Regional: Enabling Climate Change Responses in Asia and the Pacific - Disaster Risk Financing for Total Climate Risk (Subproject 6)

Sovereign Project | 44158-032

Summary

On 30 July 2010, ADB approved a Cluster TA for Enabling Climate Change Responses in Asia and the Pacific. Disaster Risk Finance for Total Climate Risk is a subproject under the cluster TA's Strategic Priority V: Promoting Climate Resilient Development. The subproject will assess potential disaster risk financing (DRF) options for climate-related risk for selected cities in Viet Nam in terms of feasibility, demand, and effectiveness. The TA is funded through the Japan Fund for Poverty Reduction.

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Project Name Enabling Climate Change Responses in Asia and the Pacific - Disaster Risk Financing for Total Climate Risk (Subproject 6)
Project Number 44158-032
Country Regional
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8012-REG: Enabling Climate Change Responses in Asia and the Pacific - Disaster Risk Financing for Total Climate Risk (Subproject 6)
Japan Fund for Poverty Reduction US$ 1.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Private sector development
Sector / Subsector Finance - Finance sector development
Gender Equity and Mainstreaming No gender elements
Description On 30 July 2010, ADB approved a Cluster TA for Enabling Climate Change Responses in Asia and the Pacific. Disaster Risk Finance for Total Climate Risk is a subproject under the cluster TA's Strategic Priority V: Promoting Climate Resilient Development. The subproject will assess potential disaster risk financing (DRF) options for climate-related risk for selected cities in Viet Nam in terms of feasibility, demand, and effectiveness. The TA is funded through the Japan Fund for Poverty Reduction.
Project Rationale and Linkage to Country/Regional Strategy

Traditionally, developing countries have relied heavily on ex post government budget allocations, public borrowing and international assistance to finance their disaster relief, early recovery and reconstruction efforts. This practice has resulted in delays in reconstruction, exacerbating the indirect impacts of disasters. The additional post-disaster pressure on public resources has also had adverse implications for the achievement of long-term social and economic development goals.

Over the past decade, there has been increasing interest in proactive, ex ante financing mechanisms via public-private partnerships (PPP) to help address these issues. These mechanisms allow the participating country to transfer and manage disaster risk via private sector finance and insurance mechanisms before a disaster occurs. The mechanisms are typically developed with the support of private sector reinsurance and risk modeling companies, which quantify and estimate disaster risk. Ex ante DRF mechanisms complement ex post arrangements, creating a long-term solution for sustainable and timely DRF.

Viet Nam is highly exposed to natural hazards, in particular hydrometeorological hazards, and its susceptibility to the effects of climate change will raise its level of disaster risk. The subproject will assist two cities in the country to develop ex ante DRF mechanisms. The subproject''s urban focus reflects the fact that urban areas face unique and rising disaster risk and climate change challenges and account for an increasing share of Viet Nam''s total population and economic productivity, yet have received relatively little attention to date in the development of DRF solutions. The Government of Viet Nam has set a 50% urbanization goal by 2025; and urban areas already accounted for 70% of GDP by 2010.

The subproject will be complemented by additional activities under RETA 7812, a separate JFPR-funded DRF TA, which will focus on the development of DRF options in two cities in Indonesia and two cities in the Philippines that face both geophysical and hydrometeorological risks.

Impact Participating governments increase appropriate reponses to climate change and disasters with support from civil society and the private sector.
Project Outcome
Description of Outcome Participating governments are able to integrate climate change and disaster responses with social and economic development goals
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

(i) Risk profiles and risk models completed and available to Viet Nam that highlight the disaster-related consequences of climate change.

(ii) Consensus reached on an appropriate DRF mechanism for each city.

(iii) Consultation, training, and dissemination activities completed to increase awareness within Viet Nam regarding IDRM

(iv) Project management units (PMU) established

Status of Implementation Progress (Outputs, Activities, and Issues)

The project is being implemented in three phases: Phase 1: development of disaster risk profiles for selected medium-sized urban areas in Viet Nam, culminating in the selection of two project cities; Phase 2: development of in-depth hazard and loss models for each of these two cities, leading to the identification and development of DRF options tailored to the disaster risk circumstance, capabilities and interests of each one; Phase 3: selection of one DRF mechanism, following an independent review of all Phase 2 options.

Consultative Groups

A Project Working Group was formed in 2013 comprised of the Ministry of Construction, Ministry of Finance (MoF), Ministry of Agriculture and Rural Development (MARD), Ministry of Natural Resources and Environment (MONRE) and the Ministry of Planning and Investment (MPI). The working group convened in March 2013 and June 2013 to consider city selection criteria and to evaluate recommendations made by the project consultants on final pilot city selections.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation Throughout the inception and implementation of the subproject, planning workshops and training courses will be held to engage a wide range of stakeholders from national and local government agencies, civil society organizations, academic institutions, and the private sector. The results of the subproject will be disseminated widely to stakeholders in Viet Nam as well as elsewhere in Asia and the Pacific through ADB reports, regional conferences, and other fora to keep the public informed and to mobilize support for improved financial management of disasters.
Responsible ADB Officer Charlotte Benson
Responsible ADB Department SDCC
Responsible ADB Division SDCD
Executing Agencies
Asian Development Bank6 ADB Avenue, Mandaluyong
Metro Manila, Philippines
P.O. Box 789, 1099 Manila,
Philippines
Timetable
Concept Clearance 27 May 2010
Fact Finding 30 Nov 2010 to 03 Dec 2010
MRM -
Approval 09 Dec 2011
Last Review Mission -
Last PDS Update 19 May 2014

TA 8012-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Dec 2011 - 09 Dec 2011 30 Nov 2014 30 Nov 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,000,000.00 0.00 0.00 0.00 0.00 1,000,000.00 09 Dec 2011 698,961.29

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Phase 1 Activities

cambodia railway
August 2013 Ha Noi workshop in session

As part of Phase 1, initial risk profiling and city selection were conducted and preliminary risk assessment completed in September 2012, yielding a list of ten candidate cities. More in-depth risk profiling was completed by February 2013, yielding a short list of five cities. Analysis of additional criteria, including disaster risk financing (DRF) capacity, was undertaken thereafter and the Government of Viet Nam decided on 30 June 2013 to select the cities of Can Tho and Hue as pilot cities. Project briefings were held in Can Tho and Hue in July 2013 where interested city agencies participated, together with the Ministry of Construction. A combined workshop and training session was held in Ha Noi in August 2013 involving focal point representatives from each city, the implementing agency, and other government agency members of the Project Working Group.

Phase 2 Activities

cambodia railway
Participants in the April 2014 workshop

cambodia railway
April 2014 workshop in session

In February 2014 an inception meeting was held at ADB where the Phase 2 workplan was refined and agreed upon by all the project team members. Work commenced immediately to organize the first of three workshop training events in Can Tho and Hue. The purpose of the training sessions was to introduce fundamental risk modeling and DRF concepts to key city officials responsible for disaster risk management (DRM), budget and fiscal affairs, and city administration. A joint workshop for both cities was held in Can Tho on 15-16 April. Key national government officials from the implementing agency - the Ministry of Construction/Urban Development Agency - attended the 2-day event. The workshops helped identify each of the city’s particular DRM priorities, including the key hazard and classes of exposure that the initial DRF pilot effort should focus on. Data requirements necessary for the risk modeling work were also explained.