Colombia - Earthquake Emergency Recovery Project

Report No. PID8221 Project Name Colombia-Earthquake Emergency Recovery... Project Region Latin America and the Caribbean Sector Other Non-sector Specific Project ID COPE65263 Implementing Agency Fund for the Reconstruction and Social Development of "Eje Cafetero" (FOREC) Address: Calle 23 No. 16-39 Tercer Piso Armenia, Quindio - Colombia Contact: Mr. Everardo Murillo, Executive Director Phone: (57-56) 744-2474 Fax: (57-56) 744-2371 E-mail: emurillo@ejecafetero.gov.co Date PID Prepared October 4, 1999 Projected Board Date January 18, 2000 COUNTRY AND SECTOR BACKGROUND 1. The Earthquake Disaster. On January 25, 1999, an earthquake measuring 6.2 on the Richter Scale hit an area of about 1,360 square kilometers in five Departments -- Caldas, QuindUo, Risaralda, Tolima and the Valle de Cauca. The initial impact, along with an aftershock of 5.2 and hundreds of other aftershocks, resulted in 1,185 deaths, 731missing persons and over 8,000 injuries. In terms of property loss, the municipalities of Armenia, Barcelona, Calarca and La Tebaida suffered the most extensive losses. According to geological studies and seismic experts, the coffee-growing zone is traversed by at least two extensive and active fault-lines and similar earthquakes can be expected in the region with 15-20 years frequency. The very volcanic soil contributes to its vulnerability when earthquakes strike. The problem is also compounded by poorly-compacted filled sites along fault- line areas to accommodate various superstructures for a growing population. 2. Overall, of the estimated 1,546,000 residents in the affected area, about 560,000 suffered some form of direct earthquake-related losses. United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) has undertaken an initial set of estimates which identifies both "direct" and "indirect" damages totaling about US$1.6 billion. Direct damages refer to destruction of superstructures, household personal property losses, commercial equipment losses, and damage to infrastructure. Indirect losses are characterized as loss of jobs/wages, lost production, market share, sales and revenue, loss of tax revenue, insurance losses and the actual cost of the relief effort. 3. The affected region suffered a loss estimated at about US$1.6 billion or about 30 percent of the regional GDP. Housing losses are estimated at about 70 percent of the total loss suffered. While the earthquake did not cause direct damage to coffee trees and other agricultural crops, the damage to processing and storage structures and equipment on the farms, workers' homes, as well as assets of other input suppliers (fertilizers, pesticides, financing, transport, etc) has been substantial. Even before the earthquake,  the region was experiencing economic problems related to low international coffee prices. Furthermore, about 80 percent of the affected residents fall into the low-income category, many of whom cannot afford to rebuild or repair their units with their own resources. If these affected groups are not assisted quickly in a systematic manner, the situation in the zone could deteriorate, both from a macro-economic as well as social and cultural perspectives. THE PROJECT 4. Project Objectives. The proposed project is the second phase of a two part strategy to assist the Government of Colombia (GOC) community rebuilding efforts following the devastating effects of the January 25, 1999 earthquake in the coffee growing region of the country. The overall Project Development Objective is to assist project beneficiaries normalize economic and social activities through the restoration of essential housing and basic infrastructure built to adequate seismic standards. More specifically, the aim of the project is to help finance efforts being made by the Borrower to provide a minimum level of shelter facility needed to help the poorest population strata. In particular the project will provide for: (a) housing reconstruction and repair resources for the poorest strata (families with income below 4 minimum salaries per month ); (b) grants for priority retrofitting of damaged social infrastructure (schools, health facilities and community centers); (c) rehabilitation of public infrastructure including damage to airport and transport terminals, water and sewerage systems, power systems; and (d) the design of an improved emergency response system. 5. Project Description. The proposed project will have five components: (i) Shelter Assistance. Funding for the repair and reconstruction of about 43,480 units partially damaged, about 17,550 totally damaged and about 18,420 units structurally damaged in the affected zone. This component will finance subsidies to owners of units who meet criteria established by the GOC and agreed to by the Bank. (ii) Rehabilitation and Retrofitting of Social Infrastructure. This component will provide grants for priority retrofitting of vulnerable structures which survived the earthquake but which are not in compliance with current or proposed new building code requirements in the affected zone. Included in this component would be support to repair social infrastructure (schools, health facilities and community centers, among others). (iii) Rehabilitation of Public Infrastructure. This component will finance the repair of damaged water and sewerage systems, power systems, and airport and other transport terminals, street and highway improvements, among others, in the affected zone. (iv) Capacity Building for Natural Disaster Management. As part of the reconstruction effort associated with a natural disaster, there is also a need to prepare reconstruction plans which emphasize the strengthening of prevention, mitigation and management skills of public sector agencies. Important studies to be undertaken include microzoning, land use mapping, geological and geo-technical research, feasibility studies - 2 -  for debris disposal and the preparation of new building codes. (v) Social Capital Restoration and Project Management. This component will finance the cost of activities aimed at restoring social cohesiveness in affected communities. Such activities may include community meetings and workshops to enhance cultural and community spirit, as well as psychological support to affected families. 6. Project Financing. The financing of the reconstruction effort includes US$93 million reallocated from Loans 3615-CO, 3683-CO, 3871-CO and 3973-CO, and the loan under consideration for US$225 million. The Loan Amendments were approved by the Board in August 1999. 7. Project Implementation. The Government has assigned responsibility for managing the Project to the Fondo para la Reconstrucci6n y Desarrollo Social del Eje Cafetero (FOREC). FOREC will be responsible for determining (or amending) the eligibility criteria, review and approval of individual financing proposals, as well as the overall management and implementation of reconstruction activities. To this end, FOREC will enter into agreements with different local and national organizations, both governmental and non- governmental. FOREC has established a technical committee composed of sector specialists (infrastructure, health, environment, etc.) which will oversee the implementation of the reconstruction plan, monitor and evaluate the technical performance of reconstruction activities and act as the technical focal point for the recovery of the affected area. To facilitate quick and efficient project implementation, the affected area has been divided into 31 zones in which the implementation of reconstruction activities will be managed by qualified NGOs (Zone Manager). The selection of NGOs was carried out by FOREC through public announcements for expressions of interest, according to criteria agreed upon with the Bank. Selected NGOs will work closely with affected communities in prioritizing reconstruction activities and be responsible for identifying beneficiaries for housing subsidies. In addition, they will be responsible for managing and supervising all reconstruction activities in their respective zones. 8. Project Sustainability. Among the most important aspects of the proposed project is the use of non-governmental organizations (NGOs), which have proven to be credible entities that can help promote transparency and act as effective providers of disaster response. Project activities to be supported under the new lending operation will also assist the GOC in developing a strategy to insure the sustainability of its emergency-response capability over the longer term. 9. Lessons Learned from Past Operations in the Sector. According to OED (see Precis No. 174 of 1998) the following are the main lessons of Bank experience with natural disaster response, all of which have been incorporated in the project design: (i) project design should be simple, based on extensive participation by the local community/ beneficiaries, and take into account local implementation capacity; (ii) implementation should be flexible to ensure responsiveness to community needs. Attempts to use the emergency operation to promote social reform, relocation, and land acquisition should be avoided; (iii) if feasible, in situ reconstruction should be promoted to take advantage of existing infrastructure and community facilities, while minimizing resettlement and its attendant social - 3 -  dislocation. This should be combined with self-help efforts in low-cost reconstruction; (iv) along with the reconstruction of damaged infrastructure, local vulnerabilities should be identified and addressed so as to be reduced in ways that lead to durable solutions. To ensure the sustainability of infrastructure reconstructed after the disaster, long-term measures to address disaster mitigation should be devised. Options to be considered (within the context of what is affordable) include financial incentives, land use and management practices, a review of land tenure patterns, upgraded building codes and enforcement programs, training for construction craftsmen, and other nonstructural measures to lessen vulnerability; (v) approaches selected should be cost-effective. Thus, while families should be allowed to rebuild according to their tastes and incomes, they should also be provided with guidance in disaster-resistant building techniques, as well as appropriate incentives. Low-cost reconstruction is desirable, but economizing on the structure of buildings is not cost-effective given recurrent disasters. Extremely poor areas, informal settlements, and areas where building codes are not enforced require special treatment; (vi) to avoid reconstruction delays, streamlined decision-making and procedures for contracting civil works should be put in place; (vii) emergency projects require a strong positive cash flow and special attention to the design and implementation of disbursement arrangements. To meet these requirements, the emergency loan should be quick-disbursing, and bottlenecks to cash flow should be minimized through provision of guidelines, sample bidding documents, technical assistance to first-time borrowers, and simple local disbursement procedures; (viii) emergency assistance should promote equitable development. For example, a policy to deal with renters in the post-disaster context is required. The use of public money to provide multiple housing replacements for the wealthy, while doing nothing for the renter, is inequitable; (ix) strengthening local institutions so that they are better able to cope with the current event makes them stronger the next time around. Institutional development objectives should be stated in emergency recovery project documents, and they should include measurable indicators so that the degree to which they are attained is verifiable. 10. Environmental Aspects and Category. Immediately after the earthquake, several environmental experts from the GOC, IDB, Italy and the Bank visited the affected zone and reviewed the situation. In line with the findings and recommendations of these experts, the Borrower has prepared a draft Environmental Management Plan which, among other things, lists various measures to be taken to reduce adverse health and environmental impacts of reconstruction activities and identifies additional studies and activities to be undertaken during project implementation. Among the main areas of focus are: (a) demolition, debris removal and appropriate disposal; (b) ensuring a sustainable harvesting of bamboo (used in housing construction); and (c) prevention of resettlement in hazardous and vulnerable zones in the project area. Item (c) is complemented by a monetary compensation (established by Presidential Decree No. 196 of January 30, 1999) offered to owners of plots in such vulnerable areas, as an incentive for them to settle in safer zones. In accordance with the Bank's Operational Directive on Environmental Assessment (OD 4.01, Annex E), the proposed operation has been placed in Category B and does not require an environmental assessment. 11. Program Objective Categories. The project will support the Poverty Reduction (PA) and the Environmental Sustainable Development (EN) of the Bank's program objective categories. - 4-  12. Poverty Category. This project will be included in the Program of Targeted Interventions. CONTACT POINTS: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone: (202)458 5454 Fax: (202) 522 1500 Eleotario Cordato Task Manager (202)473-8646 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending October 8, 1999. - 5 -