Philippines - Earthquake Reconstruction

 Earthquake Reconstruction Report No: ; Type: Report/Evaluation Memorandum ; Country: Philippines; Region: East Asia And Pacific; Sector: Non-Sector Specific; Major Sector: Multisector; ProjectID: P004594 Philippines: Earthquake Reconstruction Project (Loan 3263-PH) The Philippines Earthquake Reconstruction Project, supported by Loan 3263-PH for US$125 million equivalent (of which US$15.7 million was cancelled), was approved in FY90. The Loan was closed on December 31, 1996, nearly two years behind schedule. The Implementation Completion Report (ICR) was prepared by the East Asia and Pacific Regional Office and includes an executive summary of the Borrower's completion report. In July 1990 less than one month after a 7.7 Richter-scale earthquake devastated large areas of the island of Luzon in the Philippines, a Bank mission was in the field appraising this emergency reconstruction project. Disaster struck the same area again a mere twelve months after the earthquake, when a severe volcanic eruption of Mount Pinatubo occurred. As conceived at appraisal, the project aimed to minimize the economic impact of the earthquake disaster by reconstructing infrastructure and facilities and helping to mitigate the impact of future earthquakes through prevention measures. Following the Pinatubo eruption project funds were reallocated to address the consequences of the second disaster too. At completion, 96 percent of project costs went to the reconstruction of roads and bridges, housing, medical facilities, irrigation systems and essential materials and commodities, a higher share than the 87 percent foreseen at appraisal. Remaining project costs—4 percent at completion, or 13 percent at appraisal—were for training and technical assistance to help improve seismological monitoring and to implement measures to mitigate the impact of future earthquakes. Strong commitment by Borrower agencies, both central and local, helped ensure timely project preparation, to which the Bank itself responded promptly. The decision to restrict the project scope to sub-sectors familiar to the Bank augured well for rapid implementation. Nevertheless, broadening the scope of the project by formal amendment to address the Mount Pinatubo eruption-an appropriate decision in the circumstances inevitably contributed to the postponement of project closing. The physical reconstruction objectives of the project were largely met: (i) 1,164 civil works projects completed; (ii) some 8,300 families assisted with housing repairs and rebuilding; (iii) over 127,000 hectares of irrigated agricultural land restored for productive use; and (iv) an unspecified number of hospitals and health facilities were reconstructed. The ICR does not report on the current level of economic activity in the region, however. This is a key omission in the assessment of a project whose principal objective was to minimize the adverse economic impact of a disaster. There were additional project benefits not fully anticipated at the time of appraisal. Many seismic resistant building technologies introduced by the project have been applied more broadly than expected throughout the country, thereby broadening the coverage of state-of-the-art earthquake resistant construction in the Philippines as a whole. The project also contributed to community strengthening amongst those families whose homes were damaged by the earthquake. Unfortunately, project implementation was delayed by protracted disbursements problems. The urgent need to address this issue, especially as far as emergency projects are concerned, is correctly highlighted by the ICR. OED agrees with the ICR that the project outcome was satisfactory, that Bank performance was highly satisfactory and that Borrower performance was satisfactory. OED differs from the ICR rating sustainability as uncertain as there is evidence of poor quality in some civil works and inadequate maintenance. OED nevertheless recognizes that poor infrastructure maintenance is a broad issue in the Philippines into which a single emergency project such as this was expected to make only modest inroads. The ICR rating for sustainability is likely. OED’s rating for institutional development is modest, since future operations, maintenance and prevention work rely upon institutional arrangements that have remained basically unchanged since before disaster struck. Such an outcome is consistent, however, with a project that did not have institutional development impacts among its explicit objectives. The ICR rating of institutional development impact is substantial. Key lessons of the project include: (i) emergency projects (that intrinsically risk being prepared hastily) should be thoroughly reviewed after one year of implementation to identify shortcomings, correct distortions and chart new courses of action as needed; (ii) the system of disbursements in the Philippines needs to be more agile, especially for emergency projects; and (iii) Operational Policy/Bank Procedure 8.50 includes appropriate criteria and guidelines for emergency projects. The ICR is of satisfactory quality, and includes the Borrower's plans for the future operation of the project. Despite the report's broad coverage of the physical results of the many project interventions, the ICR assessment would have been more complete had it referred to the after- project level of economic activities in affected areas. Minimizing disruption to these activities was, after all, the main objective of this operation. An audit is planned.