey Results on Veterans’ Current Employment Conditions, 2021, Link. 56 UVF, “Portrait of a Veteran in Russian-Ukrainian War 2014–2022 pp.,” 2022, Link. 57 SCORE, “Reintegrating ATO & JFO Veterans ,” 2021, Link. 40 SOCIAL SECTORS Donetska Oblast. Photo by Yevgen Honcharenko, Donetsk Oblast State Administration. SOCIAL SECTORS 41 HOUSING Context damaged, the toll has grown to an estimated 1.4 million units. An estimated 135,000 single-family houses have been damaged as well and account for Housing has been one of the sectors most affected around 9 percent of the total affected housing sector by the war. Ukraine had a total of around 18 million assets. The number of damaged dormitory units residential units prior to the war. Residential units also increased, from 13,312 in June 2022 to 39,040 are in multifamily apartment buildings, single- units. The most significant numbers of damaged family houses, and dormitories, with considerable residential units are in Donetska, Kharkivska, variation across urban and rural areas. Multifamily Luhanska, Kyivska, and Mykolaivska oblasts. Over apartment buildings are predominant in urban one-third of the damaged units are destroyed areas and cater to almost 67 percent of the urban (499,056 units), while two-thirds are partially population, while in large cities, this share increases damaged; of partially damaged units, 285,257 to 79 percent. Single-family houses, which include have minor damage (up to 10 percent damage) and individual homes, dachas, garden houses, and 787,779 have moderate damage (between 10 percent country houses, are largely located in rural areas. and 40 percent damage). In cities, single-family housing is limited to individual houses and garden houses and found only in areas Losses in the housing sector are estimated over zoned specifically for individual and blocked houses. US$17 billion, reflecting the cost of demolition, Over 80 percent of multifamily apartment buildings debris removal, and temporary rental, as well in Ukraine was constructed during the Soviet era as mortgage and property tax losses. Net rental and is severely aging, and less than 20 percent was losses are estimated at US$11.4 billion. Due to the constructed after 1991. The aging building stock in increase in the volume of damage in Ukraine, the Ukraine has also been contributing to high energy total estimated cost of demolition and removal of consumption, as aging soviet era buildings are rubble since June 2022 has increased by 20 percent. non-thermo-modernized, and do not comply with The loss estimation for the rental market has high energy-efficient standards. Almost 94 percent of the uncertainty given the market’s informality. Property housing in Ukraine is privately owned, and only 3.5 tax losses are calculated at US$685 million, and bank percent of households live in private rental housing. losses related to mortgages at US$1.1 billion; these In Ukraine, 93.7 percent of the housing stock was figures reflect the increase in the share of completely private as of 2013, a reflection of the privatization destroyed assets across the asset typologies. of housing stock that took place in the 1990s. As of 2013, only 3.4 percent of households lived in rental housing, though this number may not capture the Reconstruction and Recovery Needs, actual rental market. Intention surveys of both Ukrainian refugees and IDPs show that after safety Including Build Back Better and security concerns, access to adequate housing The total needs for the housing sector are estimated is the second most prominent obstacle to return.58 to be around US$68 billion. Of these, US$31.5 billion is needed for the immediate and short term Damage and Loss Assessment and around US$37.1 billion for the medium to long term. The primary focus in the first year should be The total cost of damage to the housing sector on rapid repairs, along with planning, organization, is estimated to be over US$50 billion (Table 5). and coordination between national and local levels Multifamily apartment units account for the largest for ensuing phases. These phases will include the share of damage at over 7 percent; since June 2022, launch of planning for large-scale reconstruction of when around 564,000 residential units were reported severely damaged multifamily apartment buildings, 58 UNHCR, 2023, Ukraine Situation - Regional Refugee Response: Lives on Hold: Intentions and Perspectives of Refugees from Ukraine #3, Link.; UNHCR, 2023, Lives on Hold: Intentions and Perspectives of Internally Displaced Persons in Ukraine, Link. 42 SOCIAL SECTORS which account for the largest share of the damage living in inadequate shelter is calculated at US$112 and which housed large numbers of Ukrainian million. Demolition and debris removal is estimated families. The short term will expand activities and at US$161 million (Table 7). It is also essential to seek to reach households and communities both in develop a housing recovery strategy, including a terms of planning and direct reconstruction support housing recovery financial strategy, and to support (Table 6). local self-governments (hromadas) in building the capacity to assume their legislated roles in the For short-term activities, most of the funds will selection, support, verification, and implementation be directed to repair and reconstruction, rental of housing repair and reconstruction investments. subsidies, organizational arrangements, technical assistance, and debris removal. This will allow the recovery phase to begin by refurbishing technically Limitations and Recommendations for and economically viable buildings and demolishing Future Assessments noncompliant buildings. In parallel, urban planning for short- and medium-term recovery should be The asset typology in the housing sector remains promoted. The Ukrainian national urban planning unchanged since June 2022. The assets were broken system requires a wide and complex structure of down by the type of residential units, i.e., apartments urban planning documentation (i.e., comprehensive units (in multifamily apartment buildings), single- recovery plans, general schemes of settlements, family houses, and dormitory units. The single- and comprehensive plans of the spatial development family house group also includes dachas and garden of the territory) and meeting these requirements will houses, which are predominantly located in rural also entail significant funding. areas; a portion of these functioned as secondary homes, which significantly impacts the direct effects The medium- to long-term reconstruction needs on households. The apartment units were divided will be linked to the extensive restoration and into two groups: units in the predominant (and aging) construction, which will be associated with major Soviet era multifamily apartment buildings (pre- funds. The build back better coefficient for the 1991), which are estimated to constitute 88 percent restoration and construction needs reflects the of the apartment building stock; and units in more large share of obsolete and energy-inefficient Soviet recent post-Soviet multifamily apartment buildings era buildings. This stage will also include time- (post-1991), which are estimated to account for 12 consuming activities with long preparation phases, percent of the apartment buildings in the country. i.e., comprehensive plans for the spatial development of territories and implementation of the mid- to The ongoing fighting makes it difficult both to long-term strategies. It is also likely that for some assess the level of damage (it is likely that these territories, property rights management and/or numbers will be obsolete by the time this report is environmental restoration will be time-consuming. published) and to estimate the costs linked to the needs. In addition to the fact that the war is severely hindering access to reliable granular information, 2023 Recovery and Reconstruction the longer it continues, the more difficult it is to Implementation Priorities accurately assess the impacts and associated costs for rebuilding. To effectively conduct designed priority activities for 2023, the housing sector will likely require In terms of recommendations, a national program some US$1.9 billion. Considering the percentage for the repair, reconstruction, and recovery of of damaged and destroyed housing units, 2023 the housing sector is critical. Such a program will need to focus on the ongoing light and medium will align all different stakeholders under a unified repairs, as the fastest way to make these assets umbrella, one that could support Ukraine’s agenda available in the housing market and provide safe for European Union accession, facilitate return of shelter for IDPs, people who have remained in IDPs and refugees, and ensure a healthy recovery of their damaged homes, and returnees. Temporary the housing sector. accommodation for to IDPs, returnees, and families SOCIAL SECTORS 43 Table 5. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 28.8 1.0 36.6 Chernihivska 1,833.9 84.6 2,329.9 Dnipropetrovska 1,060.2 23.0 1,346.9 Donetska 15,689.8 1,466.9 19,933.5 Kharkivska 14,022.8 1,257.2 17,815.5 Khersonska 1,136.9 66.9 1,444.4 Khmelnytska 21.8 0.1 27.7 Kirovohradska 2.0 0.2 2.6 Kyiv (City) 950.6 27.3 1,207.7 Kyivska 4,857.2 344.6 6,171.0 Luhanska 6,742.0 577.6 8,565.6 Lvivska 11.9 0.1 15.2 Mykolaivska 2,216.1 45.3 2,815.5 Odeska 143.1 5.0 181.8 Poltavska 69.0 0.6 87.7 Rivnenska 6.8 0.1 8.6 Sumska 382.7 15.4 486.3 Ternopilska 2.8 0.3 3.5 Vinnytska 81.2 1.4 103.1 Volynska 0.5 0.0 0.6 Zakarpatska 5.6 0.1 7.1 Zaporizka 942.5 71.1 1,197.5 Zhytomyrska 174.7 5.3 221.9 Nationwide (no specific region) - 13,216.1 4,616.7 Total 50,383.0 17,210.1 68,626.9 Source: Assessment team. Note: - = not assessed for Chernivetska and Ivano-Frankivska. Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. 44 SOCIAL SECTORS Table 6. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Technical assistance for immediate and short-term repairs and 11.3 3.8 15.0 stabilization Reconstruction Historic housing (not included here) - - - needs Rental support (VA and other) 2,333.3 2,041.6 4,374.9 Demolition and debris removal 2,923.8 1,070.2 3,994.0 Repair and reconstruction cost 25,672.7 33,240.2 58,912.9 Housing assessments 468.3 643.4 1,111.6 Service delivery Organizational arrangements 20.0 18.3 38.3 restoration needs Coordination and technical assistance 94.3 86.0 180.3 Total 31,523.5 37,103.4 68,626.9 Source: Assessment team. Note: - = not assessed. Table 7. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Current and major repairs of individual and multi-apartment buildings, 1436.3 including through the compensation mechanism Development of design and estimate documentation for capital repairs 186.6 of individual and multi-apartment buildings Reconstruction needs Development of programs for the comprehensive restoration of the territories of territorial communities and Comprehensive plans for the 17.0 development of the territories of territorial communities Dismantling and removal, disposal of demolition waste, including 161.1 purchase of special equipment Service delivery Technical inspection of individual and multi-apartment buildings 15.0 restoration needs Costs for temporary accommodation of internally displaced persons 112.0 Total 1,928.0 Source: Assessment team. SOCIAL SECTORS 45 EDUCATION AND SCIENCE Context destroyed, amounting to around 10 percent of all education institutions (across all levels of education) in Ukraine. The most affected facilities are in After a year of war, Ukraine’s education and science eastern part of Ukraine: 64 percent of all education sectors have recorded substantial damage and institutions in Donetska Oblast and 38 percent in losses, including losses in learning and scientific Kharkivska Oblast are either damaged or destroyed outcomes and in the psychosocial well-being of (Table 8). These estimates do not include the students, educators, and researchers. Schools destruction of educational equipment, so the true have progressively resumed in-person education, cost of damage is likely higher. but only under the condition that they are equipped with bomb shelters. Thus, a variety of schooling Ukraine’s education sector has sustained at least modalities—in-person, online, and blended—are in US$0.8 billion in losses. For example, the war has place, with wide variation depending on the local led to decreased tuition collection for professional security situation. Returning to in-person education pre-higher and higher education institutions and to may improve learning and well-being, but remote additional costs for education institutions that are learning will remain a defining feature for many used as IDP shelters or community centers. Also, students and will likely further exacerbate learning some teachers have been unable to collect salary losses given recurrent power outages and air sirens. payments because they are in areas not under government control or because of technical issues For years, the Ukrainian education sector has with transferring funds from local budgets. Finally, been struggling to adjust to changing demographic the government has incurred additional expenses dynamics, with a consistently declining student related to debris removal and demining of damaged population over the past decades. At least 2 million education facilities. children have left Ukraine, in addition to a significant number of educators and researchers, and many are expected to remain abroad in other countries Reconstruction and Recovery Needs, in Europe, contributing to brain drain and future demographic challenges for the country. Prior to the Including Build Back Better war, Ukraine’s learning achievement performance The reconstruction of damaged education was fairly strong, particularly given its income level; institutions is expected to cost US$7.8 billion but it had not yet reached the levels of achievement with the largest portion required for secondary observed in the EU. The war’s impact on education schools (Table 9). The reconstruction process must will negatively affect Ukraine’s human capital, with comply with the latest safety, sustainability, and Harmonized Learning Outcome scores potentially quality standards established by the government. declining from 481 points to 420 points.59 This This requirement entails equipping all institutions translates to future earnings losses estimated to be with bomb shelters, readying them for winter (e.g., in the trillions of dollars. providing generators), and rehabilitating them with power/internet connectivity and modern educational Damage and Loss Assessment equipment. Reconstruction of damaged assets must also align with demographic trends. In fact, The war has caused at least US$4.4 billion in the future education network will need to take into damage to education institutions across Ukraine. account the patterns of internal displacement and As of February 24, 2023, at least 2,772 education returns to Ukraine to ensure its sustainability and institutions were partially damaged and 454 were alignment with previous optimization efforts. 59 World Bank estimates of Harmonized Learning Outcomes are based on school closures and reduced effectiveness of online learning. 46 SOCIAL SECTORS The costs of restoring education service delivery 2023 Recovery and Reconstruction Priorities are estimated at US$1.4 billion. While 68 percent of all education institutions have been retrofitted with bomb shelters, a large share of the needs remain dedicated to their construction and renovation. The estimated cost for ensuring safe access to In the interim, provisional measures—such as education in 2023 is US$466.8 million (Table 10). the organization of digital learning centers and The government should prioritize the return of in- school transportation services—are crucial to person classes where the security situation allows, provide in-person learning. Measuring learning particularly for younger children. To achieve this, renovation of partially damaged assets in areas losses to provide evidence for catch-up programs further away from the areas with active fighting and psychosocial support is also necessary at should be prioritized, as well as the reconstruction all educational levels. Finally, authorities must of hub schools in combination with the organization prioritize the provision of high-quality education by of transportation, as they play an effective role in improving learning platforms, supporting teachers optimization of the school network and ensuring to deliver effective lessons, and continuing reforms. rational use of resources. Additionally, establishing This includes the modernization of vocational and shelters is essential to facilitate in-person education higher education curricula to respond to the needs and minimize learning losses. In regions closer to of the post-war economy, as well as the restoration the frontline, where education institutions cannot of Ukraine’s scientific potential to spur growth and open for face-to-face classes, the priority should be limit brain drain. Over the medium-term, this will to establish digital learning centers with shelters, entail development of university research facilities, which can provide students with safe access to research hubs with foreign universities, and online education and opportunities for socialization. academic mobility programs. Key 2023 activities for ensuring quality in the In line with Ukraine’s National Recovery Plan, education process will require an estimated recovery and reconstruction priorities for the US$130.8 million. In addition to protecting teachers’ education sector include ensuring safe access to salary payments and offering other forms of learning and ensuring the quality of the educational support to mitigate further loss of teachers, it will process. It is important that Ukraine continues pre- be important to provide psychosocial support to war reforms aimed at improving equity, resilience, both children and education personnel, particularly and efficiency in education. This will provide an IDPs and those located in areas close to fighting. avenue to transition from emergency interventions Schools should also focus on curricula aimed at the to longer-term recovery efforts. It will also acquisition of foundational knowledge, the provision require close coordination between the Education of digital devices and learning materials, as well as on Cluster and education sector working groups as nonformal academic catch-up programs and other well as better access to timely data for planning. targeted interventions to compensate for learning Furthermore, inter-sectoral coordination for vital losses. This will be key to compensate for learning services including mental health and psychosocial losses, but also to modernize teaching methods and support is crucial to respond to the immediate needs initiate the development of an integrated education and to support the recovery of the education sector. model for the recovery. Implementation of key activities for recovery will necessarily involve local actors in a major role. Limitations and Recommendations for Given the wide variation across localities—e.g., Future Assessments population dispersion, IDP concentration, extent of infrastructure damage, modalities of instruction—a Little information on damage to research multifaceted recovery approach will be needed. equipment was available, and calculations using The reconstruction and recovery process should be the RDNA2 methodology do not reflect the true aligned with the ongoing education decentralization extent of estimated learning losses. Data on reforms: while the Ministry of Education and Science research infrastructure and especially on specialized will provide guidance for key reforms, local authorities and scientific equipment are not comprehensive, should be granted the necessary responsibilities and making it harder to estimate the needs for restoring mechanisms for planning and implementation. Ukraine’s research capacity. Also, the RDNA2’s time- bound methodology limits the integration of learning losses into the calculations, since their effects are accrued throughout an individual’s working life. SOCIAL SECTORS 47 Table 8. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 9.6 14.1 121.7 Chernihivska 152.0 19.8 382.2 Chernivetska 0.0 13.6 105.7 Dnipropetrovska 220.1 38.6 496.8 Donetska 994.0 64.7 1,846.6 Ivano-Frankivska 0.0 14.0 105.7 Kharkivska 834.7 64.6 1,600.2 Khersonska 294.4 35.0 636.8 Khmelnytska 5.3 14.0 114.8 Kirovohradska 12.1 13.1 127.0 Kyiv (City) 113.3 106.7 301.6 Kyivska 250.6 42.9 596.8 Luhanska 284.7 28.0 615.1 Lvivska 1.4 17.9 108.4 Mykolaivska 350.8 32.5 732.3 Odeska 29.2 26.4 156.7 Poltavska 16.9 14.8 143.6 Rivnenska 2.3 13.8 109.7 Sumska 136.4 18.7 353.9 Ternopilska 0.0 13.7 105.7 Vinnytska 12.3 14.5 126.8 Volynska 0.0 13.9 105.7 Zakarpatska 0.0 13.5 105.7 Zaporizka 578.3 107.3 1,195.9 Zhytomyrska 104.6 15.6 288.1 Nationwide - 37.0 97.4 Total 4,403.2 808.9 10,680.6 Source: Assessment team. Note: - = not assessed. Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. 48 SOCIAL SECTORS Table 9. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Preschool education 495.8 743.7 1,239.6 School education 1,589.3 2,383.9 3,973.2 Extra-curricular education 126.2 294.6 420.8 Vocational education 313.5 731.6 1,045.1 Professional pre-higher education 123.6 288.3 411.9 Reconstruction Higher education 153.7 358.6 512.3 needs Specialized education 19.1 44.6 63.7 Special education 21.4 49.9 71.2 Adult education 1.7 3.9 5.6 Research infrastructure 30.4 71.0 101.4 Youth centers 1.1 2.6 3.8 Ensuring safe access to education for 976.2 823.9 1,800.0 all Service delivery Tackling learning losses and trauma 241.2 241.2 482.5 restoration needs Providing quality education at all 164.9 384.7 549.6 levels Total 4,258.1 6,422.5 10,680.6 Source: Assessment team. Table 10. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Preschools 49.7 Secondary schools 167.8 Reconstruction vocational education and training institutions 26.4 needs Pre-higher education institutions 10.3 Higher education institutions 15.2 Construction and renovation of bomb shelters 138.6 Acquisition of additional school buses 27.3 Establishment of safe digital learning centers 31.5 Provision of digital devices for teachers and students 24.7 Service delivery Provision of mental health and psychosocial support for students and restoration needs teachers 38.6 Teacher training and education materials to focus on foundational 30.8 learning Non-formal catch-up programs or accelerated learning for vulnerable 36.7 students Total 597.7 Source: Assessment team. SOCIAL SECTORS 49 HEALTH Context centers registered). Additionally, there were 3,118 ambulances prewar nationwide, of which 650 (20.8 percent) were damaged or stolen. The actual level of Since February 24, 2022, there has been a massive damage is likely higher, given incomplete or missing detrimental impact not only on mortality and reports on private sector assets as well as damaged disability but also on the availability and accessibility facilities located in the territories temporarily not of health services and infrastructure. The damage under government control. and losses have increased by approximately 79.2 percent and 157.7 percent, respectively, since June The total loss was estimated conservatively at 1, 2022. The estimated recovery and reconstruction US$16.5 billion, including the removal of debris and needs have increased by 8.6 percent over the same demolition of the destroyed facilities, loss of income period. Although resources are constrained, the of private providers, losses from the financing of health system in Ukraine has shown tremendous facilities, and additional losses to the population’s resilience since the beginning of the war, and national health due to forgone care and increased public health institutions have continued to function. But health threats. Under the standard approach for the risks for the population will escalate without the current estimate, assumptions for the removal targeted and urgent investments well aligned with of debris and demolition remained the same as in the health reform visions of the Government of RDNA1. A share of additional expenditures paid under Ukraine. the Program of Medical Guarantees (PMG) to sustain health care providers’ activities and salaries is also Damage and Loss Assessment estimated as losses. The RDNA2 includes losses associated with the needed strengthening of the core The war has caused approximately US$2.5 billion essential public health functions. This new estimate in damage to the health sector infrastructure in includes increased expenditures and needs for Ukraine (Table 11). The Ministry of Health has been surveillance, preparedness, and response to health collecting data about damage to health facilities since emergencies, including increased expenditure for the war started. According to MoH registry, there water quality monitoring, immunizations, and control were 15,084 health facilities of different types and of select communicable diseases. As in the RDNA1, ownership, including 9,925 public facilities, in Ukraine the losses in population health were estimated before the war. Damage or destruction was reported using the DALYs concept.61 The RDNA2 estimates a in 15.9 percent of public facilities (1,574 facilities, loss of US$13.2 billion in DALYs, for 12 months since or a total area of 1,791,608 m2) as of February 24, the invasion and additional 18 months following, 2023; this represents nearly a tripling of the damage resulting in the estimated loss from additional health reported in RDNA1 (5.6 percent). The damage to burden more than tripled compared to RDNA1. health infrastructure is registered in 17 regions, and the largest share of damage is concentrated in the Donetska, Kharkivska, and Chernihivska oblasts. Reconstruction and Recovery Needs, Of the damaged facilities, 596 are pharmacies Including Build Back Better (37.9 percent of the affected facilities)60, 436 are general or mono-profile hospitals (27.7 percent of The total reconstruction and recovery needs are affected facilities and equivalent to 23.4 percent estimated at US$16.4 billion for the next 10 years of all hospitals registered), and 297 are primary (Table 12). Out of these, US$3.6 billion is required health care (PHC) centers (18.9 percent of affected to restore the health system and address increased facilities and equivalent to 4.3 percent of all PHC health needs in the immediate to short term. This 60 In November 2021, there were 22,816 pharmacies registered in Ukraine. More recent baseline data for pharmacies is not available. 61 Disability-adjusted life years (DALYs) assess overall disease burden, expressed as the number of years lost due to mortality and morbidity. One DALY represents the loss of the equivalent of one year of full health. 50 SOCIAL SECTORS amount includes the building of new infrastructure priority, especially in territories that have recently to replace destroyed facilities using the build back been returned to the control of the Government of better approach as well as the immediate upgrading Ukraine. Such investments will help speed up the and recovery of partially damaged facilities. The renovation of facilities damaged during the war and new facilities may be relocated to serve larger the reconstruction of outdated rehabilitation and catchment population groups, based on new models mental health facilities that require refurbishment of care. A destroyed general profile hospital can and upgrading. This amount also covers preparatory be rebuilt as a more efficient facility to serve a works and planning investments associated with minimum of 300,000 persons or, in some cases, major reconstruction and construction of facilities can be rebuilt as a specialized hospital that serves using the building back better approach. The number up to 750,000 persons. PHC centers, or PHC+62, also includes the following: a further increase in can be rebuilt as comprehensive PHC centers that financing of mental health services, including for provide multidisciplinary care as well as extended veterans and victims of gender-based violence; diagnostic capacity and basic emergency services. scale-up of rehabilitation services, assistive An additional US$12.7 billion is required for medium- technologies, and efforts to address the missed to long-term needs. Rehabilitation and mental health screening of non-communicable diseases; follow- services as well as PHC and access to essential up of people with chronic conditions; and scale-up medicines should be strengthened and scaled up to of child and adult vaccinations. Given that this is a address the impact of the war on the population of period of increased public health risks, increased Ukraine. The estimate of the need includes costs of focus on threats will be essential; this should include additional equipment to strengthen diagnostic and investments in appropriate epidemic surveillance, emergency services in hospitals within two ongoing preparedness, and response mechanisms, as well World Bank-financed projects, and a new project as increased monitoring of water quality and other providing US$500 million to support reconstruction environmental risks to health. and recovery. It is critical to systematically identify and address Limitations and Recommendations for disrupted services accumulated during the Future Assessments COVID-19 pandemic as well as since the invasion. There is a need to improve community-based The limited availability of reliable data sources health services, provide additional medicines in continues to be a challenge. The baseline data the Affordable Medicines Program,63 and expand relied on a single data source, the state registry of telemedical services. Major scale-up of services medical licenses. Although the registry is the most will require significant investments in building the comprehensive source, its data are incomplete, and capacity of medical staff and engaging additional lay approximations were used in the estimates. In the workers who can proactively seek to identify people future, however, the national e-Health system and in need of services. independent verifications are likely to be used to triangulate the data on health facilities. RDNA2 also excluded data on the damage in private facilities as 2023 Recovery and Reconstruction the data had not been updated since 2022. However, Priorities a survey of private sector providers is planned for 2023, and the findings will be reported in the course Of the short-term needs, an estimated US$543.6 of 2023 by the World Bank. Health losses were million is needed in 2023 (Table 13). Strengthening estimated using key areas of disease burden that are PHC as the foundation for people-centered services, most likely affected by the war. The methods may be along with making small-scale repairs to restore further refined in future assessments. health facilities’ functionality, should be an immediate 62 The expanded PHC model, or PHC+, will cover the original scope of services delivered in PHC, but will also offer a range of additional services, such as outpatient specialist care and ambulatory physical therapy. In addition, PHC+ facilities will provide participants with health check-ups and access to a range of disease management programs, while also offering patients access to a broader range of competencies than the basic PHC team, which consists of general practitioners, nurses, midwives, and, in some cases, physical therapists. 63 Affordable Medicines Program is a medicines reimbursement program for outpatient prescriptions, launched in 2017. SOCIAL SECTORS 51 Table 11. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 0.9 462.3 442.4 Chernivetska 0.0 302.4 339.4 Chernihivska 259.4 460.9 438.0 Dnipropetrovska 51.6 1,056.0 1,194.3 Donetska 785.8 1798.6 1,767.6 Ivano-Frankivska 0.0 458.9 515.1 Kharkivska 618.3 1,048.6 1,163.7 Khersonska 78.3 347.5 403.5 Khmelnytska 0.6 417.1 468.4 Kyiv (City) 69.0 1,710.7 1,144.8 Kyivska 101.3 802.4 713.3 Kirovohradska 0.0 351.9 344.2 Luhanska 188.2 914.1 854.4 Lvivska 0.0 841.3 944.5 Mykolaivska 211.0 391.1 475.1 Odeska 6.2 957.6 898.0 Poltavska 0.3 532.8 515.2 Rivnenska 1.5 387.8 435.6 Sumska 16.0 486.1 399.0 Ternopilska 0.0 346.9 389.4 Vinnytska 4.3 512.7 576.3 Volynska 0.0 346.8 389.4 Zhytomyrska 3.7 400.5 450.2 Zakarpatska 0.0 422.6 474.4 Zaporizka 57.8 650.1 640. 4 Nationwide 30.3 68.6 8.5 Total 2,484.7 16,476.4 16,385.2 Source: Assessment team. Note: - = not assessed. Loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. 52 SOCIAL SECTORS Table 12. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Demolition and debris removal 242.1 0.0 242.1 Investments to build new secondary care 535.9 4,823.3 5,359.2 facilities Investments to build new secondary care 266.6 2,399.8 2,666.4 facilities with centers of excellence Investments to reconstruct damaged 439.9 0.0 439.9 secondary facilities Investments to refurbish and equip 4.5 0.0 4.5 ambulance stations Reconstruction needs Investments to build new primary care 82.1 0.0 82.1 facilities Investments to reconstruct damaged 10.2 0.0 10.2 primary care Investments in the construction of new 0.0 495.0 495.0 rehabilitation centers Investments in the reconstruction of 84.8 763.3 848.1 rehabilitation centers Investments to upgrade specialized and 192.7 449.6 642.3 primary mental health centers Additional primary health care services 1,190.6 2,778.1 3,968.8 and medicines Health emergency preparedness and 59.9 139.7 199.6 response Service delivery Additional mental health needs 166.0 387.3 553.2 restoration Additional rehabilitation services 156.7 365.7 522.4 needs Education needs 113.3 0.0 113.3 Digitalization and telemedicine 60.0 140.0 200.0 Investments in emergency care 38.0 0.0 38.0 equipment Total 3,643.4 12,741.8 16,385.2 Source: Assessment team. Table 13. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Demolition and debris removal 48.4 Investments to reconstruct damaged secondary facilities 219.9 Investments to refurbish and equip ambulance stations 4.5 Reconstruction Investments to build new primary care facilities 16.4 needs Investments to reconstruct damaged primary care 10.2 Investments in the reconstruction of rehabilitation centers 42.4 Investments to upgrade specialized and primary mental health centers 9.0 Additional primary health care services and medicines 70.0 Health emergency preparedness and response 12.0 Additional mental health needs 20.0 Service delivery Additional rehabilitation services 20.0 restoration needs Education needs 22.7 Digitalization and telemedicine 10.0 Investments in emergency care equipment 38.0 Total 543.6 Source: Assessment team. SOCIAL SECTORS 53 SOCIAL PROTECTION AND LIVELIHOODS Context of previously employed refugees were working prior to the February 2022.68 In addition, in 2022 alone, the number of persons with disability status increased Ukraine is showing resilience in the face of the by at least 130,000 (as of December 1, 2022). Looking ongoing war, but the impact on social protection forward, the ILO projects only a minor improvement and livelihoods remains very large. Nearly 5.56 in the labor market situation for 2023. Assuming million formerly displaced people have returned the security situation will remain broadly the same home, 20 percent of them from abroad.64 However, throughout the year, employment growth is forecast the projected negative impact of the war is still at only 0.5 percent, which equals roughly 70,000 jobs significant. The incidence of monetary poverty in the country could return to levels observed 16 years In 2022, Ukraine spent around UAH 159 billion ago, pushing more than 7.1 million Ukrainians below (US$4.3 billion) on social assistance. This includes the poverty line and almost 3.7 million people into Guaranteed Minimum Income (GMI), HUS (Housing a state of “vulnerability to poverty.” While the labor Utility Subsidy), child and family benefits, disability market has improved since the analysis was carried and care benefits, benefits to IDPs, etc. Between out for RDNA1 (June 2022), the projected adverse June and December 2022, social assistance impact on the labor market remains immense. The expenditures amounted to around US$3.4 billion. International Labor Organization (ILO) estimates that A social assistance program for IDPs to cover employment in 2022 is 15.5 percent (2.4 million jobs) living expenses introduced in March 2022 provides below the prewar level.65 National surveys report monthly support to around 1.9 million beneficiaries that only 67 percent of those who were employed (as of December 2022). Total spending on social before the war still have a job.66 Moreover, some assistance for IDPs in 2022 was UAH 53.5 billion formally employed people are receiving reduced (US$1.46 billion), which includes US$1.26 billion paid labor earnings (as compared to February 2022) or not since June 2022. A wage subsidy program aimed at receiving earnings at all.67 Only about 40 percent of encouraging employers to hire IDPs was introduced people work as they used to before the war. In terms in March 2022. By the end of 2022, over 16,500 IDPs of employment by economic activity, the refugee had been hired under this program, with employers outflux is likely to have had a disproportionately receiving over UAH 200 million (US$5.7 million). In adverse effect on the workforce of Ukraine’s 2023, 23,000 IDPs are expected to be employed with wholesale and retail trade, education, and health and the support of this program.69 social services sectors, in which nearly 40 per cent 64 IOM, “Ukraine Internal Displacement Report: General Population Survey, Round 12 (16–23 January 2023),” Link. 65 ILO Monitor on the world of work. 10th edition. Multiple crises threaten the global labour market recovery. October 2022. Link. 66 Rating Sociological Group, “Legal Protection of Victims from the War Crimes of Russia (December 23–26, 2022),” February 2, 2023, Link. 67 Gradus Research Company, “Social Screening of Ukrainian Society During the Russian Invasion—The Twelfth Wave of the Study,” October 2022, Link. 68 ILO; Report on developments relating to the resolution concerning the Russian Federation’s aggression against Ukraine from the perspective of the mandate of the International Labour Organization; February 2023; Link. 69 Ibid. 54 SOCIAL SECTORS Damage and Loss Assessment Reconstruction and Recovery Needs, Damage in the social protection area mostly Including Build Back Better consists of destroyed or partially destroyed Restoration of jobs remains the key priority for infrastructure, such as residential care units, recovery. Permanently lost jobs will not be restored sanatoriums, or social service delivery centers. as part of reconstruction efforts, as they were lost As of December 2022, damage to facilities providing because businesses ceased to exist and because social services was continuing; 158 social protection there was a direct loss of the workforce. Nearly infrastructure assets were damaged or destroyed. 19 percent of current refugees do not currently The total amount of damage is about US$241 million intend to return to Ukraine,72 while according to (Table 14).70 the authorities, about 2 million people have been forcibly deported to Russia73 and may not be able to Total losses for the social protection and livelihoods come back. As of January 2023, among those who sector in Ukraine are estimated at US$65.7 billion. returned to their places of permanent residence, 34 These very large losses stem from the loss of jobs percent reported having income per one household and household income from wages, higher poverty, member per month equal to or below UAH 2,600 related increased expenditures under existing (≈ the subsistence minimum per one person per means-tested social programs, and additional month).74 The RDNA2 assessment estimates that needs for programs such as survivor’s benefits or about 10 percent (1.5 million) of all jobs may be lost programs related to disability. The government has permanently. Restoring these jobs would require implemented a blanket energy subsidy by freezing additional efforts and costs (through mobility grants, energy tariffs, which reduces losses that accumulate skilling programs, settling-in grants, or wage in social protection by shifting them to the energy subsidies and other types of support for employers sector, as a measure aimed to prevent further to re-establish production, markets, and supply increase of the vulnerability of the population in a chains, as well as to ensure access to needed skills situation when expansion of means-tested programs through return migration and immigration schemes). could become difficult. The cost of means-tested support is also expected to remain high during the reconstruction period, not The largest share of losses comes from the only to support workers who temporarily lost their permanent loss of jobs and workers. While ILO jobs, but because matching jobs and workers will estimates employment at 15.5 percent below the also incur costs (e.g., insertion schemes, mobility prewar level, of those employed prewar, 33 percent incentives and retraining, much of which requires (5.1 million) report losing their job in national polls, additional capacity of public employment services). while about 17 percent (2.6 million) report receiving Special programs are needed to bridge gaps no or partial labor earnings.71 This shows that a created by geographical mismatches and changes significant number of people while formally being in labor market needs due to structural change. employed, suffer large livelihood losses linked to The estimated needs in the social protection and the war. Losses stemming from social protection livelihoods sector amount to US$41.8 billion over 10 programs are estimated at US$4.2 billion. The years (Table 15). calculation of losses used the average monthly salary in Ukraine before the war (as of January 2022), US$534, and assessed the losses for 18 months. 70 For RDNA1 these numbers were respectively 56 infrastructure items and US$164.4 million of damages. 71 Calculation of losses uses the lowest number of people out of a job from the Rating Sociological Group and Gradus Research Company polls; the number of people receiving reduced income (including no income) is averaged. Resulting income for this category is assumed at 50 percent of prewar income. See Rating Sociological Group, “Legal Protection of Victims from the War Crimes of Russia (December 23–26, 2022),” February 2, 2023, Link.; Gradus Research Company, “Social Screening of Ukrainian Society During the Russian Invasion—The Twelfth Wave of the Study,” October 2022, Link. 72 United Nations High Commissioner for Refugees, “Lives on Hold: Intentions and Perspectives of Refugees from Ukraine,” September 2022, Link. 73 “President: Russia Deported about 2 Million People, Among Them Many Children” (in Ukrainian), Ukrinform, December 18, 2022, Link. 74 IOM, Ukraine Returns Report - (16 - 23 January 2023), Link. SOCIAL SECTORS 55 The focus should be on the rehabilitation of war- program, the birth grant program, and the Municipal affected groups, such as orphans, IDPs, and Nanny program (which provides compensation for persons with disabilities. This approach is critical care services to children under three); together, for the reintegration of war veterans into society and the social assistance programs account for over 46 could efficiently respond to the multidimensional percent of all program beneficiaries. Over 1.4 million challenges faced by survivors. It could include the (60 percent) of the IDP support program beneficiaries restructuring and modernization of the respective applied for the benefits online. By the end of 2023, benefits, as well as services to reintegrate veterans the government will launch online enrollment in into civil life (e.g., psychological support, physical additional programs to enhance access to benefits rehabilitation to improve functionality, social during the war. A welcome addition to facilitate online rehabilitation to ensure inclusion in the community). skills training in technical and vocational education To support IDPs’ and returnees’ integration into the and training was launched in December 2022 – the local labor market, efforts to relocate businesses, Professional Education Online Platform - which capacities of private and public employment includes virtual reality modules to partially bridge services and skills training for IDPs (particularly on the practical learning gap imposed by the war due entrepreneurship) needs to be supported. The budget to disruptions in schools and firms. It already covers for social protection of persons with disabilities, 29 occupations and will be expanded by 60 more.75 including rehabilitation and assistive technologies, increased from US$51 million in 2022 to US$94 million in 2023. The government intends to move from 2023 Recovery and Reconstruction disability assessment based on the ability to work Priorities toward an assessment that takes into account the International Classification of Functioning, Disability, In the immediate to short term (2023–2026), there and Health (ICF) of the World Health Organization. is a need to finance social expenditures that will This would allow the government to better assess protect vulnerable households and individuals the individual needs of beneficiaries and plan the from additional long-term harm—for example, rehabilitation interventions and expenditures needed by ensuring that they do not resort to adverse to restore their ability to function and work. coping strategies. These expenditures include support through a GMI-type program that provides In this recovery phase, the utilization of new low-income families with the income to cover basic technologies, including cloud-based and online needs, and through housing and utility subsidies solutions, should be expanded to strengthen the that aim to prevent energy poverty, especially during adaptability of the overall system. Ukraine has the heating season. Costs associated with these already appreciably invested in digital solutions and other social programs (such as benefits to IDPs such as the Diia platform, the Pension Fund digital and restoration of social services) are expected platform, and the Unified Information System of the to reach over US$3.6 billion (Table 16). This figure Social Sphere, which allowed digitization of the IDP excludes energy subsidies, which will become part and HUS program benefits. However, new solutions— of social expenditures after the freeze on tariffs is such as skill-based job matching at scale—are lifted. However, this cost may grow in the event that needed. The Diia, with over 18 million users as of additional territory is brought back under government December 30, 2022, allows online enrollment for the control, welfare office operations resume, refugees unemployment benefit and for four social assistance return from abroad, and/or the freeze on tariffs is programs, namely the IDP program, the HUS lifted. Adjusting tariffs alone could increase the needs for 2023 by about US$750 million. 75 ILO. One year of war in Ukraine: “Professional Education Online” – a new and innovative digital platform to sustain TVET education in Ukraine. Link. 56 SOCIAL SECTORS Limitations and Recommendations for social assistance payments from pensions; and Future Assessments strengthen labor incentives in social assistance programs to respond to insufficient targeting, weak behavioral incentives, and less-adequate This assessment does not incorporate the expected support. A better-designed GMI-type program results of likely changes to social protection could integrate several less-effective benefits policies in the future aimed at higher efficiency of into the current Social Assistance to Low-Income the public funds use. The Ministry of Social Policy Families. prepared a concept note that identified key problems • Social services. Expand the use of social in social protection and suggested relevant reform services to help beneficiaries overcome difficult priorities (listed below), noting that addressing the life circumstances; expand family-based and problems would impact the social protection needs community-based modes of providing social in the future: services to respond to the underdevelopment of the social services system in Ukraine. • Social insurance (pensions). Unify and simplify the different pension guarantees, revise criteria For social programs that depend on change in for disability, and prepare for the introduction of incomes and the cost of basic needs, there is high a funded pension scheme to respond to declining uncertainty beyond the immediate/short term. pension benefit adequacy. Expenditures for means-tested programs may • Social assistance. Transform the subsistence change significantly depending on the change in minimum into an anti-poverty tool (de-linking it household incomes and their relation to the cost from fees, fines, and penalties, as well as salaries of basic needs, expressed by the legislatively set in the budget sector); optimize the number of income threshold. and algorithms for social benefits; separate Table 14. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Chernihivska 1.2 0.2 1.6 Dnipropetrovska 3.6 0.6 4.8 Donetska 43.0 6.1 58.1 Kharkivska 7.2 0.6 9.7 Khersonska 2.0 0.3 2.8 Kyiv (City) 68.8 9.3 92.9 Kyivska 10.7 0.7 14.4 Luhanska 30.5 3.3 41.2 Mykolaivska 8.8 1.1 11.9 Odeska 42.3 0.5 57.1 Sumska 12.4 1.8 16.8 Zakarpatska 0.2 0.0 0.2 Zaporizka 9.4 1.5 12.7 Zhytomyrska 0.5 0.1 0.7 Nationwide (no specific region) - 65,712.8 41,458.1 Total 240.6 65,738.9 41,782.9 Source: Assessment team. Note: No damage reported for Cherkaska, Chernivetska, Khmelnytska, Kirovohradska, Lvivska, Poltavska, Rivnenska, Ternopilska, Vinnytska, and Volynska. Loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. Note that household income loss valued at US$61.5 billion is not included in the RDNA2 overall figures to avoid potential double-counting in relation to other sectors. SOCIAL SECTORS 57 Table 15. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Residential institutions for the elderly, 127.5 0.0 127.5 persons with disabilities, and children Reconstruction needs Sanatoriums, children’s camps 146.2 0.0 146.2 Social service delivery centers 51.2 0.0 0.0 Restoration of permanently lost jobs 3,495.3 6,116.7 9,612.0 Means-tested benefits 7,590.9 14,180.0 22,522.9 Service delivery Benefits to IDPs 4,298.3 1,718.3 6,016.6 restoration needs Restoration of social services 900.0 0.0 900.0 Military social assistance and other long- 1,148.0 2,009.0 3,157.0 term benefits related to war Total 17,757.3 24,025.6 41,782.9 Source: Assessment team. Table 16. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Residential institutions for the elderly, persons with disabilities, and Reconstruction 1.1 children needs Sanatoriums, children’s camps 112.7 Restoration of permanently lost jobs 250.0 Means-tested benefits 1,942.4 Service delivery Benefits to IDPs 1,576.4 restoration needs Restoration of social services 225.0 Military social assistance and other long-term benefits related to war 287.0 Total 3,644.2 Source: Assessment team. 58 SOCIAL SECTORS CULTURE AND TOURISM Context and collective well-being. Due to the drop in national budget expenditure on culture, many cultural institutions are at risk of closure, with the independent The war has significantly impacted the diversity sector the most impacted. However, civil society and richness of culture and cultural heritage in organizations, volunteers, artists, and cultural Ukraine, causing damage to cultural infrastructure professionals have demonstrated unprecedented and assets, reducing livelihoods for cultural activism in supporting the preservation of Ukraine’s creators, bearers and practitioners, limiting access culture during the war. The damage to cultural to culture, and impeding the exercise of cultural properties and looting of collections furthermore rights. Historic cities with heritage and monuments sparked public debates on national values and are under threat, and damage to museums and subsequent recovery. looting of collections have exposed the need for better inventory and collections management. Emergency measures were taken since the start of the war to Damage and Loss Assessment secure movable cultural properties, though large- scale conservation treatments will be required due to As of February 24, 2023, the total damage cost from unstable storage conditions. The war has also deeply identified assets is estimated at US$2.6 billion, affected the safeguarding of intangible cultural distributed as follows: historic cities, buildings, heritage and creativity, undermining the social and sites imbued with recognized cultural/social fabric and interfering with the daily practices and values—US$1.7 billion; movable cultural properties livelihoods of living heritage practitioners, producers, and collections, repositories of culture—US$143 community members, cultural professionals, and million; buildings/workshops/ateliers dedicated artists. Internal displacement and outflow of artists to cultural and creative industries (CCIs)—US$150 and cultural professionals have significantly reduced million; and tourism facilities—US$650 million. the diversity of cultural practices and expressions, The most impacted oblast is Kharkivska (30 percent particularly in eastern oblasts, and have diminished of damage), followed by Donetska (16 percent) and the ability of cultural institutions to cope with Luhanska (9 percent) (Table 17). emergency needs. At the early stage of the war, there was a severe decrease in cultural activities and Losses are estimated at US$15.2 billion and tourism. This resulted in substantial revenue losses include revenue losses from tourism, art, sports, in addition to the physical damage. entertainment and recreation, CCIs, and cultural education, as well as valued asset protection. The Since June 2022, some activities have gradually most critical losses are for CCIs (US$10.8 billion) resumed. The market for artists and cultural and tourism (US$3.2 billion). Unlike damage, losses professionals has shrunk, with a notable reduction in in revenue are highly concentrated in the capital; at their incomes. Despite damage to the communication US$7.3 billion, which represent about half of the total and broadcasting infrastructure, many media outlets loss. Another US$4.6 billion in losses is not identified and journalists have continued working to ensure with specific oblasts but rather nationwide losses. access to information; many local and hyperlocal media outlets are facing severe financial constraints after a significant drop in advertising revenues and Reconstruction and Recovery Needs, incomes. Tourism, especially international tourism, Including Build Back Better  is still in decline in the country, but several religious sites and cultural institutions have reopened and The total needs over the next 10 years for recovery are hosting temporary exhibitions, demonstrating and reconstruction, including service delivery the resilience of Ukraine’s cultural sector and its restoration, amount to US$6.9 billion, with short- importance for reestablishing a sense of normalcy term needs (2023–2026) at US$2.3 billion and SOCIAL SECTORS 59 medium- to long-term needs (2027–2033) at US$4.6 localization are necessary for the delicate recovery billion (Table 18). The early stage is expected to and reconstruction of the sector, and a strategic include damage assessment and documentation, reengineering of the culture sector’s architecture emergency measures for cultural immovable and will be required. Funding schemes will also need to movable properties (including debris removal), be rethought for post-war transitional and recovery stabilization and conservation measures for cultural scenarios. assets, storage management, preparedness plans, and immediate conservation to prevent further loss and looting. This stage will also include support for 2023 Recovery and Reconstruction CCIs, safeguarding of intangible cultural heritage, Priorities and restoration and reconstruction of about 30 percent of assets. The remaining restoration and During 2023, physical recovery and reconstruction reconstruction (including operational costs), along includes protecting and conserving valued assets, with further support for CCIs and safeguarding of urgent repairs, and preventing demolition of sites/ intangible cultural heritage, are reflected in the buildings of cultural significance (Table 19). For medium- to long-term needs. nonphysical but essential measures, 5-7.5 percent of all necessary restoration activities over the next It is highly recommended to increase protection 10 years is allocated to 2023 needs per component. of cultural heritage and undertake preventive These activities include (i) continued monitoring, conservation of sites and assets that risk being assessment, and documentation of damaged further damaged or destroyed. This will entail cultural heritage using geographic information identifying each cultural asset—such as historic system (GIS) satellite imagery; (ii) enhancement cities, built heritage, museums, monuments, of legal protection and normative frameworks for national/regional theaters, and religious sites— heritage; (iii) emergency management measures, and recognize culturally valued movable assets inventories, storage management, preparedness temporarily secured or held in such buildings need plans, and urgent conservation to avoid loss and to be protected and more systemically managed by looting; (iv) repair of assets as feasible to restore designated authorities. function and preservation of heritage and cultural infrastructure to prevent demolition of assets of More fundamentally, a comprehensive recovery cultural significance; (v) support for CCIs to support plan is needed to rebuild the sector. This plan should broader access to cultural life, the continuation of include alignment with international standards, artistic creation, resumption of cultural events, and enhanced legal protection and governance, the development of community plans and practices for development of protocols and guidelines for safeguarding intangible cultural heritage; and (vi) protecting and recovering cultural heritage, and a reinforcement of capacities of culture professionals. comprehensive digital architecture to document The total 2023 needs amount to US$108.5 million. and manage cultural property. Revisions to state policies are necessary to support cultural heritage Limitations and Recommendations for Future Assessments preservation and safeguarding, build institutional capacity, and develop regulations, in particular to protect heritage from demolition and urban development pressures. Incentives and conditions for RDNA2 benefits from information improvements the resumption of cultural activities in safe territories over RDNA1, including a more accurate overview and the return of cultural sector professionals to of damage categories through a proxy calculation. Ukraine, are crucial. All these priorities must also be RDNA2 includes communications and broadcasting,76 accompanied by development and execution of an CCIs, and partially also intangible cultural heritage. inclusive capacity-building program for the culture However, given the absence of on-site inspection, sector with a view to sustain the results achieved. calculations of damage levels rely on reports The recovery plan will require significant funding, from regions and relevant authorities, with with an increase in cultural expenditures from local some assumptions applied. Monitoring cultural budgets; this process had started in 2019 but has properties in inaccessible areas, especially smaller- been halted since the war. Decentralization and scale properties with local significance, remains 76 Culture and Tourism sector calculations included programming and broadcasting activities as part of losses; while Telecommunications and Digital included calculations of damage and needs related to broadcasting, and losses related to physical damage. 60 SOCIAL SECTORS challenging. Assessing damage to underwater especially for revenue losses, as the most recent heritage is also difficult at this stage, given Ukraine’s data were as of 2021, meaning that the finalization 2,700 km of coastline. Intangible cultural heritage period was already affected by the war. Hence, 2020 losses have not been fully estimated. Additionally, and 2021 data to get counterfactual revenue, and quantitative data on the loss of human resources in assumed severity level to get losses. However, many the cultural sphere are not yet available, hindering assumptions had to be applied, and a more rigorous the development of necessary restoration measures estimation based on more facts will need to be for cultural institutions. Loss data collection was carried out in the near future. more difficult compared to damage and needs, Table 17. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 4.6 41.3 9.0 Chernihivska 96.7 72.1 246.9 Chernivetska 1.1 5.7 2.2 Dnipropetrovska 63.1 379.4 134.9 Donetska 414.4 172.1 1,007.3 Ivano-Frankivska 1.7 14.9 3.3 Kharkivska 809.9 1,017.5 2,194.5 Khersonska 87.3 59.8 191.1 Khmelnytska 5.3 11.0 12.2 Kirovohradska 1.9 9.4 3.7 Kyiv (City) 54.9 7,340.7 134.5 Kyivska 118.6 155.4 305.3 Luhanska 242.5 70.7 584.8 Lvivska 7.8 528.4 17.8 Mykolaivska 177.1 75.3 481.8 Odeska 132.8 205.3 349.0 Poltavska 4.6 31.7 9.0 Rivnenska 1.4 3.4 2.8 Sumska 86.6 38.8 227.1 Ternopilska 1.3 7.4 2.5 Vinnytska 16.0 143.4 42.9 Volynska 1.3 7.5 2.5 Zakarpatska 1.3 10.2 3.2 Zaporizka 138.1 122.6 317.6 Zhytomyrska 17.4 28.7 43.5 Nationwide (no specific region) 143.0 4,608.2 557.8 Total 2,630.8 15,160.9 6,887.5 Source: Assessment team. Note: loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. SOCIAL SECTORS 61 Table 18. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Medium to Short term Total Category Types of activities/investments long term (2023–2026) (2023–2033) (2027–2033) Damage assessment, detailed documentation, & 173.4 80.0 253.4 harmonized digitalization Emergency measures for cultural immovable properties (shoring, propping, structural reinforcements, sheltering and protection 780.5 0.0 measures, including debris removal) and movable 780.5 Reconstruction properties (inventories, preparedness plans, needs storage management, etc.) Repair of assets as feasible to restore function and ensure preservation and restoration of built heritage, historic cities, and cultural 520.3 0.0 520.3 infrastructures to prevent/mitigate demolition of sites/buildings of cultural significance Reconstruction/restoration of assets 260.2 3,483.7 3,743.9 Strengthen legal protection of the cultural sector and normative frameworks during and after the 29.1 10.1 39.2 Service war delivery Reinforce capacities of professionals 204.0 201.3 405.3 restoration needs Support restoring the creative industry and 262.3 372.5 634.7 safeguarding intangible cultural heritage Operational cost 87.4 422.8 510.2 Total 2,317.3 4,570.3 6,887.6 Source: Assessment team. Table 19. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Estimated Category Types of priority activities/investments Cost Damage assessment, detailed documentation, harmonized digitalization, and 35.8 emergency measures, including debris removal Reconstruction needs Repair of assets as feasible to restore function and ensure preservation and restoration of built heritage, historic cities, and cultural infrastructures to 13.0 prevent/mitigate demolition of sites/buildings of cultural significance Strengthen legal protection of the cultural sector and normative frameworks 17.5 during and after the war Service delivery restoration needs Reinforce capacities of professionals 29.1 Support restoring the creative industry and safeguarding intangible heritage 13.1 Total 108.5 Source: Assessment team. 62 PRODUCTIVE SECTORS Donetska Oblast. Photo by Yevgen Honcharenko, Donetsk Oblast State Administration. PRODUCTIVE SECTORS 63 AGRICULTURE77 Context that the current crises of food access will become a crisis of food availability over the next several years. Prior to the war, Ukraine’s agriculture produced 10 percent of GDP, employed 14 percent of the labor Damage and Loss Assessment force, and generated 41 percent of total exports. The war started just before the start of the 2022 spring The damage and losses for Ukrainian agriculture planting campaign, hitting the agriculture sector are estimated to reach US$40.2 billion, with losses very hard. The total planting area in 2022 declined accounting for 78 percent of the total (Table 20). by 20 percent compared to 2021 and 15 percent of agricultural capital stock was already damaged after As of February 24, 2023, the war has resulted in the first three months of the war. The 2022 grain and total damage of US$8.72 billion for the agriculture oilseed harvests declined by 37 percent on a year- sector, while the aggregate losses total US$31.50 on-year basis. Along with the upward pressure on billion. The damage includes partial or full input prices, especially fertilizers and diesel, the destruction of machinery and equipment, storage lower agricultural production significantly reduced facilities, livestock, fisheries and aquaculture, farm incomes. In the first months of the war, grain and perennial crops, as well as stolen inputs and exports sharply dropped due to the blockade of the outputs. The damage to machinery and equipment Black Sea, whose ports had supported 90 percent of was the largest source of total damage (53 percent), the prewar agricultural export. In March 2022, the followed by stolen inputs and outputs (23 percent) export of grain was only 0.3 million tons, compared and damaged storage facilities (15 percent). The with 5.4 million tons in January 2022. Although the damage increased almost four times compared to alternative routes helped increase the grain export June 2022, for several reasons: in the territories to 1.2 million tons in April and 2.7 million tons in temporarily not under government control, assets June 2022, these volumes were still below the 5–6 that had previously been partially damaged became million tons exported monthly prewar through Black fully damaged; the value of stolen inputs and outputs Sea ports. As a result, the domestic farm gate prices increased; and the farm surveys conducted by the for wheat and corn declined by 45 percent between FAO and the World Bank (and used for this updated January and June 2022, while globally they grew assessment) found that the actual damage was by 15 percent. The Black Sea Grain Initiative, which greater than previously assumed. started in July 2022, substantially increased exports (to 6–7 million tons monthly), but the logistical costs The war losses include the foregone farm income remained very high and continued to put a downward due to lower/forgone production volume (e.g., pressure on farm gate prices. The pressure has been unharvested crops), lower farm gate prices (due greatest for corn, which led to a delayed corn harvest; to export logistic disruptions), higher additional 6 percent of the corn crop remained unharvested farm production costs (e.g., fertilizers and fuel, in the field in February 2023. The winter wheat the cost of affected land recultivation after survey, planting area in 2022 declined by 25 percent, and clearance and land-release, and the halt of fishing many farmers switched to oilseed crops, which will operations). 78 The losses add up to US$31.5 billion further reduce Ukraine’s grain harvest and export in (Table 20). The largest loss, accounting for 46 percent 2023. The low volumes of grain exports will further of the total losses, resulted from the decrease in exacerbate global food insecurity, triggering the risk farm gate prices of export-oriented commodities such as wheat, barley, corn, and sunflower seeds. It 77 The agriculture sector includes crops, livestock, and fisheries/aquaculture. It excludes irrigation and forestry, as well as food industry and agro-logistics, which are included in other parts of the RDNA2. 78 This sectoral assessment includes under loss and needs the cost of recultivating and cleaning of land after demining. The losses from mines on agricultural land and the need for the survey, clearance and release of agricultural land are not included in the agriculture sector estimates. They are presented separately in the RDNA2 in the Chapter on Explosive Hazard Management. 64 PRODUCTIVE SECTORS is followed by losses from lower production of annual extension services, training and retraining of and perennial crops (44 percent), lower livestock farmers and staff of other agribusinesses, etc.), and fishery production (6 percent), and higher farm so that institutions can better support a climate- production costs (3 percent). The estimated loss is resilient recovery of the agricultural sector and only slightly higher, by 11 percent, than the June also help farmers access the EU pre-accession 2022 loss estimate. funds, to be available in the near future, in order to converge with EU agriculture sector. Reconstruction and Recovery Needs, Including Build Back Better 2023 Recovery and Reconstruction Priorities The total reconstruction and recovery needs from the public sector are estimated at US$29.7 billion The principal recovery and reconstruction focus over 10 years (Table 21), including US$600 million for the first year includes the following measures, in 2023 (Table 22).79 For the agricultural sector to which take into account the implementation/ recover, drive the overall economic recovery, serve absorption capacity of the government: as a decent income source for farmers, and provide food for the Ukrainian population, the most pressing • Provision of direct support to farmers through investments include rebuilding the damaged assets, the public programs that were successfully helping agriculture bounce back by addressing implemented in 2022. To relaunch agricultural liquidity (especially for smaller farms), investing in production, this support combines grants resilience to climate change and in integrated food- and inputs (for small farms) and interest rate energy systems, and strengthening the agricultural compensation for agricultural production loans, public institutions to effectively support recovery coupled with partial credit guarantees for small and reconstruction. farms; matching investment grants support energy alternatives for farmers and grain The priority medium-term and longer-run needs elevators and horticulture production. (from 2024 to 2033) amount to US$29.1 billion or • Clearing of mines (estimated separately, not 98 percent of the total needs (Table 21), with the included in Table 22) and recultivation of emphasis on the following areas: agricultural lands. • Completing reconstruction or replacement of the incurred war damage; building back better, Limitations and Recommendations for • Scaling up direct support to farmers and banks Future Assessments (through liquidity support for agricultural loans) during several production seasons to help While most damage was assessed using the results agricultural production rebound, of farm and fishery/aquaculture surveys carried • Supporting a longer-term rebound and recovery out in 2022, some damage was estimated indirectly, of agricultural production to increase its including stolen inputs and outputs. These data will diversity, inclusiveness, climate resilience, food- need to be reassessed in the future. More accurate energy integration, and environmental and social estimates of farm gate prices, production costs, sustainability in line with the EU Green Deal and logistical costs for various commodities will be requirements, required to improve the loss estimates. Including the • Scaling up investment in agricultural public estimates for agricultural land survey, demining and institutions for delivery of agricultural services land-release operations, irrigation, irrigation, food (sanitary and phytosanitary measures, food safety, processing, and agro-logistics, which are currently land monitoring and registration, soil testing for presented in other parts of the RDNA2, will help precision agriculture, agricultural research and clarify the full extent of the agrifood sector losses and needs. 79 The estimate of the needs is based on the Government of Ukraine’s Recovery Plan, FAO’s Response Program for restoring Ukraine’s food systems and protecting rural food security in 2023, and other sources. PRODUCTIVE SECTORS 65 Table 20. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 0.8 1,580.8 802.7 Chernihivska 230.8 1,889.3 1,321.1 Chernivetska 0.0 180.8 91.7 Dnipropetrovska 1.0 1,827.1 929.4 Donetska 959.5 1,446.6 2,290.0 Ivano-Frankivska - 72.3 36.6 Kharkivska 1,206.9 2,984.8 3,449.0 Khersonska 1,410.7 2,136.7 3,296.9 Khmelnytska - 1,044.4 529.4 Kirovohradska 1.1 1,552.6 788.9 Kyivska 457.0 1,777.7 1,616.3 Luhanska 2,499.8 1,167.3 4,448.4 Lvivska - 384.5 194.9 Mykolaivska 385.9 1,686.4 1,477.1 Odeska 1.0 1,334.8 678.3 Poltavska 0.4 1,985.1 1,006.9 Rivnenska - 483.6 245.1 Sumska 115.5 1,509.1 951.0 Ternopilska - 771.4 391.0 Vinnytska - 2,034.2 1,031.1 Volynska - 353.3 179.1 Zakarpatska - 44.8 22.7 Zaporizka 1,447.2 2,445.2 3,520.0 Zhytomyrska 0.0 795.1 403.0 Total 8,717.7 31,487.7 29,700.6 Source: Assessment team. Note: Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. 66 PRODUCTIVE SECTORS Table 21. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Reconstruction and replacement of Reconstruction damaged assets, machinery, inputs, and 2,796.2 6,524.4 9,320.6 needs outputs Support for immediate production 1,870.0 - 1,870.0 recovery Service delivery Support for longer-term recovery of 4,335.0 10,165.0 14,500.0 restoration needs agricultural production Support to agricultural public 1,203.0 2,807.0 4,010.0 institutions to accelerate recovery Total 10,204.2 19,496.4 29,700.6 Source: Assessment team. Table 22. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Estimated Category Types of priority activities/investments cost Reconstruction Reconstruction and replacement of damaged assets, machinery, inputs, and 50.0 needs outputs Support for immediate production recovery 490.0 Service delivery Support for longer-term recovery of agricultural production 50.0 restoration needs Support to agricultural public institutions to accelerate recovery 10.0a Total 600.0 Source: Assessment team. a. It is expected that about 50 percent of this amount is to be spend on public institutions in Kyiv City. PRODUCTIVE SECTORS 67 IRRIGATION AND WATER RESOURCES Context infrastructure, irrigation canals, embankments, buildings, and agency premises. This is a partial number representing damage to (i) areas that were There has been notable damage and loss in the previously not under government control and have irrigation and water resources sector. Ukraine has recently been brought back under the control of 41 million ha of agricultural land, of which 33 million Ukrainian authorities, (ii) areas that had damage due is under cultivation. Agriculture directly generates 10 to bomb attacks, and (iii) areas that were flooded to percent of gross domestic product and 20 percent of protect against invasion. export. Irrigation covers 1 percent of all agricultural land but is especially important for certain crops The sector has suffered substantial operational (e.g., 15 percent of potatoes; almost all tomatoes losses (reduced revenues, fees, and taxes) among and rice) and for certain regions (e.g., 14 percent of the different state entities. Loss as a result of Khersonska oblast), where it contributes to the rural reduced profit for irrigated areas are included in economy. Drainage covers around 10 percent of the loss assessment for the Agricultural sector agricultural land, mainly in the north and northwest, (US$814 million) and thus excluded from this sector and makes a significant contribution to Ukraine’s to avoid double counting. The initial aggregate losses total production, including the national output of accounted for thus far (data are not complete) are cereals and beef, by ensuring usable pastures and approximately US$282.5 million. The losses include forage land. operational losses based on lost profit as reported by the different operational entities in the Ukrainian Even before the war, the irrigation and drainage water system and collected by the State Agency of (I&D) sector, flood protection sector, and water Water Resources. Data on farm level and evaluation resource management (WRM) sector were in of losses categories for the irrigation and drainage transition. Prior to the war, Ukraine’s delivery of systems use were obtained by the Institute of I&D services faced persistent challenges, as the Water Problems and Land Reclamation and the irrigation sector had collapsed after independence nongovernmental organization, Primavera. There and required deep structural change to overcome are multiple factors resulting in operational losses, the infrastructure barriers. Ukraine’s I&D system depending on the region in the oblasts: was developed for state-run farms, but with the economic and political transition after the collapse of • Losses due to flooding. River basins in the the Soviet Union, these large structures were broken northern regions of Ukraine were flooded to up, creating an ownership and funding vacuum, and protect from invasion. This prevented crops from leading to widespread deterioration. These changes being cultivated and made agricultural production also had a dramatic negative impact on irrigated for 2022 and 2023 impossible in these regions.  areas in Ukraine. • Losses due to mining.  Some areas along the border (designated military areas) were mined Damage and Loss Assessment to protect against the invasion. Because of the mining, these areas were excluded from Damage to the irrigation and drainage sector80 for agricultural production, resulting in operational several oblasts is estimated at US$380.5 million losses. Demining needs to be accompanied by (Table 23). This includes damage to on-farm soil quality improvement, as mines and other 80 Damage in WRM was assessed to a very limited extent due to time constraints and lack of data at the moment of assessment. In particular, damage to such components as river basin management, flood risk and drought management planning, establishment of regimes for exploitation of reservoirs, provision of permits, and intersectoral and transboundary cooperation were not assessed and will need to be analyzed in future assessments. Damage to water monitoring was only partially assessed. 68 PRODUCTIVE SECTORS projectiles have contaminated the agricultural is, designed to maintain and improve production fields.  levels through improved drainage and expanded • Losses due to damaged or limited power irrigation in different parts of the country that may infrastructure. Some areas have damaged or have remained under government control. limited power infrastructure that does not allow water to be pumped from drainage areas or provide water for irrigation. The forced transition 2023 Recovery and Reconstruction to rainfed agriculture and limitations to control Priorities flooding limit agricultural production and have reduced profits by 20–30 percent. The most pressing investments involve restoration • Losses due to damage to I&D infrastructure. of destroyed hydraulic assets and water storage In some areas, I&D infrastructure has been structures in areas that were recently brought destroyed and pipelines dismantled. There is back under government control and areas that did confirmed damage to two reservoirs: Oskilske not face hostilities. These investments will help the reservoir (Kharkivska oblast) and Karachunivske WRM sector rebound by addressing the major gap: reservoir (Dnipropetrovska oblast). the lack of water supply and irrigation services to • Losses due to deterioration of the farm systems. farmers (Table 26). These investments will start The lack of maintenance, lack of operations staff, the restoration and building back better of on-farm lack of inputs, and lack of raw materials have led structures in areas where Water User Associations to deterioration of the farm systems and made it are being formed (US$30 million), damaged movable impossible for many farms to operate, resulting property is being replaced and hydraulic structures in significant losses. restored (US$11 million), and the laboratory for monitoring the Eastern region waters is being Other losses outside this assessment are also relocated (US$0.5 million). important to consider and will be included in future assessments: Limitations and Recommendations for • Losses due to reduced or absent governance Future Assessments functions, such as destruction of monitoring infrastructure (including laboratories), limitations In consultation with the Ministry of Agrarian Policy to establish regimes for management of/provide and Food, the Ministry of Environmental Protection permits for special water use for water bodies and Natural Resources, and the State Agency of located in inaccessible territories, as well as to Water Resources, the RDNA2 prioritizes oblasts in develop and implement river basin as well as Ukraine according to six categories (as described flood and drought risk management plans, and in Table 23). Oblasts are categorized 1 through 6 to support and proceed with transboundary depending on the degree of exposure to the war. cooperation. A seventh category (Category 0) concerns those • Losses of water resources due to their release/ oblasts that are so far not affected by the war. For the withdrawal because of the destruction of areas in Category 3 (active hostilities) and Category hydrological facilities at large reservoirs and 4 (temporarily not under government control), main irrigation canals. These categories of the inventory reporting is for obvious reasons losses can be difficult to estimate in monetary incomplete; there is no (reliable) communication values; however, they should not be neglected with the operating agencies. and should be assessed in the future. This assessment benefited from field surveys that improved the understanding of the extent of Reconstruction and Recovery Needs, damage and loss. More such surveys with a longer Including Build Back Better time frame should be part of future assessments. Future assessments could also pay more attention The total reconstruction and recovery needs in to the geographical reach of certain damage and the public sector are estimated at US$8.9 billion losses; the RDNA2 depended on informed guesses for for a building back better approach to irrigation, this information and risked over- or underreporting. drainage, and flood protection assets (Table 25). Another recommendation is to gain a more detailed Some investments are needed to repair damaged understanding of the needs in order to arrive at clear systems, where possible under a build back better priorities for the building back better programs. approach. Other programs are compensatory—that It was not possible to provide monetary estimates PRODUCTIVE SECTORS 69 of damage, losses, and needs for water resource resources, due to military activities as described in management, specifically in relation to governance the section on losses. More effort and time should functions and loss (release/withdrawal) of water be devoted to this area in future assessments. Table 23. Overview of prioritization categories and corresponding oblasts Category of prioritization Oblasts 1. Territories with highest priority for repair works after cessation of hostilities and return of areas to Chernihivska, Kharkivska, Kyivska, Sumska Ukrainian control 2. Territories that were recently returned to Ukrainian Part of Kharkivska, Khersonska, and Zaporizka, control but are still under missile and drone attacks Mykolaivska 3. Territories with ongoing hostilities and continuing Part of Khersonska and Mykolaivska, Donetska, missile and artillery attacks Luhanska, Zaporizka, 4. Territories where hostilities have stopped but Kharkivska, part of Donetska, Khersonska, missile and drone attacks are continuing and there is Mykolaivska, Zaporizka significant damage to infrastructure 5. Territories not currently under government control Part of Donetska and Khersonska, Luhanska, Crimea 6. Territories with damage due to missile attacks, Kyivska, Mykolaivska, Rivnenska, Volynska, construction of fortifications, and flooding to protect Zhytomyrska, Chernihivska against invasion Vinnytska, part of Chernihivska, Mykolaivska, Zhytomyrska, Ivano-Frankivska, Khmelnytska, 0. Territories relatively unaffected Kirovohradska, Lvivska, Odeska, Poltavska, Ternopilska, Zakarpatska Source: Assessment team. 70 PRODUCTIVE SECTORS Table 24. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska - - 82.8 Chernihivska 90.2 36.0 415.1 Chernivetska - - 92.0 Dnipropetrovska 0.2 - 476.5 Donetska 0.7 - 154.4 Ivano-Frankivska - - 92.0 Kharkivskaa 5.8 - 1.3 Khersonskab 3.6 22.2 181.8 Kirovohradska 0.0 - 62.8 Kyivska 57.3 19.4 787.6 Luhanskac 0.7 - 10.3 Lvivska 0.0 - 182.9 Mykolaivska 4.9 22.2 638.0 Odeska 0.0 - 336.6 Poltavska - - 152.8 Rivnenskad 58.6 46.8 419.1 Sumska 32.0 12.8 289.1 Vinnytska - - 230.0 Volynskad 62.5 50.0 435.1 Zakarpatska - - 150.0 Zaporizkab - 22.2 184.2 Zhytomyrskad 63.9 51.0 440.1 Nationwide (no specific region) - 2.605.6 Total 380.5 282.5 8,891.2 Source: Assessment team. Note: No assessment was conducted for Khmelnytska, Kyiv City, and Ternopilska. Loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. a. Data refer only to areas monitored. b. Data are only for areas brought back under government control. c. Almost all of the oblast (99 percent) is not under government control. d. Flooded area protected by Ukrainian forces. PRODUCTIVE SECTORS 71 Table 25. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Medium to Short term Total Category Types of activities/investments long term (2023–2026) (2023–2033) (2027–2033) Reconstruction, overhaul, and modernization of - 1,254.9 1,254.9 state irrigation infrastructure Reconstruction of hydraulic structures and Reconstruction - 77.0 77.0 facilities of reservoirs for complex use needs Irrigation system upgrading and expansion in four priority systems: Kakhovska, Pivnichno- - 1,254.7 1,254.7 Rogachinska, Sirogozska, and Prinzovska Restoration and modernization of water 19.1 1,099.6 1,118.6 management infrastructure Restoration of the functioning of the state water 0.9 1.1 2.0 monitoring system Service Restoration and construction of centralized water delivery - 91.6 91.6 supply of rural settlements using imported water restoration needs Restoration of drainage systems - 1,080.0 1,080.0 Protection, restoration, and modernization of the drainage systems in the upper Dnieper River - 3,742.3 3,742.3 basin and Bug River Restoration of on-farm irrigation facilities 100.0 170.0 270.0 Total 119.9 8,771.3 8,891.2 Source: Assessment team. Note: Although the activity of “Recovery and enhancement of integrated water resource management through development and implementation of river basin, flood risk and drought risk management plans and mechanisms for transboundary cooperation (incl. transboundary agreements and joint bodies), incorporating war impacts and recovery measures” could not have been assessed, it is very important for recovery and enhancement of water management, irrigation, and all infrastructure referred to in this section and should be analyzed in future assessments. Table 26. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Relocation of the laboratory for monitoring the waters of the Eastern region, arrangement of laboratory premises and communications, 0.5 purchase of auxiliary equipment for monitoring additional indices Service delivery Restoration of damaged hydraulic facilities and water restoration needs management systems and buildings; replacement 11.0 of movable assets, considering current needs Restoration of on-farm irrigation facilities 30.0 Total 41.5 Source: Assessment team. 72 PRODUCTIVE SECTORS COMMERCE AND INDUSTRY Context two steel plants in Donetska oblast, the Azov Steel Plant and the Ilyich Iron and Steel Works in Mariupol. Industry and commerce accounted for about one- Total losses across commerce and industry equal third of Ukraine’s GDP in 2021 and about 7.2 million US$85.8 billion, estimated for 30 months, including jobs in 2020.81 Of approximately 700,000 active the one-year period measured from the start of enterprises in Ukraine in 2021, the vast majority the war and an additional 18 months for continued were micro or small enterprises, with fewer than 50 losses. Losses for industry were calculated based employees.82 The biggest concentration of firms (19 on sales data from the latest available financial percent) was in the city of Kyiv. Based on the 2019 reports and increased to account for inflation. Labor Force Survey, wholesale and retail trade had Commerce losses were reported from relevant the most employees, followed by agriculture and business associations but also indicate estimations industry.83 Given Ukraine’s location, human capital, of counterfactual sales losses (estimated income and physical assets, the competitiveness of its if Russia’s invasion of Ukraine had not occurred).85 commerce and industry had unrealized potential Sales losses were also calculated for subsectors prior to the war. Reforms had been underway to or specific services that experienced nationwide improve the business and investment climate and impacts, such as car rental agencies and employment specifically to allow greater competition, reform services.86 Losses include agreed calculations for state-owned enterprises, and allow firms to move demolition and debris removal, calculated based on into higher-value-added segments of markets. Since the damage. Total losses are about US$44.7 billion RDNA1, the impact of the war on businesses has for industry and about US$41.1 billion for commerce. been significant through various channels, such as These calculations likely overestimate sales losses. revenues, costs, availability of supplies, material However, sales losses were used as a proxy for other damage, disrupted trade routes, and displaced losses, such as productivity and need for rental fees, customers. where no data were available. Also, the estimates assume that all damaged and impacted firms Damage and Loss Assessment84 nationwide were not captured in the sales losses. Total damage to the industry and commerce facilities is estimated at US$10.9 billion as of Reconstruction and Recovery Needs, February 24, 2023 for the one year period since the Including Build Back Better start of the war (Table 27), a 12.4 percent increase from the RDNA1 estimate of US$9.7 billion from Total reconstruction and recovery needs for the June 1, 2022. Most of the damage (77.9 percent) was commerce and industry sector are US$23.2 billion, to industry, with the rest to commerce. About half estimated until 2033. Reconstruction needs for of the damage (50.2 percent) occurred to large and infrastructure and assets under a build back better medium-size enterprises, both public and private. approach are estimated in total as US$18.5 billion, About 75.8 percent of the damage estimate for those evenly split between the short and medium/long firms (US$4.2 billion) was due to the destruction of term (Table 28). This means that 80 percent of the 81 Estimates are based on data from the State Statistics Service of Ukraine. 82 Data are from State Statistics Service of Ukraine. Of the 700,000 firms, almost half were not classified by size in the data, but most are likely individual entrepreneurs or small firms. 83 State Statistics Service of Ukraine, “Labor Force of Ukraine 2019: Statistical Publication,” 2020, Link. 84 Data for damages and losses was primarily provided by the Kyiv School of Economics. 85 The Ukrainian Council of Shopping Centers and the Retail Association of Ukraine provided updated loss and damage data. 86 This does not include creative services or industries covered elsewhere, such as cinemas and advertising. PRODUCTIVE SECTORS 73 estimated needs for this sector are for rebuilding and constraints, facilitate international partnerships modernizing buildings, equipment, and inventory. and learning, and expand the availability of trade Many shops and retail stores have recovered to finance and insurance instruments. higher levels of sales, although not necessarily • Rebuild the logistics infrastructure needed for to prewar levels. Therefore, the build back better access to inputs and markets. coefficient for commerce is slightly lower than for • Streamline business regulations and tax industry, 1.5 versus 1.75. Recovery needs to restore requirements to make it easier to start and service delivery and to build back better total US$4.6 restart businesses and to enter into new product billion, with US$2.8 billion in the short term and lines and delivery models. US$1.8 billion in the longer term. Needs calculated • Facilitate domestic and foreign investment to for demolition and debris removal costs are included rebuild key industries. in the build back better coefficient. • Ensure private sector participation in reconstruction efforts and promote linkages Various surveys and studies87 have captured major with SMEs in priority sectors for recovery and constraints and needs cited by firms. These include investment, such as construction, transport, and interruptions in electricity, water, or heat supply; logistics. rising prices of inputs; danger while working; supply chain disruptions; reduced demand; uncertainty In both the short and medium to long term, efforts about the future; lack of capital including credit should continue to build back better, emphasizing and grants; high taxes and fees; and regulatory and green and digital technologies to build resilient fiscal obstacles. SMEs particularly noted that they businesses with products and processes aligned to could benefit from business reconstruction, grants EU standards. Financial support to firms, including for working capital or investments, opportunities efforts to facilitate access to credit, should also for learning, and participation in international continue. Addressing business, investment, and trade partnerships.88 climate obstacles that were present before the war — such as trade harmonization with the EU, competition Revitalizing the commerce and industry sector is a issues, and SoE reform—should be a priority. Direct priority, given that millions depend on this sector technical assistance, potentially focused on sectors for their livelihoods, and given its contribution critical to growth like agribusiness, metallurgy, to critical needs during reconstruction, such machine-building, and IT, could help firms enter new as construction, food industry businesses, and markets, move into higher-value-added products, key manufacturing. The following are priority and adapt more sustainable practices. Women- recommendations to support commerce and owned and -managed firms could be targeted for industry in the short term: financial and nonfinancial support. • Provide financial support to firms in the form of loans, grants, and guarantees to allow 2023 Recovery and Reconstruction viable firms to survive, relocate if needed, and Priorities reconstruct and modernize assets, and to allow new entrants to emerge, in particular targeting For 2023, the total priority needs are estimated at small businesses of vulnerable categories such US$3.85 billion (Table 29), which is approximately as displaced persons, women, and veterans. one-third of the short-term needs identified until • Support the retraining and upskilling of labor to 2026 (Table 28). Most of those costs, US$3 billion, address skills required by businesses to access are for reconstruction needs, given that the sector’s new markets. main priorities will be to repair buildings, invest in • Help firms access new markets with tools to meet new equipment, improve processes, and start new standards in international markets, ease customs businesses. Most firms, even those that suffered no physical damage, have seen revenue fall due to 87 “Study of the State of the Business in Ukraine.” Research was conducted in January 2023 as part of the Initiative for the Recovery of the Economy, Development of Entrepreneurship and Export of Ukraine, implemented by the Center for the Development of Innovation Development Centers, the Office for the Development of Entrepreneurship and Export, and the national project Diiya Business together with Advanter Group, in cooperation with relevant ministries, State Regulatory Service, and Coalition of Business Communities for the Modernization of Ukraine. See also EBRD, “EBRD, USA and Sweden Assess Impact of War on SMEs in Ukraine,” March 1, 2023, Link; Institute of Economic Research and Policy Consulting, “New Monthly Enterprises Survey,” January 2023. 88 EBRD, “EBRD, USA and Sweden Assess Impact of War on SMEs in Ukraine,” March 1, 2023, Link. 74 PRODUCTIVE SECTORS disrupted infrastructure, reduced domestic market this section, covers manufacturing and services with immigration, and broken supply chains. Thus, not covered elsewhere in the report. It excludes the remaining US$850 million under service delivery manufacturing associated with transportation, restoration costs seeks to address these issues by military, and energy, but includes agro-industry supporting system upgrades (e.g., digitalization), from the processing stage. Services related to relocation, and other working capital needs, training culture, tourism, finance, and creative industries, and reskilling of employees, and investments in such as hotels, tour operators, and advertisers, are quality standards and certifications to access new also excluded. Restaurant and food services are markets. Some firms have already started changing included under industry and commerce. Commerce their product lines or reaching new markets. covers wholesale and retail trade and warehousing. Other firms need to start investing in process and This section includes impacts on both public and equipment changes and upgrades, including efforts private firms. to meet EU and other international standards to reach new markets. Some firms, particularly in This analysis faced the following limitations, areas of active fighting, may be trying to stay afloat which hopefully can be addressed in subsequent and require only working capital, either because analyses: they have lost their workforce or are facing huge uncertainty. Although firms will bear the cost of • Regional data were unavailable for some oblasts most investments, public sector support could help that likely suffered from the war. firms survive and make the investments needed to • For commerce, no regional breakdowns of the adjust to the new reality in 2023. data were available. An indirect method was used to assign damage and loss proportions based on Both private and public contributions are included the impacts on small firms, since most commerce in the US$3.85 billion for 2023. For reconstruction outlets are small firms. February 2023 data were activities, the public contribution, including from available only for retail shops; November 2022 government, IFIs, and donors, for 2023 is estimated at data were used for shopping malls. No new data US$2.2 billion (Table 29). The instruments identified were available for warehouses, gas stations, or in Table 30 are aligned with government priorities, pharmacies. keeping in mind the number of months remaining • Damaged assets and values were not available in 2023, whether funding has been secured, and for most firms, especially smaller ones. The institutional capacity. The priority instruments assumptions used were based on financial include grants and matching grants, particularly reporting and led to best estimates. through the e-Robota program; subsidized lending • Losses were calculated based on sales losses, through the 5-7-9 program; lines of credit and other although inflated to account for other losses. For support from the International Finance Corporation large and state-owned enterprises, the sales (IFC) and European Bank for Reconstruction and losses likely did not cover the full scope of losses, Development (EBRD); and guarantees, reinsurance, since firms that did not suffer any physical and export support programs through the Export damage likely still suffered economic losses. Credit Agency and through donor programs. As Ideally, data for estimating losses in productivity possible, the government contribution through these and other indirect costs, like rental fees, could be instruments focuses on expected support for firms collected for subsequent analyses. in commerce and industry but planned lines of credit • Sector breakdowns of small firms were not and reinsurance programs are expected to support available and could not be indirectly estimated. the wider private sector, including agricultural • Needs calculations were based on calculated and infrastructure focused firms, and address damage to the sector. Given the immense significantly larger needs than identified in this nationwide losses faced by this sector, these RDNA2 chapter. calculations may be underestimated. • A key recommendation is to establish an electronic system for registering damage, Limitations and Recommendations for repairs, and losses. The system would ensure Future Assessments a transparent and verified method for reporting damage and assist the government and donors in The definitions and assumptions used for the aiding those in need, including businesses. industry and commerce sector are the same as those used for RDNA1. Industry, as defined by PRODUCTIVE SECTORS 75 Table 27. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska - 42.6 - Chernihivska 650.3 7,738.2 1,333.8 Chernivetska - 9.1 - Dnipropetrovska 0.0 255.0 0.0 Donetska 4,907.7 29,972.0 10,544.6 Ivano-Frankivska - 17.5 - Kharkivska 2,428.5 21,243.5 5,020.2 Khersonska 18.7 213.2 40.9 Khmelnytska - 24.0 - Kirovohradska - 10.2 - Kyiv (City) 35.0 2,377.7 71.7 Kyivska 579.1 5,762.4 1,228.3 Luhanska 884.2 6,101.0 1,835.2 Lvivska 9.5 218.2 20.7 Mykolaivska 542.1 3,865.8 1,171.0 Odeska 58.5 370.8 127.9 Poltavska - 76.3 - Rivnenska - 10.8 - Sumska 245.6 3,470.1 512.5 Ternopilska - 11.8 - Vinnytska - 33.6 - Volynska - 2.0 - Zakarpatska - 9.0 - Zaporizka 526.0 3,721.1 1,150.7 Zhytomyrska 58.0 285.1 125.5 Total 10,943.2 85,841.0 23,183.0 Source: Assessment team. Note: - = not assessed; Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. 76 PRODUCTIVE SECTORS Table 28. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Types of activities/ Short term Medium to long term Total Category investments (2023–2026) (2027–2033) (2023–2033) Industry 7,460.6 7,460.6 14,921.3 Reconstruction needs Commerce 1,812.6 1,812.6 3,625.2 Service Delivery Industry 2,238.2 1,492.1 3,730.3 Restoration needs Commerce 543.8 362.5 906.3 Total 12,055.2 11,127.8 23,183.0 Source: Assessment team. Table 29. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Repairs/rebuilding firms 1,500.0 Repairs and investment in new/better machinery and Reconstruction needs 1,000.0 equipment Starting a business 200.0 Investments in upgrading service delivery systems to 500.0 access new markets Service delivery Working capital support 500.0 restoration needs Training/reskilling of employees 50.0 Investments in quality standards, certifications, etc., to 100.0 access new markets Total 3,850.0 Source: Assessment team. Table 30. Estimated government, IFI, and donor contribution to 2023 implementation priorities (US$ million) Types of instruments Estimated cost Grants and matching grants for business repair, modernization, etc. 313.0 Subsidized lending through 5-7-9 program 300.0 Lines of credit 1,000.0 Guarantees and reinsurance to promote investment and exports 514.0 Total 2,127.0 Source: Assessment team, in consultation with the Government of Ukraine. PRODUCTIVE SECTORS 77 FINANCE AND BANKING Context take many months for the true extent of damage to the financial sector to become fully apparent/ quantifiable. The quantification of losses also does The Ukrainian financial sector has been not recognize the inherent risks posed to the gains significantly impacted by the war. The banking made in recent years through reforms to the financial system entered the war in relatively good condition sector, such as relaxation of prudential rules as well and banks remain operational and very liquid.89 as the state-owned bank (SoB) strategic framework; Banks have generally remained profitable, with the nor does it recognize the potential delays to the system’s return on equity amounting to 11 percent.90 implementation of further reforms as a result of the At the same time, loss of assets, collateral, and need to address postwar problems first. revenues is severely affecting banks’ profitability and solvency. During March-December 2022, the banking sector accounted for US$2.8 billion of loan Reconstruction and Recovery Needs, loss provisions for expected war-related credit losses.91 Far-reaching emergency measures have Including Build Back Better been introduced under martial law to help preserve The total reconstruction and recovery needs from financial stability. It can be anticipated that the the sector are estimated at US$6.79 billion, with the nonbank financial institution (NBFI) sector will also most pressing needs relating to the provisioning of suffer significant losses as a result of the invasion on banks’ credit losses. Critical actions are required to top of prewar vulnerabilities; however, data remain safeguard the financial system, maintain confidence, very limited. Given its small size, the NBFIs sector is and minimize fiscal costs. At the same time, a not expected to have systemic impacts on the overall solvent, liquid, and operationally sound financial financial system. sector will be key to provide financing to the economy during and after the war. Four key areas for Damage and Loss Assessment financial sector policy reform are seen as critical: (i) preserving financial stability and maintaining public Based on current conditions as of February 24, confidence, (ii) ensuring readiness for resolution, 2023, as well as available data, the total cost for (iii) safeguarding institutional frameworks, and damage is estimated at US$18.8 million, and losses (iv) balancing the financial sector’s contribution to are estimated at US$6.85 billion (Table 31). Damage addressing fiscal and private sector needs. was estimated using data on banks’ fixed assets (in particular, bank premises and equipment) as well For the financial sector to recover and drive the as the NBU bank survey on damage conducted in overall economic recovery, a series of measures October 2022. The damage includes partial or full needs to be taken in different suggested time destruction of banks’ fixed assets such as bank frames. The estimated reconstruction and recovery premises and equipment. The losses include loan needs of the financial sector are estimated at US$6.5 losses and loss of cash, collateral, and investment billion in the short term and US$0.3 billion in the property. Credit losses were estimated at 30 percent medium term (Table 32). In aggregate, total sector of the pre-war net loan portfolio in line with NBU’s needs are US$6.8 billion (Table 32). Financial sector upper-range estimates outlined in its Financial policy reforms should focus on the four areas listed Stability Report for the second half of 2022. It will above. Coordinated efforts by all financial market 89 The National Bank of Ukraine (NBU) has taken steps to address excess liquidity in the banking system, including through increased reserve requirements. 90 NBU, Financial Stability Report, 2022 (2H). See Link. 91 This amounts to around 13 percent of the net loan portfolio the banks held at the end of February 2022, while NBU states in its 2022 Financial Stability Report (2H) that losses might reach 30 percent. 78 PRODUCTIVE SECTORS players—financial institutions, the NBU, the National services and sustainable financial system Securities and Stock Market Commission (NSSMC), diversification and inclusion. and the Deposit Guarantee Fund (DGF) —along with the effective support of public authorities, in particular the MoF, are needed to ensure financial 2023 Recovery and Reconstruction stability during the war and in the recovery/ Priorities reconstruction phase. In parallel to the investments listed in Table 33, the The priority medium-term and longer-run needs principal recovery and reconstruction focus for the (from 2024 to 2033) amount to US$1.7 billion, or 25 first year (2023) includes the following measures: percent of the total needs, with the emphasis on the following areas: • Analysis of the impact of the war on the financial sector (asset quality reviews). NBU should • Continuation of financial sector health prepare and undertake an initial assessment of diagnostics and their implementation. Financial the losses of financial institutions followed by institutions should be required to present plans independent valuation of banks’ assets when on how they will recapitalize to meet prudential conditions allow. requirements. Using the results as a starting • Development and adoption of a financial point, an assessment of individual institutions’ sector strategy with a focus on financial sector viability on a forward-looking basis should be restructuring and NPL resolution. This should conducted. include modalities of governance, transparency, • Reform of nonperforming loan (NPL) resolution and financing. mechanisms and creation of markets/ • Development of a carefully calibrated plan mechanisms for distressed assets. for phasing out special measures put in place • Provision of financial support to corporates during the war. Such measures should be that have been affected by the war but remain gradually replaced with standard measures viable if going through a comprehensive and or refined laws and regulations to address the orderly corporate restructuring program. Such changing situation. funding would need to have a transparent and • Efforts to ensure the financial sustainability of clear governance mechanism and would need the DGF. The DGF will need sufficient funds to to be well integrated with the restructuring cover insured deposits at banks with the highest proceedings. likelihood of becoming insolvent. • Development of assistance programs for • Creation of a development finance institution. insured parties. These will be needed by those The benefits of creating a development finance who have suffered significant losses, and where institution, versus building on an existing the obligations of insurers are uncertain or force structure, should be assessed; the goal is for majeure clauses have been enacted. a single institution to coordinate the utilization • Development of well-designed, time-bound of reconstruction funds and to assure proper financial support programs that target affected controls are in place so that both the government’s borrowers and sectors using transparent and donors’ priorities are met. rules and governance mechanisms. Policy responses will need to minimize opportunities Limitations and Recommendations for Future Assessments for moral hazard and rent-seeking and adhere to sound credit risk management practices and independent governance arrangements at SoBs, while facilitating the effective allocation of new This financial sector needs assessment is based credit. A special war insurance pool should be on a wide range of inputs and data from diverse developed and the Partial Credit Guarantee Fund sources, including NBU and surveys of financial for small farmers operationalized. sector institutions. The assessment also used • Implementation of critical reforms in the expert opinions and secondary data where possible. financial sector in the medium term. These However, as with the RDNA1, these estimates are should be continued in line with international based on currently available information, which is standards and European Union directives and largely anecdotal and will need to be reassessed. should aim at enhancing financial stability, More accurate estimates will be available once facilitating sustainable development of the financial sector health diagnostics are completed. banking sector, and promoting digital financial As indicated earlier, the quantification of losses also PRODUCTIVE SECTORS 79 does not recognize the inherent risks posed to the recognize the potential delays to the implementation gains made over recent years by reforms to the of further reforms as a result of the need to address financial sector, such as relaxation of prudential rules postwar problems first. as well as the SoB strategic framework; nor does it Table 31. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 0.0 53.9 53.9 Chernihivska 0.4 29.5 30.1 Chernivetska 0.0 18.0 18.0 Dnipropetrovska 0.0 271.3 271.3 Donetska 2.8 229.3 233.2 Ivano-Frankivska 0.0 60.2 60.2 Kharkivska 6.0 1,120.9 1,129.4 Khersonska 1.4 241.3 243.4 Khmelnytska 0.0 56.9 56.9 Kirovohradska 0.0 36.8 36.8 Kyiv (City) 0.0 3,056.7 3,056.7 Kyivska 0.6 48.0 48.9 Luhanska 2.5 40.5 44.0 Lvivska 0.0 219.9 219.9 Mykolaivska 1.1 122.0 123.6 Odeska 0.0 272.2 272.2 Poltavska 0.0 70.3 70.3 Rivnenska 0.0 33.3 33.3 Sumska 0.3 50.1 50.5 Ternopilska 0.0 36.2 36.2 Vinnytska 0.0 58.7 58.7 Volynska 0.0 24.2 24.2 Zakarpatska 0.0 26.4 26.4 Zaporizka 3.6 549.1 554.2 Zhytomyrska 0.0 34.4 34.4 Nationwide (no specific region) 0.0 74.9 7.0 Total 18.8 6,835.2 6,793.5 Source: Assessment team. Note: Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. 80 PRODUCTIVE SECTORS Table 32. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Public sector banks (SoBs) 16.1 0.0 16.1 Reconstruction needs Private banks (domestic and foreign 12.1 0.0 12.1 banks) Public sector banks (SoBs) 2,356.8 123.8 2,480.6 Service delivery restoration needs Private banks (domestic and foreign 4,070.7 214.1 4,284.8 banks) Total 6,455.6a 337.9 6,793.5 Source: Assessment team. a. short-term service delivery restoration needs include already provisioned war-related credit losses, 90 percent of the remaining estimated credit losses, and investments to strengthen the resilience of banking operations (satellite terminals and generators). A total of US$2.8 billion of war-related credit losses were already provisioned for in 2022. Actual recapitalization needs can only be determined after the NBU resilience assessment to be conducted in 2023. Reconstruction Needs include the estimated cost of restoration of damaged and destroyed branches. Table 33. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Reconstruction Reconstruction of destroyed branches in reclaimed territories 13.1a needs Additional recapitalization needs and asset quality review costs TBDb Service delivery restoration needs Investments to strengthen the resilience of banking operations 7.0c (satellite terminals and generators) Total 20.1 Source: Assessment team. Notes: a. Priority reconstruction needs relate to the damaged branches in territories brought back under government control (Chernihivska, Kharkivska, Khersonska, Kyivska, and Sumska oblasts). b. Banking sector recapitalization needs estimates can only be determined after the NBU resilience assessment to be conducted in 2023. c. NBU estimates. 81 INFRASTRUCTURE SECTORS The historical building of the First Ukrainian Gymnasium named after Mykola Arkas. Mykolaiv City, Mykolaivska Oblast. Photo from Mykolaiv City Council. 82 INFRASTRUCTURE SECTORS ENERGY AND EXTRACTIVES Context Damage and Loss Assessment Before the onset of the war, the energy sector Preliminary estimates indicate that current played a key role in Ukraine’s economic growth damage to energy infrastructure is more than five as well as its national security, and increasingly times greater than in June 2022. Damage to power, supported the country’s goal to modernize the gas, and heating infrastructure and coal mining, economy. The energy supply sector represented 7–8 as of February 24, 2023, was above US$10 billion percent of GDP,92 with gas transit fees from Russia versus the US$2 billion estimated by June 1, 2022 representing about 0.3 percent of GDP.93 The entire (including estimated damage to some assets located population had access to electricity, and 94.9 percent in territories temporarily not under government had access to clean fuels for cooking.94 Central control).96 The largest share of damage is in the heating had high penetration (about 47 percent), power sector (close to US$6.5 billion). Within the particularly in the bigger cities. The gas distribution power sector, the largest contributor to damage is network covered 74 percent of the population,95 and the generation segment (US$3.9 billion) followed 89 percent of the population had access to clean by the transmission segment (about US$1.9 billion). water, thanks to pumped water distribution systems. Damage to the power distribution sector is estimated at about US$404 million (without including assets Between February 2022 and September 2022, in territories temporarily not under government the energy sector suffered war-related (though control). The lack of data in this category has likely mostly collateral) damage; but intensified attacks led to underestimation. The gas sector damage on energy infrastructure since early October 2022 estimates are around US$1.2 billion (vs. the US$500 have caused extensive damage across the country. million estimated in RDNA1); this comprises damage In the last months, Ukraine’s energy infrastructure to gas distribution infrastructure as well as damage has suffered multiple artillery attacks as well as reported by the gas transmission system operator cyberattacks on energy companies. The attacks (TSO). Damage to the oil sector, including oil refinery resulted in significant damage to Ukraine’s integrated facilities, fuel depots and fuel stations, is estimated energy system, including power generation and at close to US$1.7 billion. Damage to the coal and transmission infrastructure. mining sector could not be newly estimated because there is a lack of information from the mines located in territories not under government control; RDNA1 figures are used for this sector. An indicative breakdown of damage and losses by regions is provided in Table 34.97 92 National Institute for Strategic Studies under the Office of the President of Ukraine, 2023, Determination of the Level of Energy Security of Ukraine, p. 35, Link. 93 Gas transit via the territory of Ukraine has undergone substantial changes since independence. The construction of pipelines (Blue Stream in 2003, Nord Stream 1 in 2011, and TurkStream in 2020), gas disputes between Ukraine and Russia, and the development of the liquefied natural gas market have served to reduce gas transit through Ukraine over the last few years. 94 WHO, “The Global Health Observatory (2022),” Link. 95 State Statistics Service of Ukraine. 96 Assets located in territories temporarily not under government control are estimated to be partially damaged (50 percent). It is likely that some of the assets are completely destroyed while others are almost intact. There is limited ability to verify the damage at this point. 97 Given the sensitivity of the information, most of the damage is aggregated and presented as nationwide. INFRASTRUCTURE SECTORS 83 Estimated war-related revenue losses in the aligned with systematic implementation of energy power, gas production, gas transit, coal mining, efficiency (EE) measures as part of the large-scale and fuel oil sectors exceed US$27 billion.98 The reconstruction, which will occur across all sectors— revenue losses have been caused by regular attacks public and private, including households. Careful on energy infrastructure, which, as a result, have planning will be required to ensure no-regret left 12 million households across Ukraine with no or investments, and institutional processes will need to limited electricity and with disrupted water supplies be simplified to attract financing flows from different and heating systems at a time when temperatures public and private sources. Any planning advanced have fallen below freezing in most parts of the during the war period will likely require adjustments country. Despite extensive restoration efforts,99 and reconsideration during the recovery phase. the average Ukrainian household experienced five cumulative weeks without electricity, from October The total reconstruction and recovery needs in the 10 to the end of December 2022. Most of the system public sector are estimated at almost US$47 billion continues to operate in a centralized manner (Table 34), including around US$5.7 billion for the (divided into eight subpower systems), thereby immediate and short term (2023–2026) (Table 35). maintaining stability, but restoration of services is Because the energy sector provides critical services, becoming more difficult after every attack. Among reconstruction and recovery investments in this distribution networks in territories not under sector are all considered as pressing. In addition, government control, the status varies, with some addressing part of the losses can also be considered areas connected to Russia’s network and others as pressing for the sector’s short-term operations. operating in island mode.100 Resulting disruptions to This includes the need to close liquidity gaps in the gas and district heating networks and to electricity power sector TSO (Ukrenergo), key state-owned gas supply have also significantly affected the delivery supplier Naftogaz, and other stakeholders. of water in major cities and have had a significant impact on the telecommunications and banking To enable economic recovery and meet long- sectors, in particular on the processing of payments. term climate objectives101 while ensuring energy security, Ukraine will need to rebuild its energy supply based on a model developed by the World Reconstruction and Recovery Needs, Bank, specifically by reducing reliance on fossil Including Build Back Better fuels and rebuilding energy demand sectors to minimize energy consumption. On the demand Balancing short-term energy needs with long- side, Ukraine will need to promote electrification of term goals is very difficult in a context of high the industrial, transport, and heating sectors. The uncertainty. In the recovery phase, basic energy heating and industrial sectors will need to reduce and utility services must be restored as quickly as dependency on gas to avoid gas imports in the short possible, enabling the return of internally displaced term while setting the pace for decarbonization in persons—even if Ukraine’s population and its the long term. With proper EE and electrification spatial distribution will differ from what they were investments, primary energy demand could remain prewar. However, energy policy decisions made below prewar levels for decades, decoupled from during recovery could impact long-term economic, economic growth. On the supply side, biofuels energy security, and climate objectives. The postwar (including biomass, biogases, and hydrogen) will need context will present an opportunity to rethink energy to replace gas as a main fuel source in the industrial sector priorities in Ukraine, while also balancing the and heating sectors, even if the electrification of need for fast provision of enabling services with the industry and heating contributes to the move away need to build back better. The latter should also be from gas. 98 The losses were estimated by comparing the level of production and revenues in 2021 and 2022 and taking into account the production decreases caused by the war. 99 The TSO, Ukrenergo, has organized 40 mobile repair crews with over 700 persons to rapidly fix damage to the network elements and restore the electricity supply. 100 Kherson was only intermittently connected to the Ukrainian system until July. Mariupol was never connected. Some populations in territories not controlled by the government are supplied by electricity from systems operating in local island mode, such as the Zuevsky plant near Donetsk. 101 Ukraine remains committed to the clean energy transition and its climate change international commitments in the medium and long term. Climate objectives are well aligned with the need to reduce energy dependence from imported gas and coal, which are strategic priorities. 84 INFRASTRUCTURE SECTORS The power system is expected to remain unified During reconstruction, Ukraine will need to adopt a and synchronized with the European Network build back better approach with policies that align its of Transmission System Operators (ENTSO-E), energy model with the EU energy strategy and move though ideally key subsystems could operate toward a decarbonized economy. Decarbonization in island mode if needed. Additional redundancy efforts are critical to meet the requirements under measures may be required to increase resilience, the EU accession and to increase energy security. including alternative decentralized networks in Critical reforms will include the transposition of the cities to provide backup support. In some areas, Clean Energy Package with support from the Energy networks may need to operate in isolated mode for Community Secretariat, correction of institutional an interim period. Regarding generation, assuming and market-related breaches, and the adoption of the a reference decarbonization scenario that would Repower EU approach to increase energy security. meet the net zero target by 2060, several points are To meet this last goal, Ukraine should focus on (i) relevant: (i) the rebuilding of new coal power plants diversifying gas supply and promoting green gases would be uneconomical; (ii) a rapid scale-up of and electrification when economically feasible; (ii) renewables and storage would be needed to replace accelerating decarbonization of the power sector thermal and renewable generation destroyed during and implementing a just transition roadmap toward the war, and to phase out coal generation by 2035; renewable energy generation; and (iii) boosting EE (iii) existing nuclear generation would need to be in demand sectors (housing, industrial, transport). restored and play an important role till at least 2040, Building on advances in digital development before when several nuclear power plants will need to be and during the war, the reconstruction should decommissioned and renewable energy investments take advantage of opportunities and synergies to will be increased; and (iv) full decarbonization decarbonize and digitalize the energy sector, thereby would imply substantial electrification of the increasing its resilience to cybersecurity attacks and energy demand over the years, hence the need for natural hazards. These policies will also help attract much higher generation capacity by 2060 than in a support from donors, financiers, and investors to business-as-usual scenario. Electricity and ancillary accelerate the restoration and reconstruction. service trade with Europe could be a significant revenue source for the country during recovery and Given the need to balance short-term needs with reconstruction, increasing the economic incentive to long-term goals, Ukraine must focus first on policies promote EE, even if further work would be needed to that minimize fiscal liabilities in the sector, catalyze analyze potential scenarios.102 external financing, and enhance transparency and internal implementation capacity. It must not allow The immediate focus after the war will be restoring short-term emergency and recovery actions to services and energy security for the next heating impede progress on long-term international climate season, i.e., ensuring enough gas and electricity commitments and EU accession requirements. supply are available, and that the basic infrastructure is rebuilt to ensure an adequate level of services to the residential and key infrastructure sectors 2023 Recovery and Reconstruction (hospitals, airports, schools, railway facilities, etc.). Priorities In the first year after the war, the country should seek to increase energy trade with the European Preparation for the 2023/2024 winter season energy markets and implement measures to should focus on restoring access to electricity improve the financial situation of the sector (phasing supply for millions of Ukrainians and for critical out price caps, Public Service Obligations, and war social infrastructure, including heating, potable emergency measures) and to increase sectoral water, wastewater treatment, security of high- resilience (improved cybersecurity, regulating voltage transformers, and others. Immediate needs back up generation and storage, grid operational to cover these areas are around US$2.1 billion. procedures, etc.). These activities are considered part of the overall short-term (2023 to 2026) needs described above, in the amount of US$5.7 billion. In addition, Table 36 includes liquidity needs for purchasing gas and importing electricity for the next heating season. 102 Modeling limited trade of power. No trade of biofuels or hydrogen was included in the model. INFRASTRUCTURE SECTORS 85 Limitations and Recommendations for • Power generation damage is based on Future Assessments conservative assumptions and fragmented information—damage to thermal power plants (TPPs) may be larger. Some assets have been The main shortcoming of the analysis is that it is damaged and repaired multiple times. based on limited information in some subsectors • The transmission damage is calculated based and regions: on estimates from Ukrenergo that combine preliminary and actual estimates. The former • Power sector damage estimates in areas not applies until the end of hostilities and is based on controlled by the government are inaccurate. In available information from technical personnel areas partially controlled by the government, the (witnesses) on the asset’s condition, degree of accuracy of estimates varies. Full estimation of damage, and the possibility of recovery. The power sector damage in areas not fully controlled latter is based on actual inspection, technical by Ukraine should be done later. inspection, and full inventory in areas controlled • The power TSO data are aggregated at the by Ukraine where inspections are feasible. country level due to the extra sensitivity of the Ukrenergo has operational data on damage to information. the network and inspects and repairs damaged • The gas sector does not include damage in the assets. gas production sector. If the government provides • Given government restrictions on data sharing, data on this category, damage could be quantified. direct detailed information on damage to • District heating data must be specified as a whole distribution networks could not be obtained. In and by region. the future, the actual extent of damage will have • The coal mining sector was not quantified in to be assessed, and a power sector model will be detail due to the lack of data. needed to refine the needs estimates. • Damage in the gas transmission sector is The assessment includes a range of assumptions estimated as the book value provided by the in addition to the general RDNA2 assumptions of gas TSO. Additional specifications were made to geographic scope and timeline: specify the values. • Damage in the district heating sector was based • Damage includes damage in both territories fully on previous data from the government and or partially controlled by Ukraine and in territories compared with previous estimations in some temporarily not under government control. cities. Further verification is needed for greater Damage for distribution system operators and precision. district heating is provided only for territories • The quantification of the fuel oil sector is based controlled by Ukraine. Damage in territories on estimations provided by the Kyiv School temporarily not under government control of Economics, complemented by additional is estimated based on information from the modeling by the World Bank. With additional data, government and other sources on actual damage these estimates could be refined and verified.  to facilities. Assets in territories temporarily not • Where possible, damage to assets in areas under government control are not considered as temporarily not under government control has definitely lost unless there is certainty that they been estimated assuming partial damage instead have been completely destroyed. of 100 percent damage. This should be better • Damage quantification in the power sector is quantified at a later stage. estimated as replacement cost (with similar equipment quality). 86 INFRASTRUCTURE SECTORS Table 34. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Chernihivska 86.8 1.6 173.5 Dnipropetrovska 72.8 1.1 137.5 Donetska 751.8 13.1 1,486.1 Kharkivska 303.3 5.1 592.3 Khersonska 82.0 1.4 160.4 Kyiv (City) 24.4 0.4 48.6 Kyivska 131.9 1.9 246.0 Luhanska 170.0 3.1 342.5 Lvivska 12.0 0.2 25.0 Mykolaivska 112.9 1.6 208.0 Odeska 13.8 0.2 25.0 Poltavska 34.2 0.6 69.6 Sumska 251.8 3.4 456.7 Vinnytska 12.0 0.2 24.4 Zakarpatska 16.4 0.3 33.4 Zaporizka 423.4 5.3 751.9 Zhytomyrska 5.9 0.1 12.0 Nationwide (no specific region) 8,083.1 27,119.3 42,192.3 Total 10,588.3 27,159.1 46,985.2 Source: Assessment team. Note: Oblasts not assessed include Cherkaska, Chernivetska, Ivano-Frankivska, Khmelnytska, Kirovohradska, Rivnenska, Ternopilska, and Volynska. Loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. INFRASTRUCTURE SECTORS 87 Table 35. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Medium to Short term Total Category Types of activities/investments long term (2023–2026) (2023–2033) (2027–2033) Power sector reconstruction, including transmission system operator, distribution 2,962.7 34,070.8 37,033.5 system operators, power generation facilities District heating reconstruction, including heat supply networks, heating points and heat-only 747.4 1,743.9 2,491.3 boiler houses, combined heat and power generation facilities Reconstruction Gas transportation system reconstruction, needs including gas transmission system operator 377.1 2,136.7 2,513.7 and distribution system operators Fuel oil sector reconstruction, including oil 339.5 3,055.4 3,394.8 refinery facilities and distribution networks Coal mining sector (urgent closure works on flooded mines, not currently under 48.0 272.0 320.0 government control) Service delivery Power sector liquidity needs 200.0 - 200.0 restoration District heating sector liquidity needs - - - needs Gas purchasing and gas system liquidity 1,032.0 - 1,032.0 Total 5,706.6 41,278.8 46,985.4 Source: Assessment team. Note: - = not assessed. Table 36. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Ukrenergo’s emergency equipment needs (in government-controlled areas) 466.0 Development of secure power grid (protected substations of Ukrenergo) 500.0 Statcoms to enhance import-export operations 40.0 Building of transmission connections with EU/Slovakia 30.0 Building of transmission connections with EU/Romania 60.0 Reconstruction Large Hydro Power Plants restoration for season 2023/2024 63.0 needs TPP restoration for heating season 2023/2024 167.0 Small-scale/distributed generation 275.0 Electricity supply (including distribution stations, overhead power lines) 193.0 Emergency equipment for heating infrastructure (mobile units) 200.0 Heat supply (including heat-only boiler houses, district heating network, 81.1 heating points, combined heat and power) Gas purchasing needs for the next heating season 1000 Service Electricity import purchasing needs for the next season 200 delivery Other gas system liquidity needs 31.8 restoration needs Other power sector liquidity needs - District heating liquidity needs - Total 3,306.9 Source: Assessment team. Note: - = not assessed. 88 INFRASTRUCTURE SECTORS TRANSPORT Context undertake rapid emergency repairs of damaged assets have significantly mitigated losses, as described below. Since completion of RDNA1, the context for transport sector damage, loss, and needs in Ukraine has changed, specifically due to the return of certain Damage and Loss Assessment territory to government control, intensive fighting in southern and eastern frontline cities, the Black Total transport sector damage is estimated at Sea Grain Initiative, and the “Solidarity Lanes.” In US$35.7 billion (Table 37). The largest concentrations oblasts that are back under government control, the of damage are (i) local oblast, village, and communal transport networks have been exposed to additional roads combined (32 percent); (ii) motorways, movements of heavy weaponry and supply vehicles highways, and other national roads (21 percent); and as well as military actions aimed at disrupting retreat (iii) railway infrastructure, rolling stock, equipment, or advance of opposing forces. Positional fighting in and other assets combined (19 percent). Damage eastern and southern frontline cities has brought to transport infrastructure is not evenly distributed further military strikes against the essential logistics and appears correlated to changes in war intensity. infrastructure. In these cities, concentrations of Severe damage is concentrated around settlements troops and heavy weapons along with intensive where more protracted fighting took place. use of artillery during protected positional fighting has increased the strategic importance of road The largest contributors to increased damage and rail linkages used for supplies. Key logistics relative to RDNA1 were urban transport nodes that connect with frontline areas have been infrastructure and rolling stock (nearly five times intensively shelled. In addition, the urban transport greater than in RDNA1), Ukraine’s railway network infrastructure in frontline cities themselves (e.g., (more than three times greater), and communal Kupiansk, Soledar, Bakhmut, Orikhiv, Huliaipole) is roads (roughly a 50 percent increase). Increased substantially destroyed. railway and local road infrastructure damage reflects increased levels of destruction in frontline areas The Black Sea Grain Initiative, the Solidarity subject to positional fighting as well as damages to Lanes initiative, and most importantly the ability the critical logistics infrastructure used for supply of of Ukraine’s transport sector institutions to make frontline areas. Since June 2022, Donetska, Luhanska, emergency repairs have mitigated transport Zaporizka, Khersonska, and Kharkivska oblasts have sector losses. The Black Sea Grain Initiative has experienced damage to an additional 88 rail stations, allowed approximately 22 million tons of Ukrainian more than 400 railway bridges, 28 bridges on the grain (about half of annual prewar Black Sea grain national road network, 76 bridges on the oblast and exports) to move via Ukraine’s ports since August village roads, and more than 250 bridges and other 3, 2022. Similarly, the Solidarity Lanes initiative has artificial structures on the communal road network. successfully helped to scale transport via westward The US$ 1.4 billion increase in damage to urban logistics chains that run through the EU. Solidarity transport infrastructure and rolling stock likely Lanes remain the only option for export of Ukrainian reflects improvements in data availability in areas goods other than grain (e.g., steel, manufactured returned to government control, theft of mobile products, ore) and for import of critical needs (e.g., assets by retreating forces, and collateral damage fuel, humanitarian aid). Between May 2022 and the due to increased targeting of civilians in urban areas. end of January 2023, the total value of trade via Damage to bridge infrastructure across national, the Solidarity Lanes is estimated at around €65 local, and communal road networks and Ukraine’s billion. Beyond these key initiatives, the resilience railway remains significant (roughly US$4.4 billion, of transport sector institutions and their ability to or 12 percent of all damages in the transport sector). INFRASTRUCTURE SECTORS 89 Transport damage is greatest in oblasts that been able to reconnect service along the majority have experienced protracted positional fighting; of mainline track in territories brought back under Donetska, Luhanska, Khersonska, and Zaporizka government control. Most emergency repairs made together account for over 70 percent of damage. to date cannot be considered permanent, but they Among these oblasts, Donetska, Khersonska, and are proving adequate to restore lifeline transport Zaporizka have seen the largest increase in damage connections temporarily while Ukraine’s fiscal and since June 2022 (an additional US$3 billion, US$2.2 institutional capacity remains highly constrained by billion, and US$1.0 billion respectively). In the case war. The clear exception within the transport sector of Khersonska, the natural barrier provided by the is aviation, where full airspace closure to civilian Dnipro River has also resulted in a static front line flights results in losses (22 percent of all transport throughout late 2022 and early 2023. The remaining sector losses considered) that cannot be mitigated and returning populations (about 160,000 people103) across the industry. in approximately 200 settlements throughout Khersonska subject to artillery and missile attacks which have further damaged local and urban Reconstruction and Recovery Needs, transport infrastructure. Including Build Back Better Transport sector losses for the period projected Reconstruction and immediate recovery needs (through August 24, 2024) are estimated at US$31.6 are estimated to be US$92.1 billion (Table 38). The billion, dominated by continued disruption to Black largest concentrations of reconstruction needs are in Sea maritime transport. The largest concentrations (i) railways infrastructure, rolling stock, equipment, of losses are attributable to (i) disrupted Black Sea and other assets combined (30 percent); (ii) port access (64 percent); (ii) closure of Ukraine’s motorways, highways, and other national roads (29 aviation industry and loss of overflight revenues (21 percent); and (iii) local oblast, village, and communal percent combined); (iii) disruptions to road transport roads combined (16 percent). Within this larger set (7 percent); and disruption to rail transport (7 of needs is a program to expand western logistics percent). The RDNA2 has considered the positive linkages and an emergency program to repair and impact of the Black Sea Grain Initiative, which helped restore essential transport services during 2023. unlock maritime transport routes for approximately Expanding westward logistics chains could provide 22 million tons of Ukrainian grain shipments between both short- and long-term benefits (as described August 3, 2022, and February 24, 2023. Over this in the next section). In contrast, expenditures on period, the initiative mitigated approximately US$1.3 emergency repairs and service restoration would billion in losses by providing maritime transport be aimed at mitigating the impact that damaged access for grain shipments. The Black Sea Grain transport infrastructure and disrupted services Initiative does not include maritime cargoes other have had on Ukraine’s population and economy than grain, which historically were about three times during wartime. More permanent reconstruction larger by tonnage than Ukraine’s grain exports. activities are envisaged to start after 2024, given The EU’s Solidarity Lanes initiative has therefore the need for complex project preparation and the been critical to facilitating alternative trade routes likelihood that government’s institutional and fiscal for these cargoes, though RDNA2 analysis has capacity will be absorbed by the scale and scope of not segregated out the attributable impact of the emergency repair and service restoration needs for Solidarity Lanes at this stage. the immediate future. The ability of Ukraine’s transport sector institutions 2023 Recovery and Reconstruction Priorities to implement emergency repairs is mitigating about 30–40 percent of potential losses that would otherwise have accrued due to disrupted road and rail transport. The State Agency for Restoration During 2023, an estimated US$3.5 billion is needed and Development of Infrastructure of Ukraine has for urgent expansion of westward logistics chains, completed or is currently executing emergency high-priority emergency repairs, and restoration repairs on roughly half of damaged national roads of services—before reconstruction. Despite overall in territories brought back under government resilience among transport sector institutions, three control. Ukrzaliznytsia (Ukrainian Railways) has factors hinder Ukraine’s ability to undertake major transport infrastructure reconstruction within 2023: 103 Ministry of Internal Affairs of Ukraine, November 23, 2022, Link. 90 INFRASTRUCTURE SECTORS (i) limited project readiness and the absence of ready is less potential for cost recovery and greater designs for reconstruction projects; (ii) severe fiscal need for fiscal support to deliver services. constraint; and (iii) uncertainty in both transport Finally, because much of Ukraine’s public demand and the market for contractor services transport services depend on electricity (e.g., because of the dynamic security situation created by trams, trolleybuses, metros), they are vulnerable war. The key priorities during 2023 instead focus on to disrupted power supply. A national program addressing immediate emergency needs (Table 39), aimed at providing lifeline rolling stock (primarily including the following: diesel powered) accompanied by fiscal support to sustain services could offer a way to address • Accelerating survey, demining, and land-release these constraints in the near term. in territories brought back under government • Expanding capacity of westward transport control to avoid delays in restoring access. linkages further. Expanded westward transport The need for extensive survey and demining linkages are essential in both the short and long operations has emerged as a key constraint to term. In the short term, they will mitigate the emergency network repairs in territory brought losses imposed by disrupted Black Sea access back under government control. For example, and airspace closures. In the long term, they contamination with mines and explosives along will facilitate convergence with Europe’s single the road corridor between Kyiv and Chernihiv market, which will entail physical integration with delayed the start of emergency repair works for the Trans-European Transport Network (TEN-T). over a month. While demining is not a function Expanding capacity along westward transport of Ukraine’s transport sector institutions, these linkages and the measures already underway institutions could more effectively mitigate losses via the Solidarity Lanes represent no-regret by scaling up support for accelerated survey, investments that are urgently needed and well demining and land release operations. aligned with Ukraine’s future within the EU. • Providing fiscal and technical capacity for emergency repairs. Such repairs are urgently While emergency repairs and restoration of basic needed on both national and local segments of connectivity will likely dominate 2023, there is an Ukraine’s transport network to reestablish a urgent need to mobilize project preparation for minimum level of transport connectivity, which is reconstruction and to prepare teams for delivery. critical for meeting basic needs of the population, Reconstruction projects in the transport sector enabling Ukrainian businesses to function, are technically complex and engineering intensive. and sustaining government services. Ensuring Some will require environmental assessments and/ essential connectivity also requires reinforcing or land acquisition along with public consultation. and sustaining transport infrastructure that has Alignment with EU peers will also require Ukraine not been directly damaged by fighting. Reduced to apply standards that differ from or modify those network redundancy, increased criticality of previously used. Ukraine’s own domestic standards remaining infrastructure, and increased intensity will eventually need amendments to align with the of use along selected transport corridors EU acquis. Project preparation tasks will likely cost (especially those linking to EU neighbors and 2–10 percent of total civil works investment (roughly Moldova) are creating urgent maintenance needs. US$2–10 billion during reconstruction). Preparing for • Reinstating lifeline transport services in war- no-regret high-priority investments will help ensure affected communities. Urban public transport, that Ukraine can absorb reconstruction funding school transport, and regional passenger effectively. Equally important will be developing connectivity are urgently needed in war-affected the skills and experience of project implementation communities but face several challenges. Firstly, units within the State Agency for Restoration and physical assets like rolling stock fleets, depots, Development of Infrastructure of Ukraine, Ukrainian and street-level infrastructure have been Railways, Ukrainian Seaports Authority, State heavily damaged and, in some cases, there have Service of Maritime and River Transport, oblast been reports about theft of functioning rolling administrations, and local government bodies. stock (e.g., school buses in Khersonska oblast). Immediate engagement by development partners on Secondly, population levels in areas that were this agenda could help make project delivery during temporarily not under government control are reconstruction more effective. roughly 20 percent of prewar levels, so that there INFRASTRUCTURE SECTORS 91 Limitations and Recommendations for market factors that may affect pricing of works at Future Assessments the time of reconstruction. Unit costs also reflect assumptions regarding the nature of works required for reconstruction, and actual technical RDNA2 considers roads, railways, bridges, solutions may differ from those assumed. The aviation, ports, inland waterways, and urban public detailed site-by-site engineering analysis that transport as part of the transport assessment. would substantially reduce uncertainty may Specific limitations in the approach include the not take place in the near future, given wartime following: constraints on budgets and capacity. • Assumptions regarding extent of damage. • Data sets and completeness. Like RDNA1, As with RDNA1, the assessment of damage RDNA2 calculates damage to road, rail, aviation, has not included detailed engineering work or and urban transport assets using data provided testing. Definitive assessment of damage levels by Ukraine’s MCTID, Ukrainian Railways, the is needed to determine appropriate mitigation State Agency for Restoration and Development of strategies; for example, some assets assumed to Infrastructure of Ukraine, oblast administrations, be fully damaged might turn out not to require and municipal authorities. The accuracy of these full replacement/rehabilitation. While the extent data varies according to the security situation— of Ukrainian territory under government control that is, according to whether government has expanded since June 2022, remaining representatives can access sites and validate (at security threats and budgetary constraints have least approximately) locations and actual levels prevented detailed engineering assessments in of damage. Government access has improved most instances. considerably since June 2022, but precise data • Continuation of lost Black Sea access and on damaged assets in areas not currently under airspace closure. Loss calculations from RDNA1 government control remain unavailable. Hence assumed that Ukraine’s Black Sea access would the resulting analysis of damage and needs is remain fully impeded, and that Ukraine’s airspace inherently uncertain. would remain fully closed until December 2023. • Indirect losses. With the exception of aviation, These assumptions have been revised. The Black loss calculations do not currently consider Sea Grain Initiative is assumed to continue, and indirect losses. This limitation may be most RDNA2 analysis has used 2022 data to project relevant to lost Black Sea access for goods other Black Sea Grain Initiative tonnage by month until than grain, where specific industry clusters August 2024. It is further assumed that Ukraine’s near port agglomerations were likely predicated airspace will remain fully closed during this on transport via the Black Sea and would not time. These assumptions are inherently linked to otherwise be competitive. Disruptions to specific Ukraine’s military gains or the effectiveness of road or rail linkages may have similar effects on international diplomacy efforts, both of which are industries with rigid mode requirements, where outside the scope of RDNA2 analysis. Projected switching to alternative forms of transport may losses incurred or avoided are accordingly not be possible. Given these limitations, the subject to high levels of uncertainty. scale of losses suffered due to transport sector disruptions is likely underestimated, though some The foremost recommendations going forward of these effects may be captured in analysis by are as follows: (i) once security conditions allow, other sectors. intensify field-level investigations and engineering • Cost estimates. Estimates for reconstruction work needed to identify and classify damage; and needs use unit costs or approximations for (ii) in parallel with field validation of data, expand specific assets rather than detailed engineering consideration of indirect losses, which will require assessments; actual costs would vary by the more complex calculation methodologies. extent of damage, location within Ukraine, and 92 INFRASTRUCTURE SECTORS Table 37. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 28.1 771.3 81.8 Chernihivska 1,661.2 897.8 6,022.1 Chernivetska 2.0 293.4 30.8 Dnipropetrovska 151.7 2,886.6 725.7 Donetska 9,254.5 1,819.4 20,250.5 Ivano-Frankivska 5.0 645.5 22.6 Kharkivska 3,679.9 2,101.5 9,387.9 Khersonska 5,363.0 703.9 14,044.5 Khmelnytska 9.8 616.2 36.8 Kirovohradska 48.9 528.2 115.1 Kyivska (includes Kyiv City) 1,981.4 8,837.3 5,344.4 Luhanska 5,358.7 464.8 13,073.0 Lvivska 19.2 1,584.7 68.9 Mykolaivska 1,277.6 829.5 4,407.7 Odeska 130.3 1,488.7 402.3 Poltavska 7.9 1,379.1 52.7 Rivnenska 2.4 498.8 19.8 Sumska 1,315.7 728.5 4,231.1 Ternopilska - 410.8 15.1 Vinnytska 48.1 968.3 313.4 Volynska 1.9 560.2 27.3 Zakarpatska 2.7 440.1 22.6 Zaporizka 5,076.9 1,468.4 12,331.4 Zhytomyrska 249.6 687.5 1,050.3 Total 35,676.6 31,610.6 92,078.0 Source: Assessment team. Note: Loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. INFRASTRUCTURE SECTORS 93 Table 38. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Road bridges (national roads) 872.5 6,398.2 7,270.6 Road bridges (local roads) 91.2 668.9 760.2 Motorways, highways, and other 3,171.0 23,254.0 26,425.0 national roads Oblast and village roads 636.7 4,669.0 5,305.6 Communal roads 1,013.3 7,430.6 8,443.8 Airports 201.3 1,476.2 1,677.5 Reconstruction Railway track, bridges, stations, and 2,792.7 20,479.9 23,272.7 needs electrical Railway rolling stock 294.3 2,157.9 2,452.2 Railway equipment and other assets 171.7 1,259.0 1,430.7 Private vehicles 819.0 6,006.2 6,825.2 Ports and inland waterway 39.7 291.3 331.0 infrastructure Urban public transport rolling stock, infrastructure, depots, maintenance 529.0 3,879.5 4,408.5 vehicles National road and bridge repair 1,498.6 - 1,498.6 Local road and bridge repair 324.8 - 324.8 Communal road and bridge repair 176.4 - 176.4 Railway infrastructure emergency 524.4 - 524.4 repair Railway rolling stock and equipment 169.6 - 169.6 Urban transport repairs 23.5 - 23.5 Urban transport rolling stock and 173.4 - 173.4 equipment Service delivery Ports repair 4.6 - 4.6 restoration needs Border crossing point expansion 51.0 - 51.0 Inland waterways infrastructure repair 30.0 - 30.0 & Danube River port expansion Equipment for repair and maintenance 29.9 - 29.9 of urban transport infrastructure Equipment for repair and maintenance of national and regional roads and 68.8 - 68.8 bridges Maintenance of road and bridge infrastructure affected but not 399.9 - 399.9 damaged by war Total 14,107.3 77,970.6 92,078.0 Source: Assessment team. Note: - not relevant. 94 INFRASTRUCTURE SECTORS Table 39. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Reconstruction Expected after 2023 - needs National road and bridge repair 1,498.6 Local road and bridge repair 324.8 Communal road and bridge repair 176.4 Railway infrastructure emergency repair 524.4 Railways rolling stock and equipment 169.6 Urban transport infrastructure repair 23.5 Urban transport rollick stock and equipment 173.4 Service delivery restoration needs Ports repair 4.6 Border Crossing Point (BCP) expansion 51.0 Inland waterways infrastructure repair and Danube River port expansion 30.0 Equipment for repair and maintenance of urban transport infrastructure 29.9 Equipment for repair and maintenance of national and regional roads 68.8 and bridges Maintenance of road and bridge infrastructure affected but not damaged 399.9 by war Total 3,475.0 Source: Assessment team. INFRASTRUCTURE SECTORS 95 TELECOMMUNICATIONS AND DIGITAL104 Context operators sustained US$0.3 billion, postal service providers US$1.1 billion, and broadcasters US$0.02 billion. The losses have been concentrated in Kyivska Ukraine’s telecom and digital sector plays an Oblast (37 percent of the telecommunications sector outsized role in enabling Ukraine’s service sector, losses), Kharkivska (19 percent), and Donetska (17 particularly the IT industry and the start-up scene. percent). Widespread access to mobile and fixed broadband was one of the key drivers of the country’s economic growth prewar.105 Ukraine’s postal service was Reconstruction and Recovery Needs, instrumental to the growth of e-commerce in Ukraine. Including Build Back Better  The priority short-term recovery needs amount One year into the war, the Ukrainian to US$3.1 billion; of this amount, US$1.8 billion telecommunications sector has proven resilient. is for reconstruction needs, and US$1.3 billion is Despite the increased war intensity since June for needs related to service delivery restoration. 2022, telecommunication operators, postal service These estimates incorporate the build back better providers and broadcasters have adapted to the war premium of 40 percent above the damage estimates conditions and managed to provide telecommunication (Table 41). services and ongoing maintenance of infrastructure amidst missile strikes on civilian assets. The key recommendations for recovery and reconstruction include prioritizing electricity Damage and Loss Assessment back-up (generators and other energy equipment) for telecom operators. These efforts will have Since the start of the war through February 24, immediate effect on humanitarian relief and access 2023, the estimated accumulated damage to the to information. In the short-term repair work, telecommunications sector is US$1.6 billion. Fixed providing telecommunication operators with power broadband providers sustained accumulated damage generators and fuel is of high importance. Because of US$0.8 billion, mobile operators sustained US$0.6 of sustained damage to Ukraine’s electricity grid billion, postal service providers US$0.2 billion, and from shelling, the telecommunications sector is broadcasters US$0.05 billion (Table 40). The damage relying extensively on generators and other energy has been concentrated in areas of intensive fighting equipment to maintain service provision. in the country’s eastern and southern regions: Kharkivska Oblast accounts for 20 percent of the sector damage, Donetska for 19 percent, Zaporizka 2023 Recovery and Reconstruction for 15 percent, and Khersonska for 13 percent. Priorities As of February 24, 2023, the estimated accumulated The 2023 recovery and reconstruction priorities loss to the Ukrainian telecommunications sector is are estimated to require at least US$602 million, US$1.55 billion. Fixed broadband providers sustained which should focus on maintaining the telecom and accumulated losses of US$0.1 billion, mobile postal infrastructure and covering the immediate 104 This sectoral assessment benefited from the Interim assessment on damages to telecommunication infrastructure and resilience of the ICT ecosystem in Ukraine developed by the ITU Office for Europe. 105 As of December 2019, the wireless penetration was 131 percent per capita, which was the second highest performance among the Eastern Partnership (EaP) countries. The mobile telecommunications market was competitive, and mobile internet generally affordable to an average Ukrainian. The wireless market in Ukraine displayed levels of competition similar to comparable European markets. 96 INFRASTRUCTURE SECTORS operational expenses related to generators and Kyiv School of Economics. The figures for the other energy equipment for mobile and fixed period June 1, 2022, to February 24, 2023, rely on broadband. Table 42 summarizes the priorities and extrapolations in case of postal services, while provides estimates of associated budgets. figures for broadcasting are available from the government. The figures for telecommunications are partially available from operators and partially Limitations and Recommendations for extrapolated from the RDNA1 assessment, using the Future Assessments data on war intensity by oblast. The damage and loss to media outlets were not quantified in this sectoral The key data used for these estimations are assessment which focused on providers of fixed from the Government of Ukraine (sourced from broadband, mobile operators, postal service, and postal service providers, public broadcasters, public broadcasting infrastructure. and internet service providers) and from the Table 40. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska - 1.2 21.6 Chernihivska 102.3 71.6 219.3 Chernivetska 0.9 1.0 5.5 Dnipropetrovska 6.4 6.0 70.8 Donetska 309.2 263.8 757.7 Ivano-Frankivska 1.0 2.2 81.3 Kharkivska 323.4 297.8 824.7 Khersonska 215.8 50.2 311.5 Khmelnytska 0.2 0.8 1.6 Kirovohradska 0.2 0.9 18.3 Kyivska 155.9 572.2 1,214.5 Luhanska 138.6 65.4 253.5 Lvivska 0.5 2.5 25.9 Mykolaivska 69.1 86.4 188.8 Odeska 14.5 2.8 25.2 Poltavska 0.2 1.8 3.3 Rivnenska 0.5 1.1 22.6 Sumska 44.9 30.7 58.2 Ternopilska 0.2 1.0 2.1 Vinnytska 1.4 1.9 5.2 Volynska 0.2 1.4 2.7 Zakarpatska 0.7 1.8 50.6 Zaporizka 241.4 85.5 348.2 Zhytomyrska 0.6 1.3 2.7 Total 1,628.0 1,551.2 4,515.7 Source: Assessment team. Note: loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. INFRASTRUCTURE SECTORS 97 Table 41. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Telecom 1,469.8 1,469.9 Reconstruction Post 247.8 12.2 260 needs Broadcasting 72.2 72.2 Telecom 320.4 480.6 800.9 Service delivery Post 926.5 959.9 1,886.4 restoration needs Broadcasting 10.9 16.6 27.3 Total 3,046.7 1,469.0 4,515.7 Source: Assessment team. Table 42. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Cost in US$ million Telecom 215.9 Reconstruction Post 60.7 needs Broadcasting 17.7 Telecom 78.4 Service delivery Post 226.9 restoration needs Broadcasting 2.7 Total 602.2 Source: Assessment team. Note: Figures in this table do not match those in Figure 4 (US$0.5 billion) as it is estimated that approximately 10 percent of telecom investments will be undertaken by the private sector and that these private sector investments will only require a small public contribution (e.g., through provision of access to subsidized loans under the 579 program). 98 INFRASTRUCTURE SECTORS WATER SUPPLY AND SANITATION Context Damage and Loss Assessment Before the war, access to centralized piped water The estimated aggregate physical damage for the supply in the country was estimated to be at 70 WSS sector stands at US$2.2 billion (Table 43); percent, and access to centralized wastewater of this amount, around US$0.9 billion was due to collection and treatment services at around damage between June 1, 2022, and February 24, 50 percent;106 approximately 10 million people 2023. Bearing in mind the various challenges in lack access to safely managed water services data collection (especially in oblasts with ongoing and 20 million people lack access to centralized military actions and those that are not currently wastewater collection and treatment services. under government control), this is a conservative There are significant inequalities between urban figure and could underestimate actual damage by up and rural areas in piped water access (80 percent to 30 percent; however, it provides a fair assessment in urban areas versus 34 percent in rural areas), of the magnitude of WSS infrastructure damage flush toilet access (86 percent versus 26 percent), up to this point. Based on the received data, the and sewer connections (75 percent versus just 8 most affected oblasts are Kharkivska, Luhanska, percent). In addition, the water supply and sanitation Chernihivska, Kyivska, and Donetska. Acquisition (WSS) sector governance framework is highly of data and information for Khersonska oblast was fragmented, with administrative and legislative not possible, but it is believed that this oblast has shortcomings that limit coordination and efficiency experienced a similar level of WSS damage. It is also between national and local administration efforts. expected that a sizable increase in damage will be found in Luhanska and Donetska oblasts once they Due to the ongoing war, the WSS sector has are accessible to the government and damage can experienced damage and losses and has struggled be safely reassessed. In terms of infrastructure, to provide essential services in extremely difficult most of the damage has been observed in larger circumstances. The mass drone and missile attacks physical infrastructure like wastewater treatment on critical civil infrastructure at the end of 2022 and plants, water supply and wastewater collection beginning of 2023 significantly affected WSS service networks, and drinking water treatment plants provision. WSS infrastructure was damaged both in and facilities. Significant numbers of water and territories still under government control and in those wastewater pumping stations, which are critical for not under government control, but most importantly functioning WSS systems, have been damaged as the ongoing power outages and intermittent well, but utilities are constantly working to fix those electricity supply have significantly affected these to ensure basic provision of WSS services. services. Water and wastewater facilities, pumping stations, etc. are all highly dependent on and require Losses have been estimated at approximately constant electricity supply. Despite the ongoing US$7.5 billion, noting even bigger challenges in efforts of emergency and communal service collecting reliable data for this assessment. With providers, millions of Ukrainians continue to receive support from the MCTID, other development partners, intermittent WSS services. and ongoing consultancy services procured by the ministry, the RDNA2 provides information on losses, but only at the national level. More than 40 percent of the total losses are from the lost revenues of WSS services provision. The war significantly reduced water consumption, as millions of people 106 According to Government of Ukraine. National report on the quality of drinking water and the state of drinking water supply in Ukraine for 2020, 2021, Link. INFRASTRUCTURE SECTORS 99 fled the country and many industries temporary improving wastewater services and environmental closed or significantly reduced their water usage. protection. Moreover, the existing national and local In addition, the collection rate (especially in war- budget support to WSS utilities (especially in war- affected oblasts) fell to an extremely low level and affected oblasts) needs to be continued in order to is still recovering quite slowly. The next biggest loss keep service providers afloat and ensure service category is additional costs for WSS service provision provision. This support for operating costs is the due to increased energy costs; energy is the second biggest chunk of the required short-term funding biggest cost component (at around 30 percent) for needs, but without it the most war-affected WSS Ukrainian WSS utilities, after staff costs. The rest of utilities will not be able to cover the basic needs and the economic losses are associated with increased provide WSS services. fuel consumption, increased prices of materials and equipment, lack of required repairs, tariff deficits, Sector reforms and strong support will be needed water losses, increased costs for chemical reagents, to deliver the ambitious medium- to long-term plan and required demolition and debris management. for the WSS, which entails investing around US$3.3 billion. Some of the reforms could be prepared and agreed on while the war is ongoing to save time on Reconstruction and Recovery Needs, the required upstream sector work, which should be Including Build Back Better  based on a strategic approach and reconstruction plan for the immediate postwar period. The needs assessment applied a limited building back better approach for the reconstruction of In prioritizing WSS sector needs, the Government the damaged/destroyed WSS assets. The needs of Ukraine should apply a staged approach to are assessed as reconstructing or rebuilding the required investments; it should focus on the damaged WSS infrastructure to its initial ensuring provision of basic, safe WSS services functionality, but considering new capacity before revising existing targets and setting new requirements, materials and technologies (Table 44). national targets under the UNECE-WHO/Europe This approach does not seek to achieve immediate Protocol on Water and Health107 or applying the EU and full compliance with SDG 6 (Clean Water and environmental acquis. Accordingly, the recovery plan Sanitation) or the EU Water Directives but would set for the sector should define investments required a foundation for potential compliance in the medium to restore basic WSS services, guided by technical term. recommendations toward putting in practice the build back better concept. Additional guidance and The WSS needs assessment is split between short- capacity development will be required to support term and medium- to long-term expenditures, Ukraine as it works to get closer to EU standards, which allows for prioritization of the investment doing so in a phased manner, in alignment with efforts and preparation of the sector for the its capacity, and with required risk management required infrastructure development. While the mechanisms in place. war continues, most of the efforts should be focused on maintaining the condition of WSS infrastructure In addition, due to its low administrative capacity to the extent possible to ensure provision of basic and limited investment experience, the WSS WSS services for both the population and industries sector is not ready for large-scale investments, and to minimize service interruption. This is and both the national and local governments particularly relevant for the areas directly exposed should encourage the receipt technical support to to war activities, but due to the nature of the war, prepare for and cover such significant WSS needs. the entire territory of Ukraine suffers from war Significant support and coordination is required if damage. Emergency equipment such as generators, the calculated medium- to long-term investments water trucks, etc. should be available for emergency are to be timely implemented. This process can be response. In the short term, the focus should be accelerated by involving all development agencies first on water supply, including systems to monitor having a presence in Ukraine beyond the emergency water quality and quantity, before moving toward response period. 107 The UNECE (United Nations Economic Commission for Europe)/WHO (World Health Organization) Protocol on Water and Health provides a platform for an integrated analysis of the priorities and needs of the WSS sector, with a focus on universal access and climate resilience. For additional information, see UNECE, “About the Protocol on Water and Health,” Link. 100 INFRASTRUCTURE SECTORS Reconstruction efforts should be paired with a deliver better results and ensure sustainability of reform agenda to ensure sustainable operation and WSS assets and services. In addition, some of the maintenance of the newly developed infrastructure. upstream work on reforming the sector should Significant institutional and normative work is be initiated. The World Bank WSS sector Policy required to meet several goals, including building Note108 can be used as a basis for tackling some the capacity of utilities, aggregating them, of the key bottlenecks: (i) improving governance to strengthening regulation, and allowing for private increase access, transparency, and accountability; sector participation. Only through such reforms (ii) enhancing regulation to improve performance can the sector deliver investments worth billions of and service quality; and (iii) reforming the funding dollars in the next 10 years. In addition, the planning approach to ensure cost recovery and sustainability, of WSS infrastructure reconstruction in Ukraine as well as to diversify funding options. should consider the broader water challenges in the country, such as water resources availability and vulnerability (notably vulnerability to contamination Limitations and Recommendations for by industrial activities), climate change effects, Future Assessments and more frequent droughts and floods; doing so will help ensure that the modernization of WSS Although the work on RDNA1 increased MCTID’s services implements innovative, sustainable, green, capacity to deal with data collection and address and resilient options, like nature-based wastewater WSS sector issues, the ministry still lacks the solutions. It is also important to emphasize that information system needed to collect key data, reconstruction of such magnitude is a historic make informed decisions, and act as a policy opportunity to build back better (both system and maker for the WSS sector. In this regard, the RDNA2 infrastructure), apply international best practices, WSS exercise is useful, but it needs to be further and incorporate key aspects of EE and sustainability refined through additional and more in-depth needs principles that would bring significant economic assessments, some of which have already been benefits. initiated. The ongoing decentralization in Ukraine should not mean that all WSS responsibilities are transferred to the local level and that the national 2023 Recovery and Reconstruction government has no further obligations; rather, a Priorities mechanism should be developed to ensure that national policies trickle down and are implemented While efforts in 2023 should focus on infrastructure at local level, thus contributing to the national recovery and ensuring WSS service provision targets and expected results for the sector. This goal (Table 45), there should also be efforts to prepare requires establishing or strengthening institutions a project pipeline for the required investments, (e.g., the national association of vodokanals) to better aligned to the phased approach recommended link and harmonize work between the national and above. Recovery and reconstruction efforts should the decentralized level. make use of the building back better approach to 108 World Bank, “Ukraine Water Supply and Sanitation Policy Note,” World Bank, Washington, DC, 2021, Link. INFRASTRUCTURE SECTORS 101 Table 43. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Chernihivska 310.1 47.8 582.6 Donetska 161.7 8.0 287.0 Kharkivska 811.9 124.4 1,525.0 Kyivska 192.4 28.6 360.5 Luhanska 505.7 80.7 953.1 Mykolaivska 46.9 3.0 84.0 Odeska 63.0 10.1 118.8 Sumska 40.2 4.3 73.7 Ternopilska 0.0 0.0 0.1 Zaporizka 51.4 7.9 96.5 Nationwide (no specific region) - 7,178.1 3,063.8 Total 2,183.4 7,492.9 7,145.0 Source: Assessment team. Note: Note: - = not assessed. The following oblasts were not assessed or had no available data: Cherkaska, Chernivetska, Dnipropetrovska, Ivano-Frankivska, Khersonska, Khmelnytska, Kirovohradska, Lvivska, Poltavska, Rivnenska, Vinnytska, Volynska, Zakarpatska, and Zhytomyrska. Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. Table 44. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Water treatment facilities 81.0 324.0 405.0 Sewage treatment plants 171.0 684.0 855.0 Water pumping stations 38.5 154.1 192.7 Sewage pumping stations 52.9 211.7 264.6 Reconstruction Water supply networks 156.0 624.0 780.1 needs Sewer networks 147.2 588.7 735.9 Wells 1.2 4.7 5.9 Laboratories 0.3 1.4 1.7 Clean water tanks 4.9 19.6 24.5 Water towers 2.0 7.8 9.8 Demolition and debris management 63.0 251.8 314.8 Service delivery Facility operational costs 98.3 393.0 491.3 restoration needs Operating costs coverage 3,063.8 - 3,063.8 Total 3,880.1 3,264.9 7,145.0 Source: Assessment team. Note: - = not assessed. 102 INFRASTRUCTURE SECTORS Table 45. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Water treatment facilities 48.6 Sewage treatment plants 34.2 Water pumping stations 19.3 Sewage pumping stations 10.6 Reconstruction Water supply networks 31.2 needs Sewer networks 36.8 Wells 1.2 Laboratories 0.3 Clean water tanks 4.9 Water towers 2.0 Demolition and debris management 15.7 Service delivery Facility operational costs 19.7 restoration needs Increased energy/fuel consumption support 170.2 Total 394.6 Source: Assessment team. INFRASTRUCTURE SECTORS 103 MUNICIPAL SERVICES Context disruptions in service delivery networks), create conditions for resilience, and develop urban recovery plans for coordinated recovery at the local level. The ongoing war has not only resulted in continuing damage to communal infrastructure and widening gaps in service delivery but has also exponentially Damage and Loss Assessment strained the capacity of local governments. As of February 24, 2023, damage to communal As of February 24, 2023, the war is estimated to infrastructure had increased since June 1, 2022; but have caused at least US$2.3 billion in damage to this increase can be considered an underestimation the municipal infrastructure and services sector. given the lack of access to damage data in frontline For the purpose of the RDNA2, the municipal regions and the limited data collection on asset infrastructure and services sectoral assessment types covered by the sector. covers five categories of assets:114 solid waste management; public spaces, infrastructure and Prior to the war, utilities’ service provision across amenities; local administrative buildings; sports all regions was irregular, and coverage rates were facilities; and local mobility assets.115 Local mobility low. The waste management sector was especially assets (sidewalks and streetlights) had the highest in need of investment and reforms, with coverage share of damage at 38 percent. This was followed of only an estimated 79 percent.109 The gaps in by the public spaces and facilities category, which infrastructure and service delivery can also be seen accounted for 25 percent of the total damage and in commonly delayed repairs to local roads,110 low included important assets such as cemeteries and maintenance rates for public green spaces (only 50 parks; these respectively contributed 20 percent percent),111 the need for 500 cemeteries in urban and 10 percent of damage within this category. areas,112 and the need for better streetlighting Local administrative buildings and centers that coverage and sidewalk quality. Local governments house municipal service functions and operations in Ukraine, responsible for delivering a wide range of also suffered damage, valued at US$204 million.116 services and infrastructure, faced numerous capacity Damage to the solid waste management sector constraints.113 Overall regulatory functions are at the was significant at US$99.9 million and resulted in local level in Ukraine and directly impact the quality disruption of the entire waste management service of life of citizens, local economic development, and network, which had been severely strained even sustainability. With the war, the burden on local prior to the war. Damage is estimated to be highest governments has greatly escalated, as they are in the Luhanska, Donetska, Kharkivska, Khersonska, expected to implement emergency recovery works, and Zaporizka oblasts. Table 46 shows the damage ensure continued service delivery to residents across all oblasts.117 (despite damaged communal infrastructure and 109 MCTID, “State of the Field of Household Waste Management in Ukraine for 2021,” May 19, 2022, Link. 110 MCTID, “Analysis of the State of the Road and Bridge Industry in 2021,” June 6, 2022, Link. 111 MCTID, “ State of the Field of the Green Economy for 2021,” May 13, 2022, Link. 112 MCTID, “State of the Burial Industry in Ukraine in 2020,” April 1, 2022, Link. 113 Local governments deliver “hard” municipal services (like local roads, solid waste management, utilities, public facilities, and urban amenities) along with social services, while also fulfilling their civil and environmental protection duties. 114 Utilities and housing are covered by infrastructure and housing sections, respectively. 115 Asset types under each category are not exhaustive due to data limitations, but they reflect a range of infrastructure and services. 116 Administrative buildings do not include health and education facilities. 117 The accuracy and coverage of regional damage data differ depending on asset type and region due to limitations in on- ground data collection and verification, the evolving situation of territories, and war-related disruptions. Data gaps were addressed by leveraging informed assumptions and extrapolations, based on reports of prewar baseline information, limited satellite imagery of visible damage, data on location of war events, and anecdotal evidence from local experts and authorities. The estimated value of damage is not precise but rather indicative of the damage magnitude. 104 INFRASTRUCTURE SECTORS Sectoral loss was estimated at a significant US$2.9 cities—will need to undertake evidence-based billion and included demolition and debris removal, identification of prioritized needs and associated revenue losses, and increased expenditures sequencing of recovery and reconstruction incurred by local governments and waste collection measures. Local implementation capacity must be entities.118 Estimations of revenue losses for local enhanced to ensure that recovery and reconstruction governments incorporated both local shares of efforts can be initiated. personal income taxes119 and own-source revenues120 and were approximated for one year of the war and The short-term needs total US$1.7 billion and then projected over the subsequent 18 months. emphasize maintaining service delivery, including A significant 88 percent of the total loss value is in IDP hubs, and strengthening local technical municipal revenue loss, highlighting the need to and operational capacity to allow for subsequent fiscally equip local governments so they can continue reconstruction. A first step will be to establish to deliver municipal services in coming months. the necessary architecture and institutional Revenue losses of household waste management arrangements for the implementation of follow-on entities (public utilities and private companies) were reconstruction works. For example, debris removal estimated at US$32 million between March 2022 to and demolition—which is necessary across all February 2023, while local governments’ additional sectors for initiating recovery and reconstruction— service delivery burden for housing and utilities falls within the mandate of local governments and services was US$18 million during this same period.121 is directly linked to the solid waste sector capacity. The most pressing needs in the short term therefore relate to (i) the upkeep of service delivery, which Reconstruction and Recovery Needs, could also include repair and reconstruction of Including Build Back Better critical assets such as cemeteries, administrative service centers, sidewalks, and streetlights, (ii) rapid For the municipal sector to recover and in turn scale up of investments in the waste management facilitate local reconstruction and recovery, the sector, and (iii) formulation of local reconstruction estimated needs amount to US$5.7 billion (Table and recovery strategies and action plans. Initiating 47). The estimated needs factor in costs associated recovery and reconstruction also hinges on the with inflation and building back better in alignment explicit prioritization and sequencing of investments with Ukraine’s reconstruction strategy, which based on technical assessments and data collection prioritizes decarbonization as well as reforms and at the local level, and on an enabling institutional and institutional capacity building to meet European legal environment for implementing plans. Union accession criteria. The role of local governments in recovery and 2023 Recovery and Reconstruction reconstruction is vital and goes beyond just Priorities municipal assets. Local governments are critical for the implementation, coordination, and planning For meeting urgent needs as well as for preparing of measures stipulated by individual functional necessary conditions for subsequent investments, sectors and line ministries. This reality necessitates US$200 million is required (Table 48). In 2023, an integrated and place-based approach at the local urgent needs include the continuation of services level. In addition, to overcome the likely challenges of in IDP hubs such as Kharkiv and Dnipro. It will also resource constraints and unstable cash flow during be important to procure assets (collection trucks, the recovery period, local governments—especially container bins) so local governments can continue to 118 Loss estimates do not account for the increased costs related to increased costs of fuel. 119 During the period March–December 2022, local revenues increased relative to the same period in 2021. This increase can be attributed to increases in the personal income tax component of the local revenues across 20 oblasts (i.e., there was no loss in such revenues). The substantial increases in salaries in the defense and IT sectors and a corresponding increase in military enrollment are likely explanations. 120 Municipal own-source revenue is composed of local taxes and fees (e.g., single tax, land and property tax and fees), nonutility user fees, administrative fees, and any local capital revenue. Losses in local revenues are predominantly from losses in own-source revenues stemming from reduced likelihood of payment and collection of local taxes and fees, decline in the provision of local administrative services, and exemptions, waivers, and restrictions imposed by the military budget code that remained valid during the assessment period. 121 The loss estimates relied on available local budget data and assumptions derived from analysis of war intensity, military budget code, and prewar baseline information on household waste collection and disposal tariffs and volumes. INFRASTRUCTURE SECTORS 105 provide waste management services, and to channel approaches, and costs in urban areas widely differ resources to ensure sanitary and safe operation and from those in rural areas. More importantly, cities’ management of dump sites and landfills. Investment capacities are substantially different from those of in waste management assets is vital for continued smaller settlements or rural areas. Categorizing debris removal efforts, especially in frontline regions data by the degree of urbanization would yield a that also host large shares of IDPs; these areas better understanding of context-specific policy and require urgent debris removal and have additional financing requirements. Strengthening collection waste management needs. Needs for 2023 also of data on locally maintained and owned assets for consider costs for establishing the foundational regular aggregation at the national level could also architecture and groundwork to commence be beneficial. Better coordination between local and recovery and reconstruction and include essential national levels would help ensure the success of activities such as technical and engineering studies, subsequent recovery works. Regular data collection updating of spatial plans, and recovery planning and from local level, disaggregated between urban prioritization at the local level. and rural areas, would improve monitoring of local service delivery and investment prioritization at the national level. For this assessment, the data were Limitations and Recommendations for in most cases either incomplete or not verified, Future Assessments suggesting data-reporting systems for communal assets could be improved. The damage and losses Future data collection efforts and assessments presented were to a large extent extrapolated from would benefit from segregating infrastructure analyzing the severity of the war across regions and assets into urban and rural, and from regularly based on informed assumptions and information aggregating locally verified data at the national from multiple sources. The estimated numbers are level. Infrastructure and service needs, delivery indicative and not to be taken as precise values. 106 INFRASTRUCTURE SECTORS Table 46. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 7.6 69.6 19.7 Chernihivska 116.3 47.7 277.6 Chernivetska 4.2 16.3 10.4 Dnipropetrovska 37.8 245.2 93.3 Donetska 477.5 584.8 1,146.9 Ivano-Frankivska 0.6 16.2 3.5 Kharkivska 178.9 448.7 428.4 Khersonska 239.3 234.1 571.0 Khmelnytska 1.7 18.5 5.3 Kirovohradska 12.0 17.0 30.2 Kyiv (City) 18.1 235.5 45.6 Kyivska 147.1 140.3 348.6 Luhanska 628.5 236.5 1,504.3 Lvivska 7.8 50.8 21.4 Mykolaivska 156.3 54.2 370.6 Odeska 14.2 89.0 35.2 Poltavska 7.0 32.5 19.0 Rivnenska 1.3 14.9 3.8 Sumska 95.7 43.0 224.4 Ternopilska - 12.3 1.2 Vinnytska 11.2 24.7 28.5 Volynska 1.0 13.3 3.2 Zakarpatska 0.8 16.6 4.1 Zaporizka 171.3 284.8 411.4 Zhytomyrska 42.2 40.5 99.6 Nationwide (no specific region) 10.0 - 24.1 Total 2,388.5 2,987.0 5,731.3 Source: Assessment team. Note: - = not assessed. Losses include an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. INFRASTRUCTURE SECTORS 107 Table 47. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Reconstruction of assets 315.3 3,257.2 Technical works including planning Reconstruction documents and enhancements in 240.8 171.4 4,030.6 needs institutional processes Debris processing and disposal 45.8 - Upkeep of services and increased 129.3 116.6 service delivery in IDP hubs Repair and stabilization of prioritized public and service delivery 429.9 175.0 Service delivery infrastructure 1,700.7 restoration needs Coordinated and efficient debris removal and enhanced waste 259.7 - management capacity Operational costs—goods, equipment, 298.6 291.6 and infrastructure Total 1,719.4 4,011.9 5,731.3 Source: Assessment team. Table 48. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Repairs to critical mobility and communal infrastructure including 16.0 Reconstruction critical administrative service centers needs Technical support for local recovery planning (including spatial 70.2 planning, land management, feasibility and engineering studies, etc.) Continuation of basic services in frontline regions, regions brought 41.4 back under government control, and IDP hubs Service delivery Investment in equipment to continue solid waste management service restoration needs 30.1 delivery Debris removal for continuation of services 42.9 Total 200.6 Source: Assessment team. 108 CROSS-CUTTING AREAS Residential Building. Mykolaivska Oblast. Photo from Mykolaiv City Council. CROSS-CUTTING AREAS 109 ENVIRONMENT, NATURAL RESOURCE MANAGEMENT, AND FORESTRY Context Damage and Loss Assessment The war has continued over the past 12 months, Damage in the forestry sector is estimated at over and damage to the environment has aggravated US$1.5 billion, and losses are estimated at US$523 what was identified in the RDNA1. Practically all million. The fire damage covers 183,181 ha,123 mostly environmental components—including air, water, in the oblasts of Donetska, Kharkivska, and Luhanska, soil, and biota—have been further impacted. Damage where it drives the high assessment of damage to to infrastructure—including hazardous industrial forest growing stock and roads. At 43.1 million m3, facilities and energy installations (e.g., power plants, growing stock damage is equivalent to over two oil storage depots, and refineries) and residential years of national harvesting and accounts for 93 and commercial buildings potentially containing percent of the US$1.5 billion in financial damage asbestos—all contribute to war-related burden of (Table 49). In addition, approximately 275 km of road environmental pollution. Agricultural lands, forests, are estimated as requiring repair. An estimated and aquatic and other ecosystems have been 1.8 million ha, or 20 percent of the forest, is now directly and indirectly impacted, including through inaccessible due to mine laying. This accounts for 62 the presence of minefields or unexploded ordnance, percent of the estimated US$523 million in financial cratering from extensive shelling, forest fires, and losses, with the balance relating to the inability of lack of access and management. the forest to deliver a variety of ecosystem services. The war exacerbated existing environmental Damage related to GHG emissions exceeds US$3 challenges in Ukraine. Prior to the war, Ukraine’s billion. Using the Intergovernmental Panel on Climate National Environmental Strategy–2020122 identified Change coefficients and the hectares of forests and the following major environmental challenges: “natural landscapes” affected by fires, the total air pollution; quality of water resources and land emissions of CO2eq (carbon dioxide equivalent) degradation; solid waste management; biodiversity are estimated at 28,468,136 tons and 528,471 tons loss; and human health problems. respectively. At a current carbon price of €100.34,124 this equates to a cost of US$3,083 million for GHG released. Losses to the ecosystem services, caused by fires in “natural landscapes” only, are calculated based on the scale of fires reported on the monthly Fire Bulletins and a value of US$337 ha-1 for non-market ecosystem services for grassland in 122 Government of Ukraine, “National Environmental Policy 2011–2022,” Link; see also FAO Aquastat, “Country Profile: Ukraine,” 2015, Link. 123 Fire damage in the forestry sector (183,181 ha) is based on Fire Bulletin data for all Oblasts, except for Mykolaivska, for which State Forest Resource Agency’s data has been used. 124 Ember, “Carbon Price Tracker” (accessed February 21, 2023), Link. 110 CROSS-CUTTING AREAS Ukraine.125 At over 440,000 ha of natural landscapes a later stage. Importantly, reconstruction efforts will burnt, the annual losses come to US$148 million, or need to reflect the need for Ukraine to transform to US$371 million over the 30-month loss period used a green and net-zero economy, harmonized with EU here. environmental and climate goals. Overall losses from air pollution are estimated Forestry sector needs are largely twofold. First, at US$14 billion, with the majority coming from harvesting and wood-processing supply chains PM2.5 pollution from forest and grassland fires need to be reestablished in the 2023–2026 period (US$ 13.9 billion), followed by fires in oil depots to supply vital raw materials to export-oriented, (US$122 million) and destruction of armed vehicles rural employment–sustaining, and value-adding (US$2 million). Emission volumes are determined firms. Adequate resources remain in the forest, in accordance with the Technical Manual for the which is still accessible; but sophisticated software Preparation of National Emission Inventories (EEP/ and management systems will be needed to ensure EEA Guidelines),126 and are multiplied by coefficients sustainability. Second, the forest itself needs to be considering the hazard, environmental impact restored during the entire 2023–2033 period in a way and scale of event, and a unit cost. The unit cost that maximizes its ecosystem services, including the corresponds to the tax rate for emissions from provisioning services that can generate revenues stationary sources (Order 04/13/2022 No. 175127 and and provide renewable and low-carbon raw Article 143 of the tax code128). material with a view to build back better principles. Preparation for such reforestation should begin immediately with the restoration and expansion of a Reconstruction and Recovery Needs, network of modern closed-root nurseries. Including Build Back Better  Capacity-building activities should focus on Recovery and reconstruction needs have been training Ukrainian personnel on the following updated for the forestry sector and estimated for directions: (i) the reestablishment of environmental capacity building in environmental management monitoring networks as well as laboratory (Table 50). Forestry sector needs alone are estimated infrastructure to analyze key environmental media at over US$1 billion for building back better over the (air, surface water, groundwater, soils, etc.); (ii) period 2023–2033, mostly related to reforestation, prioritized environmental cleanup actions to remove reconstruction staffing and maintenance, harvesting contamination sources and eliminate contaminant and transport equipment, and road repair. Capacity- pathways for the sensitive receptors; (iii) the building activities for strengthening environmental construction and commissioning of environmental governance will require an estimated US$420 pollution control infrastructure (for example, million, mostly for emergency containment and hazardous waste treatment facilities, engineered clean-up of environmental pollution. While the landfills, wastewater treatment plants) following needs associated with atmospheric pollution are the principles of build back better and using green not assessed, the RDNA2 shows that the scale of technologies; and (iv) the establishment of a follow- estimated damage and losses will translate into up environmental monitoring program to assess significant reconstruction needs, to be assessed at remediation effectiveness. 125 I. Soloviy et al., “Integrating Ecosystem Services Valuation into Land Use Planning: Case of the Ukrainian Agricultural Landscapes,” Forests 12, no. 11 (2021): 1465, Link. 126 European Environment Agency, “EMEP/EEA Air Pollutant Emission Inventory Guidebook 2019: Technical Guidance to Prepare National Emission Inventories,” EEA Report No. 13/2019, 2019, Link. 127 Link. 128 Link. CROSS-CUTTING AREAS 111 2023 Recovery and Reconstruction reducing air pollution requires further evaluations Priorities for each sector (energy, transport, extractives, metallurgy, chemical, urban, etc.) based on the planned application of best practices and modern Forestry sector: In 2023, salvage of existing technologies. The capacity-building analysis is equipment and its relocation to safer zones largely qualitative but provides some estimates for should be prioritized. The forest planning unit future needs. “Ukrderzhlisproekt” VO should be re-established or relocated, as needed. It should be strengthened in The RDNA2 is hampered by gaps in the data on its support of centralized strategic forest planning various aspects of war-related environmental to minimize the long-term impact of the war on impacts in Ukraine. The data available are forest and ecosystem resources. In coordination incomplete or lack validation of field data integrity. with strategic planning, modern closed root nursery This means that it was not possible to assess the capacity should be re-established or relocated damage and needs due to pollution of soil, water, as necessary with a focus on balanced recovery and ecosystems, including the marine environment, and addressing the long term needs of the wood or the long-term consequences for climate change processing sector, and the provision of other climate and biodiversity. It was also not yet possible to resilient ecosystem services. The administrative assess actual health costs of pollution, including air functioning and mobility of staff should begin to be pollution or asbestos, since no data on exposure are addressed, including in the repair and provision of known. In assessing forest fires, the RDNA1 relied office, vehicles, and equipment. While 2023 should on data gathered through remote sensing. However, be used to lay the foundations for sustainable long- field verification data by the State Forest Resources term planning, it may be possible in 2024 to rebuild Agency of Ukraine showed much lower damage the harvesting fleet with modern machinery. from forest fires, in some cases by several orders of magnitude, including in areas where the agency’s Capacity building and environmental assessments: access was not impeded. This discrepancy shows The immediate priorities include (i) addressing the the importance of ground-truthing as a validating environmental emergencies to contain and clean factor wherever possible in determining the extent of up hazardous materials and pollution posing an damage and recovery needs. Efforts are underway imminent risk; (ii) undertaking preliminary field- to progressively improve the forest fire estimates in based assessment of 5-7 priority contaminated Ukraine caused by the ongoing war. sites posing greatest risk to human health and sensitive ecosystems; and (iii) providing capacity- It is essential for the Government of Ukraine to building support for addressing environmental identify environmental hazards from the war, and contamination and impacts of the war (Table 51). to prioritize and implement options to minimize environmental risks to public health. This will Limitations and Recommendations for require an assessment of hazardous environmental Future Assessments pollutants that impact the health of Ukrainians, as well as the identification of those environmental hazards that require immediate attention. Such This update considers needs related to forestry a framework will help identify priority needs for and capacity-building. Needs related to natural clean-up and include no-regret measures that can landscape fires can be assessed only after a detailed be implemented during the war. damage assessment. Estimating the needs for 112 CROSS-CUTTING AREAS Table 49. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska - - 5.9 Chernihivska 67.9 102.7 50.2 Chernivetska - - 4.4 Dnipropetrovska - - 3.3 Donetska 322.3 55.6 182.8 Ivano-Frankivska - - 10.7 Kharkivska 444.0 79.1 254.1 Khersonska 106.0 31.2 61.1 Khmelnytska - - 4.9 Kirovohradska - - 3.1 Kyivska 183.9 63.2 114.5 Luhanska 326.0 87.4 186.8 Lvivska - - 11.6 Mykolaivska 19.1 4.6 12.5 Odeska - - 3.8 Poltavska - - 4.6 Rivnenska - - 13.6 Sumska 1.0 53.5 8.5 Ternopilska - - 3.4 Vinnytska - - 6.5 Volynska - - 11.7 Zakarpatska - - 12.3 Zaporizka 15.5 15.1 10.5 Zhytomyrska 51.9 30.8 47.6 Nationwide (no specific region) - - 425.0 Total 1,537.7 523.2 1,453.3 Source: Assessment team. Note: - = not assessed. Loss includes additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. CROSS-CUTTING AREAS 113 Table 50. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Types of activities/ Short term Medium to long Total Category investments (2023–2026) term (2027–2033) (2023–2033) Reconstruction needs in Reforestation, equipment, road 274.5 582.7 857.2 the forestry sector repair, and forest nurseries Service delivery Reconstruction staffing & restoration needs in the maintenance, capacity building, 67.1 108.9 176.1 forestry sector forest information system Reconstruction needs for Environmental assessment, 90.2 329.8 420.0 capacity building training, and cleanup Total 431.8 1,021.5 1,453.3 Source: Assessment team. Table 51. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated Cost Reconstruction needs in the forestry Reconstructing/relocating modern closed root sector for building two nurseries and 0.5 nursery capacity procuring harvesting equipment Repairing/reconstructing offices, assets, and Service delivery restoration needs in vehicles, reestablishing “Ukrderzhlisproekt” VO 6.1 the forestry sector forest planning unit Reconstruction needs for capacity Assessing 5-7 contaminated sites, capacity building building and environmental for addressing environmental contamination, 5.0 assessments clean-up activities Total 11.6 Source: Assessment team. 114 CROSS-CUTTING AREAS EMERGENCY RESPONSE AND CIVIL PROTECTION Context SESU units. Damage in this category increased 93 percent as compared with the RDNA1 period. The increase in damage to buildings did not result from The Emergency Response and Civil Protection damage to new buildings but rather from an increase sector, along with other relevant actors, has been in the share of buildings that were destroyed relative at the forefront in responding to immediate needs to the share of those that were damaged (45 percent resulting from war-related damage. Since the vs. 55 percent respectively). In terms of territorial beginning of the war, the State Emergency Service of distribution, damage to buildings is mostly recorded Ukraine (SESU) has been actively providing essential in the Luhanska, Kharkivska, Zaporizka, and and immediate support to vulnerable populations. Donetska regions. The damage related to seized or SESU is the main institution responsible for civil destroyed vehicles amounts to US$8.3 million, with protection and disaster risk management in Ukraine more than 60 percent of damage related to vehicles and is coordinated by the Ministry of Internal Affairs.129 in Donetska oblast. SESU’s area of operations is defined by the Civil Protection Code and includes emergency response, Losses are primarily related to the extensive search and rescue, evacuation, firefighting and involvement of SESU in war-related rescue and hydrometeorological services.130 response operations, which have led to additional expenses in the amount of US$473.3 million. The war has exacerbated existing challenges in the Since the beginning of the war, SESU has been sector. Even before the start of the war in February involved in 82,007 emergency actions to respond 2022, SESU’s machinery and vehicles were reported to shelling damage and has extinguished 14,008 to be outdated; such equipment has been pushed to fires caused by shelling. While providing immediate its limit while also facing the effects of the war. The support to vulnerable populations, SESU rescued speed and effectiveness of Ukraine’s emergency 3,935 persons and provided psychological support response activities have also been hampered by to 203,485 persons. Given that this extensive work lack of funding, which has resulted in aging and has been undertaken with no increase in staff, the poorly maintained facilities, an overstretched losses related to payments for extra hours worked workforce, and outdated technical equipment for (UAH30,000 applied until February 2023 as per emergency response. In addition, the country’s aging martial law) have been doubled. infrastructure stock is a significant driver of risk. The war has caused vast infrastructural damage that Damage and Loss Assessment has significantly aggravated the risk of industrial accidents, which could also affect neighboring and/ The aggregate damage recorded within emergency or riparian countries. Major industrial accidents, response/civil protection services amounts to including war-induced ones, pose significant risks US$179.7 million (Table 52), an 80 percent increase in Ukraine and could have severe and long-term from the RDNA1 period. The majority of damage consequences that exacerbate human suffering and (US$170.5 million) is related to either damaged or cause serious environmental and economic harm. destroyed buildings, mostly property of regional The ongoing war has already destroyed numerous 129 SESU is the competent authority of Ukraine under the UNECE Convention on the Transboundary Effects of Industrial Accidents. SESU also cooperates actively with United Nations Office for Disaster Risk Reduction (UNDRR) in implementing the Sendai Framework for Disaster Risk Reduction 2015–2030. 130 As part of SESU, 25 oblast-level bodies govern emergency response services, including firefighting, rescue units, and operation-communication centers. The early warning system under SESU is supported by the Ukrainian Hydrometeorological Center and covers both hydrometeorological conditions and geophysical processes. There are 59,039 personnel in SESU (including 36,000 first responders), of whom 12,469 (21 percent) are female and 46,570 (79 percent) are male. CROSS-CUTTING AREAS 115 industrial installations, resulting in the release of oil Finally, while focusing on the need to render and other hazardous chemical substances. immediate support, it is also critical to maintain and strengthen SESU’s capacity. SESU must not only be able to respond to and mitigate impact Reconstruction and Recovery Needs, from war-related damages but must also continue Including Build Back Better engaging in overall prevention and preparedness efforts, on national and regional levels. This entails The majority of needs in this sector are related strengthening national governance, legislation, to the overall improvement of the civil protection and policy making for disaster risk management service. Given that the war is ongoing, SESU and mitigation, including risk and vulnerability continues to provide immediate support to citizens assessments, and devising respective measures. as part of search and rescue operations. Thus, priority short-term measures must be connected to the procurement of new emergency response and 2023 Recovery and Reconstruction firefighting vehicles to make up for the vehicles that Priorities were seized or destroyed (Table 53). Given that the civil protection system’s priority In the medium to long term, the focus should be now is to provide immediate support to citizens on providing support to the civil protection system during the ongoing war, the urgent needs consist which has been burdened by inadequate and primarily of emergency rescue and firefighting obsolete technical equipment. Equipment to support vehicles. The number of such vehicles has been development of river/sea rescue teams, mobile reduced due to destruction and seizure, while the command-control posts, and mobile decontamination demand has increased due to requests for support units will be necessary. Additional vehicles, such as in emergency rescue operations. Therefore, the heavy emergency response trucks and firefighting priority intervention in 2023 is to procure vehicles trucks with ladders that can extend 30–50 m, are in the amount of US$117 million (Table 54). On top of also needed for the complex emergency operations. this, debris should be removed from affected SESU At the 12th meeting of the Conference of the Parties of buildings to ensure normal functioning of all the the UNECE Convention on the Transboundary Effects SESU units (US$13 million). of Industrial Accidents (November 30–December 1, 2022), Ukraine presented its current needs and The process of budgeting the 2023 needs in civil challenges related to prevention of, preparedness protection should take into account that 48 partially for, and response to industrial accidents. Specifically, damaged SESU buildings have been repaired to Ukraine seeks to ensure power supply to hazardous make them usable (the amount invested was US$0.3 installations; obtain special emergency and rescue million). Furthermore, a total of 115 vehicles have equipment; receive expert support to further align been procured (in the amount of US$23.6 million) national legislation with the convention, following and 291 have been donated as part of international Ukraine’s recent accession;131 benefit from technical humanitarian assistance (value of US$12.1 million). missions to support implementation; continue cross- border cooperation in basins, such as the Danube delta; restore critical infrastructure; and address Limitations and Recommendations for urgent environmental protection problems in the Future Assessments Dniester basin. This assessment follows the same principles Among the facilities that were damaged or destroyed and assumption as RDNA1. The baseline data and by shelling, SESU and hydrometeorology service damage and loss figures were provided by the SESU. buildings should have priority for reconstruction Given the continuation of the war, the continuing and repair. It will also be necessary to improve the attacks on infrastructure, and hence the increased system by developing new training centers, logistic number of emergency operations conducted by hubs, platforms and hangars for helicopters, and SESU, this assessment takes into consideration the shelters in civil protection facilities. pressure and complexity under which this sector is functioning. 131 In 2022, Ukraine became a party to the UNECE Convention on the Transboundary Effects of Industrial Accidents. The accession culminated years of work in the area of industrial safety, seen as extremely important given Ukraine’s high level of industrialization, sizable chemical industry, and rich mineral resources. UNECE, “Ukraine Joins UNECE Convention on the Transboundary Effects of Industrial Accidents,” July 14, 2022, Link. 116 CROSS-CUTTING AREAS Table 52. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska - 13.4 28.4 Chernihivska 5.4 11.2 29.6 Chernivetska - 10.3 21.8 Dnipropetrovska 1.0 34.0 58.8 Donetska 24.1 47.1 164.4 Ivano-Frankivska - 15.6 16.3 Kharkivska 37.3 30.5 111.4 Khersonska 2.9 12.0 135.9 Khmelnytska - 14.2 25.3 Kirovohradska - 10.4 19.7 Kyiv (City) 1.1 34.0 42.4 Kyivska 9.7 20.8 78.2 Luhanska 48.4 30.6 229.2 Lvivska - 28.6 53.6 Mykolaivska 8.9 12.7 83.9 Odeska 0.6 27.1 30.1 Poltavska 1.1 15.6 24.8 Rivnenska - 13.2 34.4 Sumska 3.9 12.0 23.4 Ternopilska - 11.8 22.2 Vinnytska - 17.4 26.3 Volynska - 11.8 15.6 Zakarpatska - 14.4 11.3 Zaporizka 34.7 24.2 202.2 Zhytomyrska 0.8 13.6 16.2 Total 179.7 486.5 1,505.1 Source: Assessment team. Note: - = not assessed. CROSS-CUTTING AREAS 117 Table 53. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Short term Medium to long Total Category Types of activities/investments (2023–2026) term (2027–2033) (2023–2033) Buildings 0 258.8 258.8 Reconstruction needs Debris removal 13.2 0 13.2 Vehicles 469.8 0 469.8 Service delivery restoration needs Service improvement 0 763.2 763.2 Total 483.0 1,022.1 1,505.1 Source: Assessment team. Table 54. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Types of priority activities/investments Estimated cost Reconstruction needs Debris removal 13.2 Service delivery Emergency response vehicles 117.5 restoration needs Total 130.6 Source: Assessment team. 118 CROSS-CUTTING AREAS JUSTICE AND PUBLIC ADMINISTRATION Context the Ministry of Justice data, in 2022, every third Ukrainian penitentiary was in an active combat zone, and one in 10 were in areas not under government Despite the ongoing war, Ukraine’s justice sector, control. courts, prosecutor’s offices, and State Customs Service have continued to function. Those elements of the justice and anticorruption sector that were Damage and Loss Assessment created and significantly reformed before the war—including the National Anticorruption Bureau The war has had a significant impact on Ukraine’s (NABU), the Special Anticorruption Prosecutor’s justice and public administration sectors. While Office (SAPO), the High Anticorruption Court (HACC), the courts, anticorruption agencies, prosecutors’, and the National Agency for Corruption Prevention— and Customs Service have been able to continue have continued to operate as effectively and providing services, they have each suffered damage efficiently as possible under the circumstances. The and losses of critical human and physical resources. new NABU director was appointed. 88 percent of Penitentiaries and probation institutions have also Ukraine’s courts continued to function over the past suffered extensive damage. Total damage since year.132 Over 100,000 online hearings were held and February 2022 is estimated at US$290 million. rulings continue to be issued. While 38 courts are not Kharkivska and Donetska oblasts have suffered controlled by Ukrainian authorities, their judges and the greatest damage (29.5 percent and 21.7 percent staff have been reassigned to work in other courts. respectively). Loss totals US$1.4 billion (Table 55). Ukraine’s judges are being trained in how to conduct Losses are concentrated in Kyiv and Kharkivska war crimes trials. Justice sector reform is ongoing. oblast, which account for 59.9 percent and 22 A renewed High Council of Justice restarted its percent of total losses respectively. Further details operations with a quorum of 15 members after the on damage and loss in the various justice and public Ethics Council completed its initial work reviewing administration institutions are provided below. candidates for professional ethics and integrity requirements. The High Qualification Commission of Prosecution service. Since February 2022, 67 Judges is still not operational, though the Selection buildings have sustained partial damage and seven Commission began interviews with approved buildings of the prosecution service have been candidates in early 2023. Over 2,000 vacancies destroyed out of a total of 784 buildings. The total in the judiciary remain unfilled. The HACC issued damage for the Office of the Prosecutor General 19 decisions during 2022, including decisions on (OPG) amounts to almost US$22 million. The damage the confiscation of Russia’s citizens’ assets under cost was US$5.1 million for completely destroyed Ukraine’s new Law on Sanctions, and it heard over buildings and US$14.82 million for partially damaged 3,000 pretrial motions. The Customs Service in buildings. The regions most affected by damage Ukraine has suffered significantly because of the war. to buildings were Kharkivska, Khersonska, and Many customs posts were significantly damaged or Donetska oblasts. The greatest total damage and even destroyed. Revenues from customs duties fell loss was identified in Kharkivska (US$7.9 million in substantially due to a significant reduction in trade damage and US$0.7 million in losses). This result for and turnover, an embargo on all imports from the Kharkivska may stem from the return of part of this Russian Federation, and changes to customs policy region to government control, making identification triggered by the new economic realities. Since the of damage and losses to the OPG easier. The start of the war, the Ukrainian penitentiary system infrastructure of SAPO was not damaged as a result has faced extraordinary challenges. According to of the war. 132 According to the United States Agency for International Development’s Justice for All program. CROSS-CUTTING AREAS 119 Judiciary. Total damage for the judiciary since damaged and destroyed buildings. The majority of the start of the war is US$119.1 million, covering losses in the prosecutors’ offices were for removal damaged and destroyed buildings plus damaged and of debris and demolition and the cost of purchasing destroyed vehicles, furniture, and other inventory. furniture, equipment, and other inventory for The greatest damage to courthouses occurred in repaired premises. the Donetska, Kharkivska, and Mykolaivska oblasts. Total losses for the judiciary, primarily the cost of demolition and removal of debris, are US$15.2 Reconstruction and Recovery Needs, million. Including Build Back Better Institutions under the Ministry of Justice Total recovery and reconstruction needs for (penitentiaries and probation institutions). Total the justice and public administration sectors damage is US$125.3 million, with most of the are US$646.9 million (Table 56). This includes damage incurred by penitentiaries (US$123.8 approximately US$220.6 million in short-term million). The most affected regions were Kharkivska, needs and US$426.2 million in medium- and longer- Khersonska, and Zaporizka. Out of 3,556 buildings, term needs. The Kharkivska and Donetska oblasts 311 were partially damaged and 43 destroyed. The account for the largest share of both short-term and damage to buildings amounts to US$124.9 million medium/long-term needs. The judiciary accounts (US$88.9 million partially damaged and US$36.02 for US$265.3 million in total needs (US$90.2 destroyed). Losses amount to US$7.4 million, mainly million in short-term needs and US$175.1 million in due to costs of demolition and debris removal. medium/long-term needs), while the OPG accounts for US$60.2 million in total needs (US$27.9 million in State Customs Service. Since the start of the war, short-term needs and US$32.3 million in medium/ the Customs Service has lost 43 buildings and long-term needs). The Customs Service accounts for had another 273 partially damaged. Chernihivska US$50.9 million in total needs (US$16.2 million short- oblast suffered the greatest number of destroyed term needs and US$34.7 million in medium/long- buildings (21), while Kharkivska oblast had 173 term needs). The needs of the penitentiary system partially damaged buildings. Total damage for the and probation institutions amount to US$270.5 Customs Service amounts to US$23.6 million, of million (US$86.3 million in short-term needs and which almost US$16 million is for partially damaged US$184.1 million in the medium/long-term needs). and destroyed buildings and US$7.6 million is for The greatest need in both the short and long term damage to vehicles, furniture, and other inventory. is reconstruction and rehabilitation of courthouses Completely destroyed buildings account for US$7.6 and of prosecution service and Customs Service million and partially damaged buildings account for buildings. The Customs Service will also need to US$8.4 million. Total Customs Service damage was increase its capacity in western oblasts, given greatest in Sumska, Kharkivska, and Chernihivska the reorientation of trade routes toward the EU. oblasts. Finally, the Customs Service will face a large need for funding to replace lost and damaged vehicles, Total losses for the justice and public administration furniture, and other inventory. sectors are US$1.4 billion. These include US$15.6 million for the judiciary, US$1.8 million for the 2023 Recovery and Reconstruction Priorities prosecution service, US$1.4 billion for the Customs Service, and US$7.4 million for penitentiaries and probation institutions. The largest portion of the customs losses, US$1.4 billion, is for loss of fees In 2023, given the damage situation and the needs from customs services (drop in customs revenues of institutions in this sector, the priority activities from the supply of gas, petroleum products, and should include debris removal (US$25 million) and electricity amount to more than US$850 million), initiation of reconstruction (US$58.3 million) (Table with an additional US$1.4 million for removal of 57). Some resources, albeit smaller (US$1.6 million), debris and demolition of damaged and destroyed are also required for service delivery restoration buildings. The bulk of the losses in the judiciary needs. are costs for removal of debris and demolition of 120 CROSS-CUTTING AREAS Limitations and Recommendations for This analysis includes only partial data from Future Assessments institutions under the Ministry of Justice. Penitentiaries and probation institutions are included. The lack of data on assets in territories not under government control poses a great challenge Data pertaining to other institutions under the to assessing damage and determining future Ministry of Justice and to the State Tax Service has reconstruction needs. Even after Sumska, not been integrated in this analysis. This gap could Chernihivska, and most of Kharkivska oblasts be addressed in future assessments. were returned to government control, it has been practically impossible to access customs facilities for a thorough assessment of damage to buildings and movable property. Table 55. Damage, loss, and needs by oblast (US$ million) Oblast Damage Loss Needs Cherkaska 0.5 0.0 1.0 Chernihivska 15.4 71.7 33.4 Dnipropetrovska 4.2 0.6 9.5 Donetska 62.8 8.5 141.0 Kharkivska 85.6 314.5 191.0 Khersonska 42.0 84.6 96.6 Kyiv (City) 0.1 853.6 0.2 Kyivska 5.8 0.5 12.9 Luhanska 9.4 0.9 21.9 Lvivska 5.1 0.1 10.9 Mykolaivska 14.2 1.0 30.8 Poltavska 2.6 0.0 5.5 Sumska 9.1 37.1 20.2 Zaporizka 29.4 52.3 63.3 Zhytomyrska 3.8 0.4 8.5 Total 290.0 1,425.9 646.9 Source: Assessment team. Note: No damage reported for Chernivetska, Ivano-Frankivska, Khmelnytska, Kirovohradska, Odeska, Rivnenska, Ternopilska, Vinnytska, Volynska, and Zakarpatska. Loss includes an additional 18 months beyond the 12 months between February 24, 2022, and February 24, 2023. CROSS-CUTTING AREAS 121 Table 56. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Types of activities/ Short term Medium to long Total Category investments (2023–2026) term (2027–2033) (2023–2033) Judiciary 61.3 143.1 204.4 Reconstruction Ministry of Justice 65.6 153.0 218.5 needs Prosecution 10.5 24.4 34.9 Customs 8.4 19.6 28.0 Judiciary 28.9 32.0 60.9 Service delivery Ministry of Justice 20.8 31.2 52.0 restoration needs Prosecution 17.3 7.9 25.2 Customs 7.8 15.1 22.9 Total 220.6 426.2 646.9 Source: Assessment team. Table 57. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Priority activity/investment Cost in US$ million Reconstruction Debris Removal 25.0 needs Reconstruction initiation 58.3 Service delivery Vehicles 1.6 restoration needs Total 84.9 Source: Assessment team. 122 CROSS-CUTTING AREAS EXPLOSIVE HAZARDS MANAGEMENT Context133 Reconstruction and Recovery Needs, The clearance of explosive ordnance (landmines, Including Build Back Better  unexploded ordnance and improvised explosive The National Mine Action Authority (NMAA) of devices) is a precondition to safe rebuilding, Ukraine considers that 25 percent of Ukraine’s resumption of service provision, and return to territory has been exposed to the war (Figure normality in Ukraine. Effective and efficient mine 18), and although survey activities will continue action efforts, in particular nontechnical survey to better define the true nature and extent of (NTS),134 technical survey (TS),135 and clearance,136 contamination, the cost for clearance of explosive are an essential part of land release. The “Five Pillars ordnance across Ukraine is currently estimated of Mine Action,” described by the United Nations at US$37.6 billion (Table 59). Within this figure Mine Action Service (UNMAS), also include activities are costs needed for significant investments in beyond survey and clearance which are critical to equipment, training, and salaries to expand strategic manage risks from explosive ordnance.137 The extent planning capability and the operational work force of contamination from cluster munition remnants in in the country. It will be essential to increase survey Ukraine has not been quantified but is considered activities so as to enable early cancellation of non- extensive. Ukraine also has unexploded ordnance contaminated areas and the prioritization of areas and abandoned explosive ordnance remaining requiring the most urgent clearance, such as highly from the two World Wars and from Soviet military contaminated areas with a high concentration of training and stockpiles. In addition to the presence of civilian populations, and areas that are critical for explosive ordnance as an impediment to access and restoring production and economic flows. Costs recovery, there is a cost to support and rehabilitate for NTS amount to US$200 million, for TS to US$9.8 survivors of accidents. Documentation from Office of billion, and for full clearance operations to US$27.6 the High Commissioner for Human Rights indicates billion (Table 58). These costs include procurement that as of February 15, 2023, there were 632 civilian of demining machines, mine detection dogs, metal victims of mines and explosive remnants of war, detectors, drones, personal protective equipment, 413 of whom survived and will need assistance vehicles, and other specialized equipment. Such and rehabilitation. The costs of supporting those investments will need scaled-up capacity to respond injured are included within the Social Protection and to additional demands in areas where government Livelihoods chapter. control has been restored and where active military actions have ceased. 133 In RDNA1, this sectoral assessment was labeled “Land Decontamination.” 134 NTS is the starting point for identifying, accessing, collecting data on, reporting, and using information to define where mines/explosive remnants of war (ERW) are to be found, as well as where they are not. It also aids in identifying Suspected Hazardous Areas (SHA) and Confirmed Hazardous Areas (CHA) where further investigation and/or clearance need to take place. 135 TS techniques and methods involve a physical intervention and, use survey or clearance assets to enter a hazardous area to: (i) confirm the presence, or absence, of mines/ERW and identify the type of hazards present; (ii) better define the boundaries of the SHA or CHA that requires clearance; and (iii) collect information to support land release decision- making. TS can be broadly characterized as either targeted or systematic depending upon the information gathered about hazard and threat. TS assets must provide a high probability (near certainty) that the presence of expected hazard items will be indicated by the equipment and methodology in use and that TS personnel are safe to conduct the activity. 136 The most familiar and visible part of mine action is the clearance of mines and ERW. It is also the most expensive. Clearance refers to an intrusive information-gathering and threat removal process that fully defines a hazardous area while removing explosive hazards. 137 UNMAS, “5 Pillars of Mine Action,” Link. CROSS-CUTTING AREAS 123 Figure 18. Reference map and areas exposed to war used as baseline Source: Secretariat of NMAA and Mine Action Center. 2023 Recovery and Reconstruction Limitations and Recommendations for Priorities Future Assessments Explosive hazards management is an enabler of The estimated costs reflect some changes from recovery and reconstruction, and thus the targeting RDNA1: (i) a reduction in the reported area of demining operations will be determined by other considered as exposed to war (decreased from recovery and reconstruction priorities. Priorities 267,638 km2 for RDNA1 to 187,732 km2) and in 2023 will include responding to the humanitarian therefore potentially contaminated138 (Figure needs outlined in the Humanitarian Response Plan 19); and (ii) the introduction of a significant 2023, and a focus on priority areas determined by “cancellation of hazardous area”139 component the Secretariat of the NMAA: (i) residential areas; through NTS, applied differentially between (ii) electricity and heating infrastructure; (iii) roads, northern and eastern oblasts. The estimated costs bridges, and railways; and (iv) agricultural land. The for survey and clearance activities consider the total priorities for 2023 are estimated at US$397.1 increased price of clearance from US$2 to US$3 per million for NTS, TS, and mine clearance, including m2. As NTS activities are expanded, the nature and for four regions (Chernihivska, Kyivska, Sumska, and extent of the contamination will be better defined, Zhytomyrska) with the equipment costs as part of and the projected “cancellation of hazardous area” mine clearance calculations (Table 60). component of the land release process will continue to gain accuracy. 138 The area of 187,732 km2 refers to the areas for NTS (165.44 km2), TS (13.2 km2), and clearance (9.18 km2), consistent with calculations under RDNA1 for the total area exposed. 139 This refers to “a defined area concluded not to contain evidence of explosive ordnance contamination following the non- technical survey of a SHA/CHA.” See IMAS (International Mine Action Standards) 04.10, “Glossary of Mine Action Terms, Definitions and Abbreviations,” 2nd. ed., January 1, 2003, Link. 124 CROSS-CUTTING AREAS Figure 19. Oblast exposure to war (percentage) 0 10 20 30 40 50 60 70 80 90 100 Luhanska Khersonska Chernihivska Zaporizka Sumska Donetska Kharkivska Kyivska Mykolaivska Zhytomyrska Source: Assessment team. The operational costs are overly simplified but still Demining and the management of risks from represent an average. In reality, there is a phased explosive ordnance will be required over decades. approach to land release, in which the Ministry of Costs associated with the removal of anchored Defense and the SESU units first conduct emergency and floating sea mines in the Black Sea are yet clearance of non-surveyed areas (“spot tasks”), unquantified. However, until the clearance of the followed by more systematic area clearance in Black Sea and Ukraine harbors is completed, (re) accordance with international standards conducted insurers of shipping vessels will continue to charge by additional operators. In addition, while the area high and even historic levels for insurance—a cost used in the calculations incorporates both land that will eventually be passed on to consumers, and aquatic settings, no differentiation between a particularly significant issue in relation to grain terrestrial and underwater clearance approaches is exports. made. Costs of equipment should also be assumed to be included in the square meter rate used. Table 58. Explosive ordnance contamination and estimated clearance cost (US$ million) Km2 thousand US$ million Estimated area Estimated Cost for humanitarian mine action % land Oblast Non- Non- Oblast exposed Technical Technical areaa technical Clearance technical Clearance Total to war survey survey survey survey Cherkaska 20.9 0 0 0 0 0 0 0 0 Chernihivskaa 31.9 80 25.5 1.3 637 30.8 955.5 1,911.0 2,897.3 Chernivetska 8.1 0 0 0 0 0 0 0 0 Dnipropetrovska 31.9 0 0 0 0 0 0 0 0 Donetska 26.5 64 17.0 1.69 1.27 20.5 1,270.5 3,810.0 5,101.0 Ivano-Frankivska 13.9 0 0 0 0 0 0 0 0 Kharkivska 31.4 46 14.4 1.4 1.1 17.5 1,083.0 3,249.0 4,349.5 Kherson 28.4 95 27.1 2.7 2 32.8 2,030.2 6,090.0 8,153.0 Khmelnytska 20.6 0 0 0 0 0 0 0 0 Kyivskaa 28.1 37 10.4 520 260 12.6 390.0 780.0 1,182.6 Kirovohradska 24.6 0 0 0 0 0 0 0 0 CROSS-CUTTING AREAS 125 Km2 thousand US$ million Estimated area Estimated Cost for humanitarian mine action % land Oblast Non- Non- Oblast exposed Technical Technical areaa technical Clearance technical Clearance Total to war survey survey survey survey Luhanska 26.7 100 26.7 2.7 2.0 32.2 2,000.2 6,000.0 8 Lvivska 21.8 0 0 0 0 0 0 0 0 Mykolaivska 24.6 14 3.4 170 85 4.2 127.5 255.0 386.7 Odeska 33.3 0 0 0 0 0 0 0 0 Poltavska 28.7 0 0 0 0 0 0 0 0 Rivnenska 20.0 0 0 0 0 0 0 0 0 Sumskaa 23.8 70 16.7 417 208 20.2 312.7 624.0 956.9 Ternopilska 13.8 0 0 0 0 0 0 0 0 Vinnytska 26.5 0 0 0 0 0 0 0 0 Volynska 20.1 0 0 0 0 0 0 0 0 Zakarpatska 12.8 0 0 0 0 0 0 0 0 Zaporizka 27.7 74 20.1 2 1.51 24.3 1,507.5 4,521.0 6,052.8 Zhytomyrska a 29.8 14 4.2 208 104 5.0 156.0 312.0 473.1 Ukraine 575.5 165.44 13.1 9.18 200.2 9,833.2 27,552.0 37,585.4 US$/sq.km. 1,210 750,000 3,000,000 Sources: Oblast area and percentage of land exposed to war: official/public information; European Space Agency WorldCover 2020 Land Cover, Link. Estimated NTS cancellation of hazardous areas percentage and operational costs: assessment team. War area: Information Management System for Mine Action (IMSMA) database, February 22, 2023. a. Among northern oblasts, 95 percent of area is estimated to be canceled through NTS, leaving 5 percent for TS; 50 percent of that area is foreseen for full clearance. Among eastern oblasts, 80 percent of area is estimated to be canceled through NTS, leaving 10 percent for TS; 75 percent of that area is foreseen for full clearance. Table 59. Recovery and reconstruction needs (US$ million) as of February 24, 2023 Types of activities/ Short term Medium to long Total Category investments (2023–2026) term (2027–2033) (2023–2033) Non-technical survey 80.1 120.1 200.2 Service delivery Technical survey 1,475.0 8,358.2 9,833.2 restoration needs Mine clearance 4,132.8 23,419.2 27,552.0 Total 5,687.9 31,897.5 37,585.4 Source: Assessment team. Note: Equipment to be procured in the amount of US$372 million for the short and US$400 million for the long-term needs (total of US$772 million) is considered as a prerequisite for mine clearance and therefore already included as part of the unit costs for NTS/TS and demining. Table 60. Estimated 2023 implementation priorities (US$ million) as of February 24, 2023 Category Priority activity/investment Estimated cost Non-technical survey 34.3 Service delivery Technical survey 181.4 restoration needs Mine clearance 181.4 Total 397.1 Source: Assessment team. 126 TOWARD RECOVERY AND RECONSTRUCTION Borodyanka City, Kyivska Oblast. Photo by Julia Burlachenko. TOWARD RECOVERY AND RECONSTRUCTION 127 Emergency and Humanitarian The UN development system has supported the Response government’s emergency early recovery efforts by mobilizing US$1 billion for technical assistance at strategic and sectoral levels and providing basic Since February 2022, the Government of Ukraine services to vulnerable people and local communities. has taken the lead in coordinating humanitarian It has also assisted with high-voltage energy support to the war-affected regions and equipment, critical infrastructure reconstruction, population. Online humanitarian aid platforms have debris removal and demining, support for relocation been established to provide services, coordination, of businesses and people’s livelihoods, and and support to Ukraine; these are operated by state strengthening of national and local authorities’ crisis authorities and volunteers. To support the population management capacity and ability to respond to of IDPs,140 a large-scale IDP program under the population needs and vulnerabilities. Office of the President of Ukraine has been put in place to provide cash assistance to households. This Since February 2022, the World Bank Group has represents the main source of sustenance for the mobilized over US$18 billion in financial support IDPs. to Ukraine.144 The World Bank’s flagship financing instrument for Ukraine, the Public Expenditures for As of February 2023, the total support to Ukraine Administrative Capacity Endurance (PEACE) Project, from the EU, its member states, and European enables international donors to provide support.145 financial institutions amounts to approximately The World Bank also supports preparation and €50 billion141 (equivalent to US$53 billion).142 In implementation of framework projects.146 addition, the EU takes care of 4 million Ukrainians Recovery and Reconstruction who fled their country and found shelter in EU member states. This brings the overall EU support to Ukraine and to Ukrainians in the EU to around €67 billion (US$71 billion). Through the Union Civil The government is leading the country toward Protection Mechanism (UCPM), the EU has deployed recovery and reconstruction. In April 2022, the rescEU assets, including power generators, medical National Council for the Recovery of Ukraine from equipment, temporary shelter units, and other the War was established, cochaired by the Prime specialized equipment, and has coordinated the Minister and the Office of the President.147 This medical evacuation of over 1,700 Ukrainian patients institution is charged with developing proposals in urgent need of treatment. EU Logistics Hubs have for priority reforms and the postwar recovery and been established in Poland, Romania, and Slovakia. development plan. In July 2022, at the international Ukraine Recovery Conference (URC2022) held in In response to the war, the Humanitarian Country Lugano, the Government of Ukraine presented a Team, inclusive of UN entities, non-governmental comprehensive US$750 billion Recovery Plan,148 organizations, and other partners have scaled up with targets for 2032 that focus on addressing war their presence in Ukraine and delivered in 2022 effects and impacts as well as broader economic assistance to 16 million people through US$3.4s development. To support the achievement of these billion worth of assistance, including cash, food, targets, 15 national programs have been developed medicine, generators, and winter supplies.143 aimed at meeting targets in the short-, medium-, and long-term targets.149 140 The number of IDPs was 5.4 million as of January 23, 2023, as reported by IOM, “Ukraine International Displacement Report: General Population Survey, Round 12 (16–23 January 2023),” Link. 141 European Commission, “EU Solidarity with Ukraine,” 2023, Link; Consilium, “EU-Ukraine Summit, 3 February 2023,” Link; Consilium, “EU Response to Russia’s Invasion of Ukraine,” 2023, Link. 142 Using exchange rate of February 28, 2023, where €1 = US$1.06. 143 OCHA Ukraine. Ukraine: 2022 Flash Appeal Funding Snapshot - 21 February 2023. Link. 144 World Bank, “World Bank Financing Support Mobilization to Ukraine Since February 24, 2022,” January 12, 2023, Link. 145 World Bank, “Supporting Ukraine through the War,” 2023, Link. 146 World Bank, “World Bank Approves Initial $50 Million Grant to Help Repair Transport Infrastructure in Ukraine,” February 10, 2023, Link. 147 Government Portal, “About the National Council for the Recovery of Ukraine from the War,” Link. 148 Recovery.gov.ua, “Recovery of Ukraine,” Link; URC2022, “Recovery Plan,” 2022, Link 149 See Government of Ukraine, “Plan for the Recovery of Ukraine (ПЛАН ВІДНОВЛЕННЯ УКРАЇНИ),” 2022, Link. 128 TOWARD RECOVERY AND RECONSTRUCTION Several institutional and policy reforms have the process.151 In line with these commitments, in been implemented to support the recovery December 2022, the government and international and reconstruction process. The Ministry of development partners launched in thematic sector Infrastructure and Ministry of Communities working groups, based on the chapters of the and Territories Development were merged into Recovery Plan, to jointly identify key principles and the Ministry for Communities, Territories and priority actions in each sector and to promote aid Infrastructure Development (MCTID) to allow for coordination and effectiveness. In January 2023, the better coordination and to make reconstruction of EU facilitated the launch of a Multi-agency Donor war-affected regions more efficient.150 To support Coordination Platform to support Ukraine’s repair, a more systematic approach to planning the recovery, and reconstruction process and to help restoration of Ukraine, the position of Deputy Prime bridge the gap between needs and resources.152 The Minister for Restoration of Ukraine was established; platform supports coordination among donors and the minister in parallel heads the MCTID. The financial organizations. The first meeting of the government is also advancing the completion of platform brought together high-level officials from reforms in the construction sector, decentralization Ukraine, the EU, and G7 countries, as well as financial reform (which should include the promotion of institutions such as the European Investment locally driven recovery and reconstruction efforts), Bank, the European Bank for Reconstruction and and implementation of the energy efficiency policy. Development, the International Monetary Fund, and the World Bank Group. In December 2022, the International partners are supporting recovery and Ukraine Relief, Recovery, Reconstruction and Reform reconstruction efforts. At the URC2022, international Trust Fund (URTF) was set up by the World Bank to community representatives adopted the Lugano channel donor support.153 Through the Economic Declaration with a commitment to 12 actions, including Resilience Action Program, the International Finance establishing an effective coordination platform, Corporation provides for the immediate needs of fostering innovative approaches to recovery, and Ukraine’s private sector with a US$2 billion package inviting the private sector, academia, civil society, to help build the Ukrainian private sector’s resilience subnational-level actors, and others to engage in and support livelihoods.154 Guiding Principles for Recovery and Reconstruction Guiding principles have already been identified and entrepreneurship.155 The July 2022 Lugano and adopted by the Government of Ukraine and the Declaration for the Reconstruction of Ukraine international community. The key guiding principles outlines several guiding principles for recovery of the government’s Recovery Plan are to start and reconstruction.156 These include partnership, now and ramp up gradually; grow prosperity in an reform focus, transparency, accountability, and rule equitable way; integrate into the EU and be consistent of law; democratic participation; multi-stakeholder with and supportive of the accession path; build back engagement; gender equality and inclusion; and better (for the future); and enable private investment sustainability. 150 Government Portal, “Oleksandr Kubrakov Appointed Deputy Prime Minister for Restoration of Ukraine – Minister for Communities, Territories and Infrastructure Development of Ukraine,” December 1, 2022, Link. 151 URC2022, “Lugano Declaration,” 2022, Link. 152 European Commission, “Ukraine: Multi-agency Donor Coordination Platform for Ukraine Kick-starts Work,” January 26, 2023, Link. 153 World Bank, “New Multi-Donor Trust Fund Established to Channel Donor Support to Ukraine,” press release, December 16, 2022, Link. 154 International Finance Corporation, “IFC Launches $2 Billion Response Package to Support Ukrainian Private Sector,” December 15, 2022, Link. 155 See Government of Ukraine, “Plan for the Recovery of Ukraine (ПЛАН ВІДНОВЛЕННЯ УКРАЇНИ),” 2022, Link. 156 URC2022, “Lugano Declaration,” 2022, Link. TOWARD RECOVERY AND RECONSTRUCTION 129 The RDNA1 proposed a set of complementary recovery coordination mechanisms that ensure guiding principles that are based on international community participation and that engage a range experience within post-conflict and post-disaster of key stakeholders. These local mechanisms can recovery and reconstruction efforts. These are support convening of authorities, civil society, confirmed based on the results of RDNA2, and the community members, and private sector actors following principles are highlighted as the most to design and provide tailor-made support for relevant in the context of Ukraine: the needs of local communities and facilitate return and integration of refugees and IDPs. The • Leadership and coordination by the government approach should ensure focus on local governance and partners. This principle includes setting up and community needs and participation, and it common systems and processes for coordination, should promote decentralization in line with the oversight, and so on as well as enhancing subsidiarity principle. institutional, managerial, and technical capacity of implementing agencies /stakeholders to • Resilience and building back better for a more ensure mobilization and absorption of financial sustainable future. Recovery and reconstruction resources, including external and private efforts should aim at rebuilding a prosperous and support. These actions are critical to address modern Ukraine. Investments should be made implementation challenges and continue to in sustainable solutions to reduce depletion of enhance absorptive and implementation capacity natural resources, cut emissions and waste, and of authorities and other stakeholders. These protect people and the environment. Nature- actions should also support implementation of based solutions and landscape restoration should recovery and reconstruction in a transparent be adopted to enhance adaptation and resilience and efficient manner that meets the established building. Investments should flow alongside goals, avoids duplication of efforts led or financed continued decentralization and reforms that will by different actors, and is fully aligned with the foster social cohesion and that will allow Ukraine still recent reforms on the devolution of power to harmonize legislation and policies in line with and decentralization in Ukraine. the EU law, including EU standards and the acquis communautaire.157 • Balancing urgent needs and medium- to long- term goals. Overarching, sector-specific, and • Durable solutions for return of refugees and region-specific strategies can help guide efforts integration of displaced people, prioritizing their to meet immediate needs, including prioritizing needs for housing, access to basic services, the most vulnerable groups, supporting social protection, and livelihoods. Partnership livelihoods and communities as well as safety between central and local-level authorities, civil and economic activity, and addressing through society, academia, and the private sector can recovery and reconstruction the root causes help to design and deliver durable solutions with of vulnerability and risks. This approach can tailor-made packages of support to communities. simultaneously create conditions for planning of These could include housing, access to basic investments for medium- to long-term recovery services, social protection, mental health and and reconstruction. Strategic prioritization of psychosocial support, assistance with livelihoods reconstruction across all sectors and locally and business financing, and technical assistance driven reconstruction efforts should be adopted to facilitate return and integration of refugees to ensure best use of resources and interlinkages and IDPs. across them, and principles for recovery and reconstruction should be applied consistently. • Continuous data collection. All central- and local- level authorities, and other relevant stakeholders • Differentiated approaches that prioritize impact should continue to be engaged and coordinate and needs and that promote decentralization. for the purpose of continuous data collection and Investments should reflect the specific record keeping related to all damage, loss and needs of communities, oblasts, regions, and impacts of the war, with a focus on vulnerable stakeholders. Local development plans should be groups. They should also participate in the encouraged and developed through subnational collection of information on ongoing/completed/ authorities to establish inclusive local-level planned repairs and reconstruction efforts to 157 EUR-Lex, “Acquis,” Link. 130 TOWARD RECOVERY AND RECONSTRUCTION help identify needs for 2023 and for future years. to inform efforts at national and international The overarching goal for improved data collection levels and to provide timely, continuous, and and processing is to enable further assessments local context–specific support to the affected of impacts and estimation of recovery and communities. reconstruction needs. This information is critical Building Back Inclusively Priorities to address the needs identified for each be provided for center staff to promote integration impacted group include the following: of people with disabilities. Training in digital literacy should be provided to enhance the use of e-services. Displaced persons. While most IDPs have secured Longer-term investments are needed in community- some form of private accommodation, there is a based inclusive development and rehabilitation need to support host family arrangements so they approaches that apply across health, education, are retained over a longer period, to provide more employment, and other sectors, and that promote affordable housing options, and to improve collective the participation of persons with disabilities in centers so they can respond to changes in demand decision-making on recovery, reconstruction, and over time, particularly for more vulnerable groups. responsive communities. Persons with disabilities Cash support is also important for IDPs as well who return after displacement in Europe will also as returnees without significant income sources, bring back with them the valuable experience of though efforts are also needed to provide more job accessible infrastructure and services, and these opportunities in order to reduce the need for cash can inform reconstruction. support. The rehabilitation of social and economic infrastructure to a standard comparable to that of Veterans and their families. The Law on the Status European and other host counties and the provision of War Veterans and Guarantees of Their Social of mental health and psychosocial support is an Protection includes 109 distinct benefits and subsidies, important dimension to attracting refugees to return but veterans do not always take advantage of these. to and stay in Ukraine. Improved information and outreach systems are needed to increase the uptake of services, possibly Gender-specific impacts. It will be important to through one-stop shops. At the same time, assessing focus on female IDPs’ need to generate income— the financial implications of a significant increase in both to ensure that immediate cash needs are met eligible beneficiaries and uptake in services will be and to promote financial self-sufficiency. Pregnant important, since these increases will surely place and breastfeeding women, young single women, and increased strain on limited fiscal resources. Options women from minority groups (such as Roma and for deferred forms of payments to beneficiaries stateless women) require protection from gender- could be explored to alleviate the short-term based violence, sexual exploitation, and abuse. While pressure on budgetary resources. Difficult choices not included in this assessment report, a costing of may be necessary to reduce the number of benefits the economic impact of gender-based violence could provided so that the most important benefits can be be planned in future, using accepted methodologies offered to all beneficiaries. The highest priorities for and calculating its direct and indirect tangible and support are housing, pensions, medical assistance, intangible costs. legal services, employment support (including entrepreneurship), and mental health services. Persons with disabilities. Any new buildings, Facilitating the transition to civilian life will require including shelters and modular homes, should be built building social cohesion and integrating veterans in an accessible manner. Accessibility is more critical into recovery efforts. Comprehensive assistance to than ever, as the number of disabled persons (and veterans should support their success in civilian life likely their share in the total population) is climbing after military service while also addressing their as a result of the war. Collective centers should be combat injuries and losses. made more accessible, and capacity building should TOWARD RECOVERY AND RECONSTRUCTION 131 Maximizing Private Financing for Green and Resilient Reconstruction The scale of investment needed for Ukraine’s has displayed considerable resilience, asset quality reconstruction will be substantial and will require has significantly deteriorated.159 The information leveraging limited public and donor funding with technology sector continues to perform relatively private investment. Development partner support well under the circumstances. for public investment is key, but this public investment will have to be complemented by significant private A private sector–led economic recovery requires investment to maximize the available financing for sequential public policy decisions. Public policy reconstruction. Some sectors and situations could could consider following the World Bank Group’s deploy scarce public funding to leverage additional approach to maximizing private financing for private investment. An opportunity exists to develop development (Box 3). This approach can be used to innovative financing structures to mitigate risks and identify private opportunities across key sectors, as enable more private finance once the situation has well as regulatory obstacles and post-war conditions stabilized sufficiently for investing in reconstruction. that pose execution and commercial risks. Post-war, As of February 2023, support is needed to keep risks will decline gradually, supported by guarantees the private sector functioning and able to sustain and risk-sharing instruments. Public resources can provision of basic goods and services. leverage the impact of sector reforms and risk mitigation instruments. The private sector remains the main engine of the economy. Prior to the war, the private Some private financing will be immediately sector accounted for 60–70 percent of Ukraine’s available for commercial reconstruction economic output. However, GDP contracted by an opportunities that do not require significant estimated 29.2 percent in 2022. Merchandise export policy changes, and policy reforms will increase values contracted by 35 percent. Services export the amount available. Post-war private sector values fell by 12 percent. According to the RDNA2 investment, including from retained earnings, will estimates, the cost of direct losses of commerce and provide some resources to repair/replace damaged industry businesses, including SoEs and individual assets, for example in agriculture, industry and entrepreneurs’ enterprises, stands at a nominal commerce, and telecommunications. Reconstruction US$85.8 billion. The ILO estimates that around 2.4 will open private sector opportunities in logistics million jobs have been lost, representing about 15.5 and construction companies. Investments will percent of pre-war employment. About 80 percent increasingly spread beyond damaged assets after of employment and 60 percent of gross sales are the war ends and as policy reforms are continued. provided by micro, small, and medium Enterprises A transparent land market and effective land (MSMEs) and there is evidence that they have management system will boost agricultural growth been less resilient than large enterprises during and demand for private financing but will require the war.158 The damage to the energy, transport, work on the State Land Cadaster. Industry (such agriculture, and manufacturing sectors has been as pharmaceuticals and agro-processing) and particularly extensive. While the banking sector commerce will benefit from an improved business 158 Every fifth business from the MSME sector had ceased operations by mid-April 2022; the share of large enterprises that did so was smaller. The situation has been improving, however, as MSMEs adapt to the new environment and resume their operations. See UNDP, “Rapid Assessment of the War’s Impact on Micro, Small and Medium Enterprises in Ukraine,” October 2022, Link. This finding aligns with a European Business Association survey showing that companies are adjusting to the war conditions. European Business Association, “Presentation of the Study Results: Small Business Sentiment Index 2022,” Link. European Business Association, “83 percent of EBA companies experienced a drop in business performance for 2022,” Link. 159 The regulatory capital adequacy ratio was 19.8 percent as of February 1, 2023, up from 16.7 percent as of June 1, 2022. Non-performing loans were 38.2 percent of total loans as of February 1, 2023, up from 26.6 percent as of March 1, 2022 (National Bank of Ukraine data). 132 TOWARD RECOVERY AND RECONSTRUCTION Box 3. Maximizing private financing for development in the Ukraine context Following the cascade principle, private finance will be prioritized where possible before exploring public sector solutions, as follows: Commercial financing: Private financing has been flowing during the war to the Ukrainian private sector, such as the IT sector, albeit in volumes that are much smaller than needed. After the war ends, it remains to be seen whether commercial financing will be cost-effectively mobilized for sustainable investment, and if so at what scale and in which sectors. Need for strengthened public sector capacity to support implementation of reforms: Upstream reforms addressing market failures are expected to support private sector development in the context of a reconstruction program that maximizes the development impact of Ukraine’s limited public sector capacity. Reforms that address market failures —for example, country and sector policies, regulations and pricing, institutions, capacity, and so on—need to take into account the constrained regulatory and implementation capacity. While private investment can be expected to cover a significant part of post-war reconstruction needs, strengthened public sector capacity would critically enable a meaningful scale-up over the longer term. Public and concessional resources for risk instruments and credit enhancements: Risks are elevated and thus risk management tools will be needed. The government and donors will have to innovate with these tools and compare the value for money they offer versus direct public investment. The cost-effectiveness (in terms of fiscal cost) of de-risking instruments and credit enhancements may need to be evaluated continuously over time as risks moderate. Rising levels of income will reduce the need for availability payments for social infrastructure. Even so, significant public resources may be needed to finance de- risking instruments during the immediate post-war period. If this is not feasible, public and concessional financing could be considered. Public and concessional financing, including subsovereign financing: Using public resources—for example, development banks, sovereign wealth funds, multilateral development banks, and development finance institution—to address development objectives will require careful prioritization and sequencing, as short- term needs could overwhelm the available resources, in particular during the immediate post-war period. Source: Adapted from World Bank, “World Bank Group Strategy for Fragility, Conflict, and Violence 2020–2025,” 2020, Link. climate, including streamlined regulations to about half of all banking assets.161 Damage and loss make it easier to start and restart businesses.160 in the sector illustrate the importance of the sector Normalization of post-war business conditions will for the economic recovery. Trade finance guarantees take time, and operational risks are projected to and risk-sharing facilities offer a short-term solution initially remain high; de-risking instruments financed but cannot substitute robust financial sector service by development partners may be needed even after delivery. MSMEs are disproportionally underserved the war ends. by banks.162 Resolution of non-performing loans and restructuring/recapitalization of some banks may be The financial sector poses sector-specific necessary for ensuring sustainability of the financial challenges. Banks account for 89 percent of financial sector and promoting large-scale investments in sector assets, and state-owned banks account for the sector. An emerging fintech sector may further 160 Prior to the war, it took an average of 61.5 days to obtain a construction-related permit. This is below the Europe and Central Asia region’s average of 93.1 days, but represents an area of opportunity to support reconstruction efforts. In manufacturing, construction-related permits took an average of 101 days (region’s average was 95.6 days). World Bank Enterprise Survey, 2019. 161 World Bank, GoU, and EC, “Ukraine Rapid Damage and Needs Assessment,” August 2022, Link. 162 In 2018, the MSME finance gap was estimated at 36.5 percent of GDP (32.3 percent of GDP if only small and medium enterprises are considered). SME Finance Forum, MSME Finance Gap Database, 2018, Link. A European Business Association survey found that almost 60 percent of respondents consider bank loans to be difficult to get or inaccessible (n = 325 small businesses in Ukraine). European Business Association, “Presentation of the Study Results: Small Business Sentiment Index 2022,” Link. TOWARD RECOVERY AND RECONSTRUCTION 133 augment private sector financing opportunities, contracts and transparent and fair communication leveraging the government’s expected digital targets with private firms and the population. for 2025.163 Public support will be needed even in sectors Policy measures are needed to make large-scale that would be commercially viable in normal private financing available for the energy and circumstances, especially in eastern and southern transport sectors. The state has a large presence in oblasts. Public guarantees will need to compensate both sectors. Private financing to restore the massive for Ukraine’s near-default sovereign risk rating, damage in these sectors requires a stronger public- which is projected to improve only gradually. private partnership (PPP) framework to enable Commercial risk will vary by sector and oblast and greater private participation in infrastructure, is projected to decline as income levels recover and completion of energy market reforms, and improved markets stabilize. Post-war conditions in areas with governance and performance of SoEs. These widespread damage will pose challenges. To attract reforms and the preparation of PPP transactions private investors to these areas may require targeted will take time and likely prolong the period before policy interventions that go beyond compensation substantial private investment in infrastructure can for commercial risk and cover execution risk. be expected. The need to rebuild offers an opportunity to invest in green resilient infrastructure. As a first Private sector and community-based initiatives step, the private sector might engage with SoEs if have provided important financing and in-kind the government demonstrates a firm commitment contributions in response to the impact of the war. to reforms. Going forward, community-based stakeholders will be an important source of social capital for the Large-scale private financing in the social and success of local-level recovery and reconstruction utility sectors will require targeted consumer efforts and will also play an important role in subsidies or availability payments to suppliers. oversight and accountability. The damage to housing, health, and education infrastructure requires urgent investment to provide In line with the guiding principles and the build back services to existing and returning populations. better approach, it will be important to consider as Attracting private financing at scale will require part of the recovery process how to mobilize and revenues that are beyond the population’s capacity align public and private financing toward longer- to pay at this stage. Efficient use of public resources term sustainable development priorities for the will depend on competitive performance-based future and ensure transparent and participatory planning. 163 Among the digital targets are these: the IT sector contributes 10 percent to Ukraine’s GDP; 95 percent of the population has access to high-speed internet. 134 ANNEX 1. RDNA2 TEAM The RDNA2 team would like to express its deep appreciation to all individuals and organizations who contributed to this assessment (listed below and in Table 61). From the Government of Ukraine, support was provided under the guidance of Oleksandr Kubrakov, Deputy Prime Minister for Restoration of Ukraine and Minister for Communities, Territories and Infrastructure Development of Ukraine; Anna Yurchenko, Deputy Minister for Communities, Territories and Infrastructure Development of Ukraine for European Integration; Nataliia Kozlovska, Deputy Minister for Communities, Territories and Infrastructure Development of Ukraine, and Olga Zykova, Deputy Minister for Ministry of Finance of Ukraine. From the European Commission, support was provided under the guidance of Katarina Mathernová, Deputy Director-General, Directorate-General for Neighbourhood Policy and Enlargement Negotiations, European Commission. From the United Nations, support was provided under the guidance of Denise Brown, the United Nations Resident Coordinator in Ukraine, and Jaco Cilliers, Resident Representative of the United Nations Development Programme in Ukraine. From the World Bank, support was provided under the guidance of Arup Banerji, Regional Director, Eastern Europe; Jordan Schwartz, Country Director for Eastern Europe; Sameh Wahba, Regional Director for Sustainable Development; Fadia Saadah, Regional Director for Human Development; Charles Cormier, Regional Director for Infrastructure; Lalita Moorty, Regional Director for Equitable Growth, Finance and Institutions; Christoph Pusch, Practice Manager, Urban, Disaster Risk Management, Resilience and Land; and Gevorg Sargsyan, Country Manager. Table 61. RDNA2 Team Core level Government: Oleksandr Petroshchuk, Kateryna Elishyeva, Oleksandra Novak, Vitalii Protsenko, Iryna Kucheruk, Olena Mykhaylova, Olena Zubchenko, Oleksii Zhak, Roman Lysenko, Oksana Chupryna, Alina Pohribna, Natalia Safronova, Artem Mykhailov World Bank: Zuzana Stanton-Geddes, Alanna Simpson, Thomas Farole, Oleksandra Shatyrko, Krunoslav Katic, Soraya Ridanovic, Debashree Poddar, Jae Kyun Kim, Nadia Kislova, Julia Samoslied, Elena Kovalov, Sevara Melibaeva, Caryn Bredenkamp, Karlis Smits, Florian Blum, Benjamin Stewart, Nicole Frost, Amy Lynn Stilwell, Dmitro Derkatch, Victor Zablotskyi, Christina Leb, Catarina Isabel Portelo, Harum Mukhayer. International Finance Corporation: Lisa Kaestner, Tatiana Nenova, Johannes Herderschee, Patrick Alexander Avato, David Bassini, Elleanor Robins, Roman Kostiuchenko European Union: Agnieszka Skiba, Chloe Allio, Julda Kielyte, Marta Sadel, Gabriel Blanc, Claes Anderson United Nations: Ana Lukatela, Rita Missal, Ildar Gazizullin, Silke Handley Annex 1. RDNA2 Team 135 Coordination with Reform Delivery Office of the Cabinet of Ministers of Ukraine Tetyana Kovtun, Marina Denysiuk, Olena Iaroshchuk, Andrii Martyn, Oleksandr Romanishyn, Ievgeniia Bodnya Housing Government: Oleksandr Petroschuk, Evhen Plashchenko, Kateryna Voitovska, Inna Vakhovich, Iryna Oleynikova, Yuliya Podyuk, Oleh Topiha, Mariia Oryshchyna, Volodymyr Nagornyi, Serhiy Haliuk World Bank: Karima Ben Bih, Ellen Hamilton, Noriko Oe, Debashree Poddar, Pol Nadal, Oleksandr Dovbnia, Simon Walley, Paul Scott Prettitore European Union: Krzysztof Gierulski, Olga Borodankova, Andriy Bandura, Christian Ben Hell United Nations: Fiona Allen, Simon Darke, Konrad Clos, Christophe Lalande, Mustafa Sait-Ametov Education and Science Government: Dmytro Petryk, Lesia Ivanyshchuk World Bank: James Gresham, Svitlana Batsiukova, Adrien Olszak-Olszewski, Joel Reyes, Nalin Jena European Union: Vira Rybak, Fernando Fonseca, Janis Aizsalnieks, Cristina Martinez-Gallego United Nations: Niki Abrishamian, Anne-Marie Akiki, Manan Kotak, Paul Cruickshank, Sergiy Savchuk, Yayoi Segi-Vltchek, Paula Valeria Klenner Forttes, Alison Graham, Valentyna Smal, Veera Mendonca Health Government: Oleksandr Shust, Tetyana Hotsuenko, Denys Sobol, Inna Gartz World Bank: Olena Doroshenko, Akiko Kitamura, Oleksandr Zhyhinas, Khrystyna Pak, Olha Fokaf European Union: Alexandra Janovskaia, Mira Didukh, Fernando Fonseca United Nations: Guillaume Simonian, Kateryna Fishchuk, Andre Griekspoor, Sergiy Savchuk, Ivan Gorokh, Ayadil Saparbekov, Irma Danielyan Social Protection and Livelihoods Government: Daryna Marchak, Olena Kolchyk, Maksym Naimov, Khadzhinov Volodymyr Khadzhinov, Serhii Sobchuk, Ruslan Stuzhuk World Bank: Roman Zhukovskyi, Katerina Petrina, Anna Baranova, Iryna Kalachova European Union: Mira Didukh, Fernando Fonseca United Nations: Federico Negro, Paul von Kittlitz, Fiona Allen, Sergiy Savchuk, Alison Graham, Chissey Mueller, Kateryna Ardanyan, Michael Newson, Aslihan Ozcan, Olga Logvin Shevtsova, Jean Choi, Olena Safarova Cultural Heritage and Tourism Government: Nataliya Voytseshchuk, Vasyl Petryk, Stefaniya Topylko, Iryna Khrysina World Bank: Jae Kyun Kim, Pol Nadal Cros, Oleksandr Dovbnia European Union: Tetiana Shulha, Fernando Fonseca United Nations: Chiara Dezzi Bardeschi, Joe Kallas, Maissa Acheuk-Youcef Energy Government: Olena Biryukova, Roman Andarak, Sofiya Ugryumova, Nazarii Sinyuk, Oleksandr Tron, Vladyslav Filipov, Oleksandr Petroshchuk, Pavlo Tkachenko World Bank: Silvia Martinez, Koji Nishida, Roman Novikov, Sandu Ghidirim European Union: Torsten Woellert, Denys Prusakov, Andriy Bandura, Ingrid Sager, Krzysztof Gierulski, Marcus Lippold United Nations: Prashant Kumar, Tetiana Tavlui, Oleg Dzioubinski, Konrad Clos, Emmanuel Biririza, Chiara Dezzi Bardeschi, Walid Ali, Denys Motorniy 136 Annex 1. RDNA2 Team Extractives Government: Oleksandr Kropot, Olena Biryukova, Andarak Roman, Svitlana Sabishchenko, Serhiy Haliuk World Bank: Wolfhart Pohl, Alexander Johannes Huurdeman, Roman Novikov European Union: Andriy Bandura, Torsten Woellert, Janis Aizsalnieks United Nations: Prashant Kumar, Tetiana Tavlui, Oleg Dzioubinski, Konrad Clos, Emmanuel Biririza, Walid Ali, Denys Motorniy Transport Government: Iryna Kucheruk, Taras Pechonchyk, Nataliia Pervak World Bank: Dominic Patella, Yevhen Bulakh, Anna Vazhnenko, Anton Hagen, Andrii Koretskyi, Artem Poliukh, Yuriy Lozovenko European Union: Agnieszka Skiba, Svitlana Didkivska, Daniel Jacques United Nations: Elene Agladze, Steffi Holzwarth, Nenad Nikolic Telecommunications and Digital Government: Yury Matsyk, Taras Stetsenko, Ilona Havronska, Maryna Bobranitska World Bank: Natalija Gelvanovska-Garcia, Mykhailo Koltsov, Marta Khomyn European Union: Svitlana Didkivska, Sergiy Ladnyy, Jenni Lundmark, Tanel Tang United Nations: Jaroslaw Ponder, Elind Sulmina, Roberta Maio, Volodymyr Brusilovskyi, Antonia Eser-Ruperti Water Supply and Sanitation Government: Nazarii Sinyuk, Prykhodko Roman, Oleksandr Ilinskyi, Oleksandr Petroschuk, Serhiy Haliuk World Bank: Ivaylo Kolev, Stjepan Gabric European Union: Olga Simak, Gregory Tsouris United Nations: Nicolas Osbert, Nataliya Nikiforova, Teshager Tefera, Shobana Srinivasan, Dewi Hanoum, Anil Mishra, Hanna Plotnykova Municipal Services Government: Oleksandra Novak, Diana Novikova, Nataliya Zaitseva, Yuliya Podyuk, Oleksandr Petroschuk, Volodymyr Manin, Oleh Topiha, Volodymyr Nahornyi World Bank: Debashree Poddar, Noriko Oe, Ellen Hamilton, Oleksandr Dovbnia, Paul Scott Prettitore European Union: Krzysztof Gierulski, Natalia Starostenko, Tomasz Ostropolski United Nations: Mustafa Sait-Ametov, Teshager Tefera, Benjamin Samuel Fisher, Marianna Zaichykova, Martha Mildred Espano Agriculture Government: Markiyan Dmytrasevych, Mykhailo Sokolov, Oleksiy Pinchuk, Taras Tyvodar World Bank: Sergiy Zorya European Union: Christian Ben Hell, Philipp Max Lehne United Nations: Mikhail Malkov, Rodin Rubchynskyi, Daniele Barelli, Sergiy Savchuk, Oleksandr Muliar, Dragan Angelovski, Anna Burka, Taras Antonyuk Other: Roman Neyter, Mariia Bogonos, Nataliia Kussul, Andrii Shelestov, Hanna Yailimova Annex 1. RDNA2 Team 137 Commerce and Industry (Business) Government: Oksana Chupryna, Roman Kropyvnytskyi, Oleksandr Maksymov, Artem Tyshkovets, Andriy Voznenko World Bank: Sunita Varada, Blerta Qerimi, Zahra Alleyne European Union: Iryna Hubarets, Stanislav Toshkov, Panagiotis Stamoulis, Janis Aizsalnieks United Nations: Aliaksei Vavokhin, Maksym Boroda Finance and Banking Government: Olena Zubchenko, Pervin Dadashova, Oksana Chupryna, Roman Lysenko, Oleksii Zhak World Bank: Johanna Jaeger, Yevhen Hrebeniuk European Union: Vitaliya Mudruk, Olga Chilat, Marta Sadel United Nations: Suren Pogosyan Irrigation and Water Resources Government: Mykhailo Sokolov, Mariia Shpanchyk, Serhiy Lyashok World Bank: Ranu Sinha, Frank van Steenbergen European Union: Christian Ben Hell, Olga Simak United Nations: Hanna Plotnykova, Sonja Koeppel, Viktoriia Yershova Macroeconomic Impact, Poverty Government: Artem Tyshkovets, Oksana Lysenko, Serhii Sobchuk, Oleksandr Maniulov World Bank: Anastasia Golovach, Maryna Sidarenka, Florian Blum, Karlis Smits, Kristina Noelle Vaughan, Trang Van Nguyen European Union: Julda Kielyte, Olga Chilat, Fernando Fonseca United Nations: Aliaksei Vavokhin, Ildar Gazizullin, Mona Fetouh, Igor Gryshko Human Impact Assessment/Vulnerable Groups (social sustainability and inclusion; displacement/fragility, conflict, and violence) Government: Artem Tyshkovets, Angelina Oliynychenko, Nataliya Yemets, Volodymyr Anushkevych, Olena Kolchyk, Serhiy Sobchuk, Ruslan Stuzhuk World Bank: Erik Johnson, Oleksandra Shatyrko, Jennifer Solotarof, Jennifer Shkabatur, Chiara Broccolini, Dominik Koehler, Mirjahon Turdie, Nadia Fernanda Piffaretti European Union: Martin Schroeder, Tetiana Shulha, Mira Didukh United Nations: Ildar Gazizullin, Aliaksei Vavokhin, Fiona Allen, Lisa Christina Warth, Sergiy Savchuk, Alison Graham, Alissa Lalime, Chissey Mueller, Hatem Marzouk, Kim Matthis, Nurgul Asylbekova, Federica Dispenza, Darina Solodova, Ivan Jovanovich, Olena Ivanova, Clara Bastardes Tort, Anna Sukhodolska, Letizia Dell’Asin, Nynne Warring Environment and Forestry Government: Olena Kramarenko, Oleksandr Stavnivchuk, Serhiy Lyashok, Oksana Ionina World Bank: Oksana Rakovych, Arno Behrens, Susanna Dedring, Elena Golub European Union: Christian Ben Hell, Olga Simak, Gregory Tsouris United Nations: Hassan Partow, Meriem Bouamrane, BR Ravishankar, Mohammad Sherzad, Vasyl Masyuk, Alberto DelLungo, Hanna Plotnikova Other: Myles McDonagh 138 Annex 1. RDNA2 Team Justice and Public Administration Government: Natalija Pinchuk, Valerija Ivanova, Natalija Hrytsiak, Zurab Adeishvili, Oleksii Boniuk, Sergii Chornutsky, Andrii Daniliuk, Olena Kovalenko, Anna Kozubnia, Yurii Skakalskyi, Oleksandra Novak, Yuliya Podyuk, Oleh Topiha, Oksana Pidperyhora World Bank: Laura Pop, David Bernstein, Iryna Shcherbyna, Klaus Decker, Daniela V. Felcman, Vitaliy Kasko European Union: Panagiotis Stamoulis, Clemens Mueller, Manfredas Limantas, Ingrid Sager Jenny Lundmark, Ekaterina Yakovleva United Nations: Roman Khashchenkov, Alison Graham, Arezou Farivar, Vera Tkachenko, Naida Chamilova, Ana Kvashuk, Andrea Carola, Antonia Eser-Ruperti, Sabine Freizer Gunes, Ivan Honcharuk, Ainura Bekkoenova, Marianna Zaichykova Emergency Response and Civil Protection Government: Ihor Sheljuk, Petro Kropotov, Sergii Reva, Ihor Fesiuk World Bank: Tafadzwa Irvine Dube, Zuzana Stanton-Geddes, Krunoslav Katic, Maksym Dovhanovskyi European Union: Alejandro Eggenschwiler, Stanislav Topolnytskyy United Nations: Roman Khaschenkov, Franziska Hirsch, Soichiro Yasukawa, Mustapha Ben Messaoud Explosive Hazard Management Government: Serhii Reva, Dmytro Saltykov, Serhiy Bezruchenko, Vladyslav Dudar, Ihor Fesiuk World Bank: Alanna Simpson, Tafadzwa Irvine Dube, Zuzana Stanton-Geddes, Krunoslav Katic, Tomislav Vondracek United Nations: Guy Rhodes, Stanley Cheong, Jes Luckett  Collaboration with the Kyiv School of Economics (KSE) Vladyslava Grudova, Yulia Danyshchuk, Yuri Gaidai, Inna Studennikova, Yuliya Markuts, Dmytro Andriyenko, Andrey Bezpyatov, Taras Marshalok, Bykovska Alla, Dmitro Goryunov, Ihor Piddubnyi, Roman Neyter, Natalia Shpygotska, Dmytro Averin