international development association draft project...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 81712-IN

INTERNATIONAL DEVELOPMENT ASSOCIATION

DRAFT PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 163.00 MILLION

(US$250 MILLION EQUIVALENT)

TO THE

REPUBLIC OF INDIA

FOR A

INDIA: UTTARAKHAND DISASTER RECOVERY PROJECT

October 04, 2013

Sustainable Development Unit India Country Management Unit Disaster Management and Climate Change Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization

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CURRENCY EQUIVALENTS (Exchange Rate Effective September 30, 2013)

Currency Unit = Indian Rupees (INR)

INR 62.6 = US$1

US$1.53408 = SDR 1

FISCAL YEAR

April 01 – March 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank GoU Government of Uttarakhand BIS Bureau of Indian Standards GSDP Gross State Domestic Product BKFRP Bihar Kosi Flood

Reconstruction Project HEPs Hydro Electric Projects

BP Bank Policy IAF Indian Air Force BRO Border Roads Organization IBRD International Bank for

Reconstruction and Development CPS Country Partnership Strategy ICB International Competitive Bidding

DEA Department of Economic Affairs

IDA International Development Association

DM District Magistrate IEC Information, Education and Communication

DMMC Disaster Mitigation and Management Centre

IPCC Intergovernmental Panel on Climate Change

DPIU District Project Implementation Unit

IRC Indian Roads Congress

DRM Disaster Risk Management ITBP Indo-Tibetan Border Police

DSS Decision Support System IUFR Interim Unaudited Financial Reports

EA Executing Agency JRDNA Joint Rapid Damage and Needs Assessment

EMP Environmental Management Plans

M&E Monitoring and Evaluation

ESA Environment and Social Assessment

MDR Major District Roads

ESMF Environment and Social Management Framework

MIS Management Information System

ETRP Emergency Tsunami Reconstruction Project

NCB National Competitive Bidding

EWS Early Warning Systems NCRMP National Cyclone Risk Mitigation Project

FM Financial Management NDMA National Disaster Management Authority

GFDRR Global Facility for Disaster Reduction and Recovery

NDRF National Disaster Response Force

GoI Government of India NH National Highways

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NRDWP National Rural Drinking Water Program

SH State Highways

NRSC National Remote Sensing Center

SIL Specific Investment Loan

ODCH Owner Driven Construction of Houses

SRTC State Roads Transport Corporation

ODR Other Districts Roads UDRP Uttarakhand Disaster Recovery Project

OP Operational Policy UIDC Uttarakhand Infrastructure Development Corporation

ORAF Operational Risk Assessment Framework

UKRWSSP Uttarakhand Rural Water Supply and Sanitation Project

PDO Project Development Objective

ULBs Urban Local Bodies

PIU Project Implementation Units UN United Nations

PMGSY PradhanMantri Gram SadakYojana – Rural Roads Project

UNDMT United Nation Disaster Management Team

PMU Project Management Unit UREDA Uttarakhand Renewable Energy Development Agency

PRI Panchayati Raj Institution USAC Uttarakhand Satellite Application Center

PSC Project Sanctioning Committee

USDMA Uttarakhand State Disaster Management Authority

PWD Public Works Department VR Village Roads RAP Resettlement Action Plan VSL Value of a Statistical Life RCC Reinforced Cement and

Concrete WB World Bank

SDMA State Disaster Management Authority

WIHG Wadia Institute of Himalayan Geology

Regional Vice President: Philippe H. Le Houerou Country Director: OnnoRuhl

Sector Director: John Henry Stein Sector Manager: Bernice K. Van Bronkhorst

Task Team Leader: Saurabh Suresh Dani/Deepak Singh

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I�DIA

I�DIA: UTTARAKHA�D DISASTER RECOVERY PROJECT

TABLE OF CO�TE�TS

I. STRATEGIC CONTEXT ....................................................................................................... 1

A. Country Context .................................................................................................................. 1

B. Situations in UrgentNeedof Assistance .............................................................................. 2

C. Sector and Institutional Context ......................................................................................... 3

D. HigherLevel Objectives to whichtheProjectContributes..................................................... 4

II. PROJECTDEVELOPMENT OBJECTIVES .......................................................................... 4

A. PDO ..................................................................................................................................... 4

B. Project Beneficiaries ........................................................................................................... 5

C. PDO Level Results Indicators ............................................................................................. 5

III. PROJECTDESCRIPTION ................................................................................................... 5

A. ProjectComponents ............................................................................................................. 5

B. ProjectFinancing ................................................................................................................. 7

C. Lessons LearnedandReflectedintheProjectDesign .............................................................. 8

IV. IMPLEMENTATION .......................................................................................................... 9

A. Institutional andImplementationArrangements................................................................... 9

B. Results Monitoring andEvaluation ................................................................................... 10

C. Sustainability..................................................................................................................... 10

V. KEY RISKSAND MITIGATION MEASURES ................................................................... 11

A. RiskRatings SummaryTable ............................................................................................. 11

B. Overall RiskRating Explanation ....................................................................................... 11

VI. APPRAISAL SUMMARY ................................................................................................ 12

A. EconomicAnalysis ............................................................................................................ 12

B. Technical ........................................................................................................................... 12

C. Financial Management ...................................................................................................... 13

D. Procurement ...................................................................................................................... 14

E. Social (including Safeguards) ........................................................................................... 14

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F. Environment (including Safeguards) ................................................................................ 15

Annex 1: Results Framework and Monitoring.............................................................................. 17

Annex 2:DetailedProjectDescription ............................................................................................ 20

Annex 3:ImplementationArrangements ........................................................................................ 29

Annex 4: Operational Risk Assessment Framework (ORAF) ...................................................... 43

Annex 5:Implementation SupportPlan .......................................................................................... 48

Annex 6: Governance Accountability and Action Plan ................................................................ 51

Annex 7: Economic and Financial Analysis ................................................................................. 56

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PAD DATA SHEET

I�DIA

Uttarakhand Flood Recovery Project (P146653)

PROJECT APPRAISAL DOCUME�T

SOUTH ASIA

SASDC

Basic Information

Project ID EA Category Team Leader

P146653 B Saurabh Suresh Dani / Deepak Singh

Lending Instrument: Investment Project Financing Fragility or Capacity Constraints [ ]

Financial Intermediary []

Series of Projects [ ]

Project Implementation Start Date Project Implementation End Date

October 29, 2013 December 31, 2017

Expected Effectiveness Date Expected Closing Date

December 29, 2013 December 31, 2017

Joint IFC No

Sector Manager Sector Director Country Director Regional Vice President

Bernice K. Van Bronkhorst

John Henry Stein OnnoRuhl Philippe H. Le Houerou

Borrower: Government of India

Responsible Agency: Government of Uttarakhand

Contact: Mr. Rakesh Sharma Title: Additional Chief Secretary

Telephone No.: 0135-2712090 Email: [email protected]

Project Financing Data(in USD Million)

[ ] Loan [ ] Grant [ ] Other

[ √ ] Credit [ ] Guarantee

Total Project Cost (US$M): 250 Total Bank Financing: 250

Total Co-financing: 0 Financing Gap: 0

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Financing Source Amount(US$M)

BORROWER/RECIPIENT 0.00

International Development Association (IDA) 250.00

Total 250.00

Expected Disbursements (in USD Million)

Fiscal Year 2014 2015 2016 2017 2018

Annual 40 40 70 70 30

Cumulative 40 80 150 220 250

Institutional Data

Sector Board

Urban Development

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Industry and Trade Housing Construction 10 10 0

Water, Sanitation and Flood Protection Flood Protection 25 25 0

Health and Other Social Services Other Social Services 5 5 0

Transportation Rural & Inter Urban Roads and Highways

60 10 50

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project.

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Social Protection and Risk Management Natural Disaster Management 20

Environment and Natural Resources Management Climate Change 10

Rural Development Rural Services and Infrastructure 60

Social Protection and Risk Management Social Risk Mitigation 10

Total 100

Project Development Objective(s)

To restore housing, rural connectivity and build resilience of communities in Uttarakhand and increase the technical capacity of the State entities torespond promptly and effectively to an eligible crisis or emergency.

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Components

Component �ame Cost (USD Millions)

Resilient Infrastructure Reconstruction 31

Rural Road Connectivity 155

Technical Assistance andCapacity Buildingfor Disaster Risk Management 38

Financing Disaster Response Expenses 12

Implementation Support 14

Contingency Emergency Response 0

250

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects?

Yes [] No [√]

Explanation:

Does the project require any waivers of Bank policies? Yes [] No [√ ]

Have these been approved by Bank management? Yes [ ] No [√ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [√]

Explanation:

Does the project meet the Regional criteria for readiness for implementation? (following emergency project preparation criteria)

Yes [ √ ] No []

Safeguard Policies Triggered by the Project Yes �o

Environmental Assessment OP/BP 4.01 √

Natural Habitats OP/BP 4.04 √

Forests OP/BP 4.36 √

Pest Management OP 4.09 √

Physical Cultural Resources OP/BP 4.11 √

Indigenous Peoples OP/BP 4.10 √

Involuntary Resettlement OP/BP 4.12 √

Safety of Dams OP/BP 4.37 √

Projects on International Waterways OP/BP 7.50 √

Projects in Disputed Areas OP/BP 7.60 √

Legal Covenants

�ame Recurrent Due Date Frequency

Implementation Units-I Yes N/A Project duration

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Description of Covenant

Uttarakhand shall maintain: (i) a Core Committee, for policy guidance, general oversight and monitoring and evaluation; (ii) a High Powered Committee for Sanctions of Post Disaster Reconstruction Works, for according all financial and administrative approvals, facilitate clearances, and ensure inter-departmental coordination; and (iii) a Project Management Unit within USDMA for the carrying out of day-to-day implementation of USDMA’s components and/or coordinate the implementation of certain sub-components by line department and agencies; and (iv) Project Implementation Units within USIDC, PWD and USDMA for the to serve as the technical unit carrying out and/or supervise Project activities under the respective line department/agency.


District Level Coordination Units

Yes Prior to commencement of Project activities in the respective district

Project duration

Description of Covenant Uttarakhand shall establish/maintain District Level Coordination Units headed by District Magistrates (one per district) in order to coordinate and monitor performance of reconstruction/disaster recovery activities, identify beneficiaries for the housing construction assistance, ensure proper operation of grievance mechanisms; and identifying small works at district level (primarily bridle roads and bridges).


Project Documents

Yes N/A N/A


Uttarakhand shall implement the Project in accordance with the Operations Manuals, the Safeguard Documents (ESMF or mitigation plans derived therefrom) and the GAAP.


Resilient Housing-Selection of Beneficiaries

Yes N/A Project duration

Description of Covenant Uttarakhand shall select beneficiaries for housing reconstruction activities pursuant to the guidelines and selection criteria set forth in the Operations Manual.


Resilient Housing-Sub-grant Agreements

Yes N/A Project duration


Uttarakhand shall enter into sub-grant arrangements under terms and conditions acceptable to IDA with those selected beneficiaries that opt to build their own houses, which will require their compliance with

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Safeguard Documents, defined specifications, stage wise disbursement criteria, and counterpart funding obligations (as applicable).


Resilient Housing-Eligibility of Housing Sub-Grants

Yes End of Project N/A

Description of Covenant Uttarakhand shall reimburse IDA the amounts disbursed under housing sub-grants arrangements for any substantially unfinished houses.


Screening of Activities – Government Permits/Clearances and Social & Environmental Documents

Yes Before bidding for any civil work

Project duration

Description of Covenant Uttarakhand shall ensure that, prior to commencement of any civil works or issuance of a Housing Sub-grant: (i) all relevant government permits/clearances have been obtained, and/or any conditions imposed have been fulfilled/met; (ii) the respective activities have been screened as per the ESMF and, whenever required the necessary EMP, RAP or social management plans have been prepared and disclosed; and (iii) all resettlement measures identified have been properly implemented (including full payment of any resettlement compensation).


Safeguard Instruments-Reporting

Yes 45 days after the end of every calendar quarter

Every calendar quarter

Description of Covenant Uttarakhand shall submit to IDA a compilation of the safeguards screening reports prepared by the line department and agencies on Project activities.


Safeguard Reporting &Monitoring

Yes N/A Every quarter


Uttarakhand shall (i) maintain monitoring and evaluation protocols and record keeping procedures to supervise and assess compliance with Safeguard Documents; and (ii) to report on quarterly basis on compliance with Safeguard Documents.


Contractors’ Safeguards Obligations

Yes N/A N/A

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Description of Covenant Uttarakhand shall include compliance with the Safeguard Documents as part of the contractors’ obligations pursuant to the bidding documents.


Procurement Disclosure Yes 6 months as of the Effective Date

Project duration

Description of Covenant Uttarakhand shall establish and monthly update a procurement documentation and record keeping system with a freely and publicly accessible database, showing updated procurement information (i.e. notices, bidding invitations, request for proposals, awards, etc.).


Procurement Complaints Mechanism

Yes 3 months as of the Effective Date

Project duration

Description of Covenant Uttarakhand shall establish a mechanism for handling procurement complaints with a second tier appeal system and complaint database providing free and public access for the submission of electronic claims.

Conditions

�ame Type

Emergency Contingency Component Disbursement

Description of Condition

To access funds under this component, the Recipient and the Project Implementing Entity must have determined/declared that an eligible crisis or emergency has occurred, identified response activities and expenditures, prepared and disclosed any required safeguard documents, identified and/or staffed a coordination authority responsible for implementation, and prepared an operations manual.

Team Composition

Bank Staff

�ame Title Specialization Unit

Saurabh S. Dani Senior Disaster Risk Management Specialist

Task Team Leader

SASDC

Deepak Singh Senior Disaster Risk Management Specialist

Co-Task Team Leader

SASDC

Muthukumara S. Mani Senior Environmental Economist Environmental Economics

SASDC

ArnabBandyopadhyay Senior Transport Engineer Highway Engineering

SASDT

Martin Serrano Senior Counsel Legal LEGES

DechenTshering Disaster Risk Management Specialist Housing SASDC

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SurangaSorriya Kumara Kahandawa

Disaster Risk Management Specialist Disaster Risk Management

SASDC

Keiko Saito Disaster Risk Management Specialist Remote Sensing and GIS

GFDRR

Augustin Maria Urban Specialist Urban SASDU

Hemang Karelia Operations Specialist Disaster Risk Management

GFDRR

SonamVelani Disaster Risk Management Analyst Disaster Risk Management

SASDC

Ignacio Urrutia Operations Specialist Disaster Risk Management

SASDC

S. Krishnamurthy Senior Financial Management Specialist

Financial Management

SARFM

Manu Prakash Rural Water and Sanitation Specialist Rural Water Supply and Sanitation

SASDU

GauravJoshi Environmental Specialist Environment SASDI

Shankar Narayanan Senior Social Development Specialist Social Development

SASDS

JurminlaJurminla Procurement Specialist Procurement SARPS

Vinayak N.Ghatate Senior Rural Development Specialist Livelihood SASDA

RoshinMathai Joseph Disaster Risk Management Specialist Disaster Risk Management

GFDRR

Luis Tineo Senior Disaster Risk Management Specialist

Peer Reviewer GFDRR

Michel Matera Senior Disaster Risk Management Specialist

Peer Reviewer LCSDU

Deepak Man Shrestha Senior Transport Specialist Peer Reviewer SASDT

Raja RehanArshad Lead DRM Specialist Peer Reviewer GFDRR

Simon Ellis Lead transport Specialist Peer Reviewer ECSTR

Vidya Mahesh Program Assistant Administration SASDC

Lilian Macarthur Program Assistant Administration SASDC

�on- Bank Staff

�ame Title Office Phone City

Peeyush Sekhsaria Consultant - Operations Support New Delhi, India

MaliniNambiar Consultant - Disaster Risk Management

New Delhi, India

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Deepak Malik Consultant -Operations Specialist Jaipur, India

Mark Zeydler Consultant, Disaster Risk Management

Washington DC, USA

Samuel Thangaraj Consultant - Social Development New Delhi, India

B. K. D. Raja Consultant, Safeguards Management Hyderabad, India

Anil Das Consultant, Disaster Risk Management

New Delhi, India

D. C. Saha Consultant, Transport New Delhi, India

Locations

Country First

Administrative

Division

Location Planned Actual Comments

India Uttarakhand Actual All districts

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I. STRATEGIC CO�TEXT

A. Country Context

1. India is one of the most densely populated countries in the world with over one billion people and it is vulnerable to numerous natural hazards,particularly earthquakes, floods, droughts, cyclones, and landslides. The Global Climate Change and Vulnerability Index reveals that India is ranked as the second most vulnerable country in the world1 to natural hazards.As per the latest seismic zoning map (Zones I to V based on risk) published by the Bureau of Indian Standards (BIS)2, about 60% of the country is prone to earthquakes of intensity VII or more on the MSK3 scale.

2. The most vulnerable areas of the country are located in the Himalayan and sub-Himalayan regions. Climate induced disasters are very common across the region, and annual monsoon rains further accentuate the intensity of climate disasters. The rapid retreat of the Himalayan glaciers has consequences for water-related hazards, such as glacier lake outburst floods, and for water stress, as a result of the decline in fresh water supplies during the dry season. According to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)4, the incidence and intensity of floods in the Himalayan region are expected to increase as a result of a growth in precipitation during the monsoon season and glacial retreat, both occurring due to the changing climate.

3. India has made great strides in moving from reactive emergency response activities to being proactive and implementing disaster preparedness and risk reduction initiatives. India enacted the Disaster Management Act in 2005 and established the National Disaster Management Authority (NDMA) and State Disaster Management Authorities (SDMAs). NDMA has proactively formulated guidelines and procedures for dealing with specific natural disasters and is mandated to frame policies, plans and guidelines for disaster management. The Risk Management Framework developed in India has served as a blueprint and best practice model for other countries.

4. In keeping with the Government of India’s (GoI’s) commitment to disaster risk mitigation at the national and state levels, the proposed Project will focus on the post disaster recovery plans in the State of Uttarakhand as well as strengthen the capacity of the State and other entities on disaster risk management.GoI has gained a lot of experience in recovery and reconstruction following the Bhuj earthquake, the Asian tsunami and Bihar Kosi floods, wherein risk mitigation infrastructure and community resilience have been integrated into post-disaster projects.

Uttarakhand

5. Uttarakhand was formed on November 9, 2000 to become the 27th State of India. It is predominantly a hilly State, having international boundaries with the People’s Republic of China in the north and Nepal in the east. On its north-west lies the State of Himachal Pradesh, while on the south it is bounded by the State of Uttar Pradesh. The high Himalayan ranges and glaciers form most of the northern parts of the state while the lower reaches are densely forested 1Maplecroft’s Climate Change Risk Atlas, 2011. Available on http://maplecroft.com/about/news/ccvi.html 2 IS 1893 - Part 1. 2002, Map of Seismic Zones of India 3The Medvedev–Sponheuer–Karnik scale, also known as the MSK is a macro-seismic intensity scale used to evaluate the severity of ground

shaking on the basis of observed effects in an area of the earthquake occurrence. A value of MSK VII is indicated as a strong event 4 IPCC Fourth Assessment Report: Climate Change 2007. http://www.ipcc.ch/publications_and_data/ar4/syr/en/contents.html

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(covering about 60%5 of the state) with rich natural resources and wildlife habitats. Two of India's major rivers, the Ganga and the Yamuna, originate from Uttarakhand.

6. Uttarakhand comprises of 13 districts that are grouped into two regions: Kumaon and Garhwal, and has a total geographical area of 53,484 sq. km. The economy of the State primarily depends on agriculture and tourism.The State is home to some of the most important pilgrimage centres known as the “Char-Dham”, i.e. the Gangotri, Yamunotri, Kedarnath and Badrinath.

B. Situations in Urgent�eedofAssistance

7. The monsoon in June 2013 arrived almost two weeks earlier than expected in Uttarakhand. From June 15 to 17, 2013, cloud bursts6 and heavy (64.5 - 124.4 mm) to very heavy (124.5 – 244.4 mm) rainfall hit several parts of the higher reaches of the Himalayas. This unprecedented rainfall resulted in a sudden increase in water levels, giving rise to flash floods in the Mandakini, Alakananda, Bhagirathi and other river basins, also causing extensive landslides at various locations.Continuous rains causedChorabari Lake to rise and the Lake’s weak moraine barrier gave way and a huge volume of water along with large boulders came down the channel to the east, devastating the towns of Kedarnath, Rambara, Gaurikund and others in its wake. According to official sources, over 900,000 people have been affected by the event in Uttarakhand.

8. The districts of Bageshwar, Chamoli, Pithoragarh, Rudraprayag and Uttarkashi were most affected. This region is one of the most important pilgrimage circuits in India.Since the disaster coincided with the peak tourist and pilgrimage season, it significantly increased the number of casualties, missing, and affected population.A total of 580 human lives were lost; over 5,200 people are reported missing7; 4,200 villages were affected; 9,200 cattle/livestock were lost; about 3,320 houses were fully damaged; about 995 public buildings were damaged; close to 9,000 km of roads were affected;and 85 motor bridges and 140 bridle bridges were damaged. This event also left over 70,000 tourists and 100,000 local inhabitants stranded in the upper reaches of the State.

9. Landslides and toe erosion by the sediment loaded rivers damaged roads/highways at many locations and washed away multiple bridges (steel girder, beam, and suspension/cable bridges). Traffic was disrupted along all national highways and link roadsin the region,along with the disruption of telecommunication lines, all adding to the impact of the disaster. Many hotels, rest houses and shops around the temple in Kedarnath were completely destroyed.

Joint Rapid Damage and �eeds Assessment

10. The World Bank (the Bank) and the Asian Development Bank (ADB),upon receiving a request from the Department of Economic Affairs (DEA), GoI, fielded a Joint Rapid Damage and Needs Assessment (JRDNA) Mission that visited the State from July 29 to August 07, 2013.In collaboration with the Government of Uttarakhand (GoU), the JRDNA Mission undertook a multi-sectoral assessment of the damages and laid the groundwork for an immediate recovery and reconstruction needs framework. The assessment relied upon the damage and loss assessment carried out by the State government.

5 India: Uttarakhand Economic Assessment; November 16, 2012, Poverty Reduction and Economic Management Unit, South Asia Region, World Bank. 6A cloudburst is an extreme amount of precipitation, sometimes with hail and thunder, and is capable of creating flood conditions. Meteorologists say the rain fall rate equal to or greater than 100 mm (3.94 inches) per hour is a cloudburst.[ 7SITREP NO-59/2013, 1700 hours, No.32-20/2013-NDM-I, Ministry of Home Affairs, (Disaster Management Division), Dated 29thJuly, 2013

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11. The unprecedented event has severely impacted all the communities that are scattered in the mountainous terrain. The report estimated the cost of damage reconstruction to be about US$661 million.Based on the findings of the JRDNA, the DEA, GoU, ADB and the Bank agreed on a framework for assistance in the disaster recovery and future risk reduction.

12. The ADB is assisting the GoUto construct State roads and bridges, urban and tourism infrastructure and disaster preparedness infrastructure such as helipads. The total amount of assistance from the ADB is about US$205 million. The balance reconstruction need, excluding support from the World Bank and ADB, is being funded through the GoI, the State’s own resources and from NGOs/ Corporates.

C. Sector and Institutional Context

13. The State of Uttarakhand is endowed with vast natural resources and is one of the most frequented pilgrimage/ tourist destinationsin India. It is estimated that about 70% of the State’s population depends on agriculture for their livelihood, while the tourism sector contributes about 25% to the Gross State Domestic Product(GSDP). The State receives over 32 million tourists and pilgrims annually, the majority visiting the state during the peak summer season (May-July).

14. The State has a very fragile terrain that is prone to natural disasters. The entire State falls within Zone IV and V (V represents the highest level of seismicity) of the Earthquake Zoning Map of India. The districts of Bageshwar, Chamoli, Pithoragarh, Rudraprayag and Uttarkashi fall within Seismic Zone V. In the recent past the State has witnessed two major earthquakes (Uttarkashi 1991 and Chamoli 1999).Every year, the State faces losses, particularly during the monsoon, due to rains, cloudbursts, landslides, floods, hailstorms and water logging events.

15. Under the Disaster Management Act 2005, Uttarakhand constituted the Uttarakhand State Disaster Management Authority (USDMA).The State has also established the Disaster Mitigation & Management Centre (DMMC), an autonomous institute under Department of Disaster Management,as the apex center in the sector in Uttarakhand. It functions as a think-tank for the State,incorporating aspects of prevention, preparedness and mitigation into all projects.

16. The GoU’s institutional capacity to manage the disaster was challenged during the recent disaster. The GoUrecognizes the need to simultaneously work on disaster risk reduction and management and quickly help communities recover from the impacts of disaster. The proposed Project, the ‘Uttarakhand Disaster Recovery Project’ (UDRP), takes into account the lessons from other disaster events and the multi-sectoral needs assessment undertaken during the JRDNA. It aims to improve the resilience of the State’s infrastructure and its communities from the impacts of future disasters and climate change.

Rationale for the Bank’s Involvement and Recovery Strategy

17. The Bank has a number of ongoing Projects in Uttarakhand:i) Uttarakhand Rural Water Supply and Sanitation Project (UKRWSSP)aims to improve the effectiveness of rural water supply and sanitation services. The Projectcovers all 13 districts of the State and is scheduled to close in June 2014.ii) PMGSY8 Rural Roads Projectaims to achieve broader and more sustainable access to markets and social services through the construction of rural roads across India. The Project covers seven states including Uttarakhand and is scheduled to closeNovember 2014. iii) Biodiversity Conservation and Rural Livelihoods Projectaims to develop and promote 8PMGSY – PradhanMantri Gram SadakYojana – a large National Program financed by GoI for improving/ establishing rural roads to connect

villages to the main road networks. This program is also partially financed by the World Bank.

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new landscape scale conservation models for mainstreaming biodiversity conservation outcomes in theAskot Wildlife Sanctuary Landscape, PithoragarhDistrict. The Projectis scheduled to close in March 2018.iv) Uttarakhand Decentralized Watershed Development Project (Phase II) focuses on the productive potential of natural resources and rainfed agriculture and is expected to undergo board review in November2013.

18. The UKRWSSP and PMGSY Rural Roads projectshave been affected by the disaster. An additional financing of US$24 million is under consideration as part of the restructuring of the ongoing UKRWSSP. A rapid post-disaster assessment for recovery planning and programming supported by the Global Facility for Disaster Reduction and Recovery (GFDRR) has informed the recovery interventions proposed under UDRP. It accounts forongoing projects funded by the Bank and other agencies, their restructuring, and projects being proposed by other funding agencies in the aftermath of the disaster.

Bank Recovery Strategy/Response: The Project

19. The proposed Project constitutes a large multi-sector engagement on risk and vulnerability reduction, with assistancefor reconstructing damaged infrastructure, restoring connectivity and improving technical support for managing future disaster risks. The Project design has incorporated lessons learned from previous national and global post-disaster recovery projects to ensure that the recovery is targeted, effective and is built back “smarter” in order to build resilience of local communities to future disasters. The design considerations behind this approach include increased resilient housing, enhanced restored connectivity and improved institutional capacity for risk mitigation and response at the State level.

D. HigherLevel Objectives to whichtheProjectContributes

20. The proposed Project is aligned to the Bank’s Country Partnership Strategy (CPS FY13-17) to enhance disaster risk management systems. The Project is solidly anchored within the “Strategic Engagement Area 3: Inclusion” of the India CPS, which states that the World Bank’sinvestments in this area will: “(i) help build institutional capacity to prepare for and manage the impact of natural disasters and (ii) help people protect themselves from natural disasters and recover quickly from them.”

21. This Projectalso supports India’s major policy shift to proactive risk management and allows the implementation of a demand-driven program specifically in areas where the Bank offers significant experience in translating national risk mitigation strategies into effective policies and strengthening the capacity of institutions for improved service delivery.Furthermore, the design and implementation of the proposed Project will offer important lessons to be shared with other countries in their efforts to systematically address the reduction of multi-hazard risks. The proposed Project also creates a solid basis for a long-term partnership with India that ultimately benefits millions of people exposed to natural disaster risks.

II. PROJECTDEVELOPME�TOBJECTIVES

A. PDO

22. To restore housing, rural connectivity and build resilience of communities in Uttarakhand and increase the technical capacity of the State entities to respond promptly and effectively to an eligible crisis or emergency.

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B. Project Beneficiaries

23. The primary beneficiaries would be the communities in the State that would benefit from the restoration of housing, rural connectivity, and risk mitigation infrastructure. By strengthening disaster risk management systems and institutions, the Project has the potential to benefit the entire State of Uttarakhand.

C. PDO Level Results Indicators

24. The Project objective will be monitored by the following indicators. Details are included in Annex 1.

• Targeted affected households with multi-hazard resilient housing • Targeted affected villages withrestored connectivity • Departments that make use of information generated by USDMA

III. PROJECTDESCRIPTIO�

A. ProjectComponents

Component 1: Resilient Infrastructure Reconstruction – US$31 million

25. The objective of this component is to focus on the immediate needs of reconstructionof damaged houses and public buildings. The aim is to reduce the vulnerability of the affected population and restore access tothe basic services of governance.

26. Subcomponent 1.1:Resilient Permanent Housing- US$27 million: This will involve building about 2,500permanent housesthat would be multi-disaster resilient. Houses will be built under three categories; i)Houses constructed on the land of households who have title deeds to their land and that are safe for construction;ii)Construction of cluster houses for households that have lost both their houses and land due to the disaster, on land available within the village area; andiii)Construction of cluster houses relocated to a new area for households that have lost both their houses and land due to the disaster. The land for category (iii) will be provided by the GoU, and will be developed with basic amenities like school buildings, primary health centres, community centres, etc.

27. Subcomponent 1.2: Resilient Public Buildings- US$4 million:This will support the reconstruction of damaged public buildings, such as the Panchayati Raj Institution (PRI), Block and District offices and technical education institutes. It will include the restoration of partially damaged structures and the reconstruction of fully damaged structures, equipment’s and furniture’s.

Component 2: Rural Road Connectivity – US$155 million

28. Theobjective of this componentis to restore the connectivity lost due to the disaster through the reconstruction of damaged roads and bridges including: village roads,Other District Roads (ODRs)9, bridle roads and bridle bridges. The roads and bridges will be designed to withstand earthquake and flood forces as per the latest official design guidelines. The affected rural areas will be benefitted by the restored access to the market thereby increasing the economic growth in these areas and timely access to health and education services.

29. Subcomponent 2.1: Village/Rural Roads- US$120 million:This will support the

9ODRs are generally the link roads between Village Roads and Major District Roads (MDRs)

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reconstruction of about 3,600 kms of damaged village roads, following the PMGSY program standards.It will also include the construction of new bridges and drainage works, retaining walls, breast walls and other structures to prevent landslides, and minor realignments.

30. Subcomponent 2.2:Other District Roads (ODR) - US$13 million: This will involve the reconstruction of about 675 kms of damaged ODRs,linkingvillage roads to Major District Roads (MDRs), State Highways (SH) and/or National Highways (NH) to increase accessand provide opportunities for overall economic development.

31. Subcomponent 2.3: Bridle Roads and Bridle Bridges - US$22 million:This will undertake the reconstructionof about 440 kms bridle roads and about 140 bridle bridges,facilitatingpedestrian connectivity for villages located in remote areas.

Component 3: Technical Assistance and Capacity Building for Disaster Risk Management-

US$38 million

32. The objective of this component is to enhance the capabilities of government entities and others in risk mitigation and response. This component would entail the following tasks:

33. Subcomponent 3.1:Risk Assessment,Modeling and Capacity Enhancement of

Uttarakhand Space Applications Centre (USAC) - US$10 million: This will providetechnical assistanceto institutions to plan, set-up and implement a multi-hazard risk assessment of Uttarakhand. This subcomponent will include: (i) development of the framework and implementation of multi-hazard risk assessment models for Uttarakhand; (ii) development of a historic hazard and loss database; (iii) establishment of a technical advisory group for the multi-hazard risk assessment; (d) acquisition and processing of high-resolution satellite data for risk assessment;(iv) development of training of trainers courses to build sustainable risk assessment capacity; (v) development of a monitoring and evaluation framework; (vi) development of tools that will allow the optimal utilization of risk information and increase the resilience of the communities and DRM capacity of the state; (vii) capacity enhancement ofUSAC . 34. Subcomponent 3.2:Establishment of a Decision Support System (DSS)-US$3 million:This will entail setting up a DSS that will integrate and analyze information from multiple sources in an integrated geo-spatial system. The system will be designed to display information and provide access in a user-friendly manner. 35. Subcomponent 3.3: River Morphology Study - US$3 million:This will support the study of the entire morphology of some key rivers impacted by the disaster. The study will also analyze and identify critical protective infrastructure works needed for river bank strengthening. 36. Subcomponent 3.4: Slope Stabilization Study - US$4 million:This will include learning about slope stabilization from existing successful techniques, ongoing cutting edge work and research in this sector. It will also introduce appropriate technology for slope stabilization for Uttarakhand through small demonstrative works. 37. Subcomponent 3.5: Strengthening of the Uttarakhand State Disaster Management Authority (USDMA)-US$5 million:This will entail developing the institutional set up of the USDMA, technical enhancement of the facilities at the DMMC, training programs and regular drills for the emergency operations center staff and Disaster Management Officers at the District and State levels. 38. Subcomponent 3.6: StrengtheningHydro-meteorological �etwork and Early Warning

Systems (EWS)-US$10 million: This will review existing hydro-meteorological capabilities at the State and National level, and will develop and implement a hydro-meteorological modernization

7

plan for Uttarakhand. This will also review existing EWS, identify gaps and establish a robust, fail safe EWS in the State including optimum use of strengthened networks and facilities. 39. Subcomponent 3.7: Strengthening Emergency Response Capacity-US$3 million:This will focus on strengthening the capacity of the State’s disaster response force,fire services personnel and other immediate key response agencies in responding adequately to disaster situations through better search and rescue equipment and enhanced training.

Component 4: Financing Disaster Response Expenses –US$12 million

40. This component will support the financing of eligible expenses already incurred by the State during the immediate post-disaster response period. The expenses eligible include fuel for helicopter rescue missions, hiring of heavy equipment for clearing of roads and any other items listed as “positive goods” that are mutually agreed to for reimbursement by the GoU and the World Bank.

Component 5:Implementation Support –US$14 million

41. This component will support the incremental operating costs of the Project, including the operation of the Project Management Unit (PMU) and the respective Project Implementation Units (PIUs). The component will also include the creation of small, temporary field implementation offices with necessary equipment, furniture, etc. In addition, the component will include consultancies required for the preparation and supervision of specific activities, trainings, exposure visits and knowledge exchange programs. An agency will be appointed to provide technical and social support to the Owner Driven Construction of Houses (ODCH).

Component 6: Contingency Emergency Response –US$0 million

42. Following an adverse natural event that causes a major natural disaster, the respective Government may request the Bank to re-allocate Project funds to support response and reconstruction. This component would draw resources from the unallocated expenditure category and/or allow the Government to request the Bank to re-categorize and reallocate financing from other Project components to partially cover emergency response and recovery costs. This component could also be used to channel additional funds should they become available as a result of an eligible emergency.

B. ProjectFinancing

Lending Instrument

43. The lending instrument will be a Specific Investment Loan (SIL), and the implementation period for the Project is four years. SILs provide the flexibility to build human and institutional capacity, construct infrastructure, and support the gradual design and implementation of the Project activities. A SIL also allows for the close follow-up of defined activities and procedures on the part of the Government and the Bank, making adjustments where necessary.

ProjectCostandFinancing

44. A summary of the financing per component, in addition to IDA financing and % financing is given in the Table 1below:

8

Table 1: Component-wise Summary of Costs

Components Total

(US$M) IDA Financing

(US$M) % Financing

Resilient Infrastructure Reconstruction 31.00 31.00 100 Rural Road Connectivity 155.00 155.00 100 Technical Assistance and Capacity Building for DRM

38.00 38.00 100

Financing Disaster Response Expenses 12.00 12.00 100 Project Implementation Support 14.00 14.00 100 Contingency Emergency Response 0.00 0.00 100

Total 250.00 250.00

Total Project Cost 250.00 Total Financing Required 250.00

C. Lessons LearnedandReflectedintheProjectDesign

45. The proposed Project incorporates lessons learnt from the completed Emergency Tsunami Reconstruction Project (ETRP), the ongoing National Cyclone Risk Mitigation Project (NCRMP), the ongoing Bihar Kosi Flood Reconstruction Project (BKFRP) and other post-disaster recovery/reconstruction projects financed by the Bank worldwide.

a. Engagement of local communities – Evidence from ETRPand projects in Bangladesh clearly showthe benefits of involving the local community indetermining infrastructure location and design. These lessons will be incorporated in the proposed Project under multiple components: rebuilding resilient infrastructure, strengthening early warning systems, others. The consultation process to finalize the location and design in targeted areas will involve engagement with the community. b. The Disaster Management Act of 2005 paved the way for the creation of the National Disaster Management Authority (NDMA) at the national level, and the State Disaster Management Authority (SDMA) at the state levels, the latter with a clear mandate for spearheading disaster management efforts in the states. The Project recognizes the need for strengthening the capacity of the SDMAs at the state and local level towards disaster risk mitigation and has allocated funds and activities towards the same. The Gujarat State Disaster Management Authority and the Odisha State Disaster Management Authority are good examples and lessons are drawn from their evolution and development process. c. DRM institutions are frequently overstretched between regular operations and emergencies. This means that thePMU should have a clear role so that staff can continue to work on the ongoing projects independent of emergencies. The PMU in Uttarakhand will have the responsibility of overseeing the entire Projectand appropriate funds have been allocated for the same. In addition, due to the evolving conditions of the program, close support and supervision will be provided during Project implementation, with intensive and focused efforts during the crucial first 18 months of Project implementation. d. As demonstrated in the ETRP, regular third party technical auditing of various activities of the housing reconstruction process has resulted in better quality of construction. This practice has been extended to other GoIschemes as well and will be continued in this Project. e. Globally, there is evidence that some flood response programs have focused too heavily on rebuilding infrastructure and not enough on better adaptation and preparedness for the future in complementary investments, such as water and flood management, rural finance, enhancing

9

capacities of water users groups, early warning communication systems, etc.A strong disaster response mechanism plays a crucial role in not only saving lives and livelihoods, but also for achieving sustainable recovery and long-term disaster risk reduction. The Project will focus on providing technical assistance in sustainable risk mitigation and response. f. Technical codes and standards utilized should be resilient to natural hazards. Previous projects have shown that upstream consideration of technical standards during the design phase is important in order to rebuild to higher standards that adequately factor in seismic and other hazard risks. The type of design and construction methods should be tailored to local conditions and utilize appropriate reconstruction materials and practices. Technical assistance and international expertise in this area will be provided to ensure compliance.

IV. IMPLEME�TATIO�

A. Institutional andImplementationArrangements

46. Oversight and Approvals - Under the Uttarakhand State Disaster Management Act, 2005, the GoU has formed a ‘Core Committee’, headed by the Chief Secretary, for evaluation and monitoring of the reconstruction program. This Core Committee will primarily be responsible for monitoring the post disaster works of all the implementing agencies. In addition, the GoU has also constituted a ‘High Powered Committee for Sanctioning of Post Disaster Reconstruction Works’ chaired by the Additional Chief Secretary. This High Powered Committee will provide administrative and financial approvals, for all the post disaster recovery, reconstruction and risk mitigation works. In addition, the High Powered Committee will address interdepartmental coordination and follow-on external clearances where required.

47. Project Management Unit - Under the USDMA, a Project Management Unit (PMU)will be formed and headed by a full time Project Director and supported by the three Project Managers, for each of the following components: housing and public buildings; roads and bridges; and strengthening disaster management.These Project Managers will supervise the operations of the respective PIUs, including monitoring and coordination. In addition, the PMU will be supported by Procurement, Financial Management, Administration, Project Support and Management Information System (MIS) units as individuals or hired through a Project Management Consultant. Staff will be deployed from various departments, through recruitment from the open market, or by using other existing arrangements. Appropriate training programs will be developed for all staff.

48. Project Implementation Units-Relocated Cluster Housingand Public Building works will be carried out by the Uttarakhand State Infrastructure Development Corporation (USIDC), Owner Driven Construction of Houses (ODCH) will be implemented by the PMU through the office of the respective District Magistrates (DMs), and Roads and Bridges works will be executed by the Public Works Department (PWD).The technical and capacity building component will be managed by a PIU within the PMU with the support of Uttarakhand State Disaster Management and Mitigation Center (DMMC) and the Uttarakhand Space Application Center (USAC). In addition, there will be a District Coordination Committee withDistrict Magistrateas nodal officer for coordination, monitoring, progress review, etc. All implementing departments/agencies will create an exclusive setup for the implementation of the Project components including the nodal units at the departmental headquarter for the preparation of detailed project reports, tendering, evaluation, financial management, safeguards, compliance, etc.

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B. Results Monitoring andEvaluation

49. The Results Framework in Annex 1 will be used to monitor and evaluate the achievement of the PDO and the outcome indicators. Project monitoring will occur as a periodic function, and will include process reviews/audits, reporting of outputs, and maintaining progressive records. Broad thematic areas that will be supervised and monitored include the following:i) Social and Environmental Monitoring; ii) Regular Quality Supervision and Certification; iii) Periodic Physical Progress Monitoring and Third Party Quality Audit; and iv) Monitoring and Evaluation for results.

50. Social and Environmental Monitoring–This will comprise of the following sets of activities: i) Monitoring compliance with environmental regulations, social and environmental safeguards and Environmental and Social Assessment provisions; and ii) Overall State-level monitoring and oversight of social and environmental issues at the state/project levels.

51. Regular Quality Supervision & Certification – This will be carried out by the respective implementing units within the line departments. Third party quality monitoring and independent certification of goods and works procured under the Project shall form the Quality Management System. Detailed quality guidelines will be developed by the PMU/PIU and adopted by all implementing units and other stakeholders.

52. Periodic Physical Progress Monitoring & Third Party Quality Audit–Physical progress monitoring will be carried out by the implementing units within the line departments on a monthly basis and report to the PMU, which will in turn share the reports on a quarterly basis with the Bank. The implementing units within the line departments will be the nodal agencies for reporting to the PMU/PIU. Financial progress will be reported through the quarterly Interim Financial Reports (IFRs). In addition, a third party will be deployed for quality monitoring of works and compliance on social and environmental aspects. The PMU/PIU will strengthen the existing MIS and create a detailed MIS where needed for the management of the information database, which will be an online tool for gathering updates by the implementing units within the line departments. A portion of this database will also be uploaded on the Project website as part of regularly sharing information with the public.

53. Monitoring and Evaluation:The continuous monitoring of the Project and its achievementswill be taken up by the Core Committee.

C. Sustainability

54. Sustainability of the Project proposed has been enhanced due to the following:

a. Ownership: The GoUhas shown keen interest and initiative in taking this Project forward. The DEA has given high importance to the Project and to the partnership with the Bank in the area of DisasterRiskManagement (DRM). All this indicates a strong commitment and a sense of ownership which enhances the sustainability of the Project. b. Institutional Capacity: The SDMAs are the legally empowered nodal disaster management agency at the State level. This Project will help strengthen the USDMA as an operational institution and will help sustain investments in risk mitigation and its mainstreaming into the development agenda. In addition,a key outcome of the Project will be the improved capacity of the respective line departments, District Administration, and technical institutions to engage in long term planning to manage risks and respond to future disasters.

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c. Community Participation and Feedback Mechanisms: The Project is designed to involve the community in the selection and planning of the housing component. In addition, a well thought communication strategy will create awareness, inform communities about various components, and will incorporate a grievance redress system. This will promote local level ownership making the Project sustainable. d. Technical Sustainability: The Project will assist in strengthening the hydro-meteorological services within the State and technically assist in enhancing its capabilities in risk mitigation and response.The work undertaken in multiple components will enable the GoU to strategically use and understand models/tools in sustainable risk mitigation and response.

V. KEY RISKSA�D MITIGATIO� MEASURES

55. The disasterhas severely challenged and overstretchedthe Government’s capacity, whereby it faces a major implementation capacity shortfall in carrying out post disaster reconstruction works.The GoU has demonstrated an institutional will and a proactive attitude in quickly shifting from a relief to a reconstruction mode in the State by setting up empowered committees to implement various reconstruction projects. The proposed Project has provisions for contracting additional staff (if needed) and consultants to support the existing State personnel working in relief and rehabilitation activities, and provisions forcapacity building in order to facilitate implementation.

56. TheProject is multi-sectoral and complex by nature; it is spread over a wide geographical area with a large number of direct beneficiaries.It involves many departments: the PMU, the PWD, USIDC and the USDMA.Appropriate implementation arrangements with clearly defined roles and responsibilities of the PMU and PIUs will be documented in the Operations Manual (OM).

57. TheProject’s success will depend, in part, on effective coordination between different line departments and the State and District Administrations. It will require the dynamic and sustained involvement of all stakeholders in the community, along with the capacity building of state and non-state actors in risk reduction, management and mitigation.

A. RiskRatings SummaryTable

Table 2: Operational Risk Rating

RiskCategory Rating StakeholderRisk S ImplementingAgencyRisk -Capacity S -Governance S

ProjectRisk -Design M -Procurement S -Financial Management S -SocialandEnvironmental S -MonitoringandEvaluation M

OverallImplementationRisk S �ote: H= High; S= Substantial; M= Moderate and L=Low

B. Overall RiskRating Explanation

58. The overall risk is rated as substantial (as indicated in the ORAF in Annex 4).

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59. Mitigation measures will be incorporated in the Projectincluding: i) training on procurement and safeguards; ii) developing an integrated MIS system; iii) third-party monitoring (surveys and validation of Management Information Systems (MIS) data); iv) assessment of project innovations; v) participatory social audits; and vi) regular Project reviews.

VI. APPRAISAL SUMMARY

A. EconomicAnalysis

60. One of the major challenges of promoting disaster mitigation and prevention is to demonstrate that its potential benefits in terms of lives saved and property protected far exceeds its costs. Cost estimation of disaster risk reduction is relatively straightforward, while the estimation of its benefits is complicated by its probabilistic nature. In the end, the actual level of benefits will be realized depending on the degree of severity of the disaster event occurring over the life of the investment. Although the economic effects cannot be fully ascertained, there are indications of positive economic efficiency with respect to the project’s mitigation investments. Accordingly, specific analysis undertaken here includes the costs and benefits of measurable strengthening capacities, as well as of mitigation investments. Given the data constraints, in many cases extrapolation is used from similar analysis done in India to arrive at the benefit estimates.

61. Given the disaster risks faced by Uttarakhand, the proposed project is expected to yield both tangible and intangible benefits in long run (see Table 3).Overall, the project is economically feasible, yielding positive net present values with acceptable indicators and benefit-cost ratios exceeding 1.A key point, however, is that not all DRM interventions are likely to be equal with respect to their costs and benefits, particularly in relation to climate change, non-monetized and distributional considerations. A strategic assessment of costs, benefits and the assumptions underlying estimates is, as a result, essential. As discussed in Annex 7, distinctions between the cost-benefit profiles of various strategies may depend heavily on the degree to which they rely on soft versus hard resilience investments and, thus, the vulnerability of projected benefits to critical threshold values. Finally, considering the disaster related indirect costs, this project has the potential to reduce the annual need for external financing for post-disaster reconstruction, and reduce risk in achieving broader economic development and poverty alleviation goals.

Table 3:Benefit Cost Analysis of Uttarakhand Disaster Recovery Project

Project component Time horizon Project cost Benefit cost ratio

(years) (US$million) discount rate

5% 10%

Resilient Infrastructure Reconstruction 10 31.0 4.1 3.2 Rural Road Connectivity 10 155.0 15.6 12.4 Technical Assistance and Capacity Building in DRM

10 38.0 4.4

B. Technical

62. Component 1: The resilient infrastructure reconstruction includes housing and public infrastructure for communities in Uttarakhand. In addition, Component 2: Rural Road Connectivityfocuses on restoringconnectivity through the construction of 140 bridle bridges, ODR, village roads and bridle roads. The roads and bridges will be designed to withstand

13

earthquake and floods forces as per the latest design guidelines from the Bureau of Indian Standards, Indian Roads Congress and the Ministry of Road Transport and Highways.

63. Component 3: Technical Assistance and Capacity Building for Disaster Risk Management will augment government agencies, institutions and others to develop, set-up and manage risk assessment tools and models, and set up DSS and communication systems in risk mitigation and response.Staffing of the agency, capacity augmentation, initiating technical work of risk assessment targeted towards decision making and risk financing will be taken up under the Project. The GoU has already initiated the process of operationalizing the USDMA by providing it with a secretariat. In addition, inclusion of Component 6: Contingent Emergency Response will add to the Government’s capacity to effectively respond to disaster events.

C. Financial Management

64. The main implementing agencies for the Project are: USDMA, PWD, and USIDC.Under the USDMA, a PMU would be formed which would co-ordinate with all other agencies for all Project related financial management (FM) requirements. Each implementing agency would have a PIU at the head office (nodal office),which would manage the FM requirements and coordinate with all sub divisions to ensure proper accounting and reporting for the Project. The summary of the overall FM arrangements10 is provided below:

65. A budget head has been created for the Project with appropriate codes for each component. A Personal Ledger Account (PLA) is being established in the Treasury for USDMA-PMU to transfer funds as allocated in the budget. The USDMA-PMU would open a project bank account (master account) and would withdraw money from the Treasury as per the work plan requirements. All other agencies would be permitted to open link bank accounts (child account) under the master account so that limits can be prescribed and used for payments instead of transferring the amounts. The USDMA-PMU would maintain accounts in TALLY11, which would be used for accounting as well as generating reports for the Bank. The nodal PIU offices in all implementing agencies would maintain the accounts in TALLY and report to the USDMA for accounting and reporting purposes. Monthly reconciliation of the expenditure with the Bank account will be carried out by these offices. It is agreed that the accounting system will be established within three months of effectiveness.

66. While PWD and USIDC have good FM capacity, USDMA needs augmentation in terms of FM staffing. Each PMU and PIU would hire the agreed number of staff within three months of effectiveness. Interim Unaudited Financial Reports (IUFR) shall be submitted to the Bank on a quarterly basis within 60days from the end of the quarter, which would be the basis for disbursement as well as financial monitoring. The IUFR formats will be included in the OM. The annual audit of the Project Financial Statements (PFS) would be carried out by AG-Uttarakhandas per the agreed terms of reference with the Bank. The audit report should be submitted to the Bank within nine months from end of the financial year. Internal audits would be carried out by the internal audit wing either through their own staff or through a chartered accounting firm as per the terms of reference agreed with the Bank. PMU will review the audit reports and ensure compliance. Component 6: Contingent Emergency Responsecould also be used to channel additional funds should they become available as a result of an eligible emergency. The FM arrangements for this component would be worked out if and when the

10 In terms of FM assessment, PWD and USIDC have good FM capacity, while USDMA has no capacity at present and needs augmentation. 11 TALLY is an accounting software widely used in India.

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component is activated. The FM risk rating for the Project is currently rated as “Substantial” even though it is a ring fenced system as all agencies identified are new to the Bank’s FM arrangements. The mitigation measures would be documented in the OM created for the Project.

67. A Designated Account (DA) would be maintained in the Reserve Bank of India (RBI) for the Project and would be operated by the Controller Aid, Accounts and Audit (CAA&A) in accordance with the Bank’s operational policies. There would be a one-time fixed advance of US$25 million, which would be maintained throughout the Project life and adjusted towards the end of the Project. Disbursements would be made based on quarterly IUFRs to be submitted within 60 days from the end of the quarter. There would be two disbursement categories for the Project, one for all goods, works and services under the Project and another for Component 6: Contingent Emergency Response theProject is planning to execute certain contracts under retroactive financing. The details for eligibility for retroactive financing and for FM assessment are provided in Annex 3.

D. Procurement

68. Procurement will be carried out in accordance with the Bank’s “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by the World Bank Borrower” dated January 2011 (Procurement Guidelines), “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by the World Bank Borrowers” dated January 2011 (Consultants Guidelines) and the provision stipulated in the legal agreements. A procurement plan will be prepared for the first 18 months by appraisal and will be updated at least annually.

69. The first Contract for goods and works of each implementing agency will be prior reviewed and all subsequent contracts above US$1 million for goods and US$10 million for works will be prior reviewed. Consultancy services estimated to cost above US$500,000 per contract for firms and US$200,000 for individuals will be prior reviewed. Single-source or direct contracting for assignments estimated to cost above US$30,000 will be subject to prior review by the Bank.A shortlist of consultants for services estimated to cost less than US$800,000 equivalent per contract may be composed entirely of national consultants in accordance with the provision of paragraph 2.7 of the Consultant Guidelines.

70. The procurement activities will be carried out by the PMU and the identified line agencies such as PWD, USIDC, and USDMA. While some staff working in these agencies are familiar with World Bank procurement procedures, many others will need training. The Bank will provide training, workshops and handholding support whenever possible to build the capacity of the Borrower.

71. The Bank has conducted a rapid capacity assessment of the implementing agencies. While the system in general looks fairly good, given the presence of multiple implementing agencies, simplified procurement procedures and lack of familiarity and proper controls, it is likely that certain contractual terms and conditions may not be observed or applied. Therefore, the risk for this Project has been rated as high initially, but with proper mitigation measures, this can be reduced to substantial.Procurement activities are more elaborately discussed in Annex 3.

E. Social (including Safeguards)

72. Potential environmental and social impacts would arise mainly due to the biophysical and socio-economic characteristics of the Project areas, such as soil fragility, forests, biodiversity,

15

poverty and a high dependence of the population and livestock on the natural resource base. This has led to stressed environmental resources like land, sand, water resources, grasslands and forests. The Project considers these aspects and does not envisage any significant, irreversible impacts due to the small scale of the proposed interventions. The Project components would result in overall positive environmental and social impacts, if planned, designed and implemented with environmentally and socially sound practices.

73. The Environment and Social Management Framework (ESMF) is prepared to minimize and mitigate adverse impacts and enhance positive impacts to the environment and the affected populations. The ESMF includes the Environment and Social Assessment (ESA) as a tool for decision making to promote environmental sustainability and equity, which are the envisaged Project outcomes. In order to address safeguards policies, the ESMF includes a criteria for screening and exclusion of sub-projects that may have irreversible impacts; formats to carry out ESA’s during the preparation; and guidelines for mitigation of environment and social impacts with monitoring indicators that can be used at the local level. These would help identify and consider the potential social and environmental impacts of different interventions early in the decision making process, i.e., during the preparation, through a participatory process. This ESMF will consist of a process through measures such as screening, consultations, preparation and implementation of Environment Management Plansand Resettlement Action Plans (RAP) and extension of entitlements. The ESMF integrates such mitigation measures into the sub-project planning, design, implementation, operation and maintenance.

74. The Project’s infrastructure and connectivity components will involve the restoration and/or rebuilding of damaged and lost facilities and, to some extent, the construction of new facilities. These activities would involve certain adverse social impacts and land acquisitions. The size and scale of these impacts could be assessed when the sub-projects are finalized. Under these conditions, there is a possibility that private land may be required for the reconstruction of houses, public buildings, roads, bridle roads and bridges.

75. Several measures for minimizing the adverse impacts, such as the usage of vacant government land for Project facilities as a first option, are incorporated into the ESMF. Where such government land is not available, private land may be acquired through i)Direct purchase through negotiations, ii) Voluntary donation and iii) Consent award using the land acquisition process. The ESMF stipulates a replacement cost for the lost land and structures. Further, it proposes a shifting allowance and a subsistence allowance for those displaced. Those losing residential/ commercial structures are entitled to alternate housing/ commercial sites and an allowance for building the same. Those who lose their livelihoods on account of the Project activities will be provided with livelihood assistance through the Project with the provision of Income Generating Assets and Training.

F. Environment (including Safeguards)

76. The Project components largely include reconstruction works and limited new constructions that have the potential to create adverse environmental impacts. While project interventions are generally identified at appraisal, specific details of the components related to planning and designing of sub-projects will be known later during the detailed design process. As sub-projects will be located in several disaster affected districts, an ESMF approach has been adopted for the Project.

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77. Potential adverse environmental impacts could include: i) issues related to poor selection of location (such as in the case of the housing component, the realignment of roads, etc.) the planning and design of sub-projects, particularly affecting drainage (such as in the case of roads, bridges, etc.), ii) impacts related to availability and extraction of resources such as stone, earth and sand that will be required for re-construction works, iii) issues related to forest and biodiversity arising out of realignment or existing roads through forests, iv) occupational health and safety issues related to various construction operations, and v) improper disposal of debris and other waste materials. While the Project itself is designed to benefit the flood affected communities, the management of unwarranted/adverse impacts is proposed to be managed through the application and implementation of the ESMF. The systematic application and implementation of the ESMF will also assist in achieving compliance with the applicable laws and regulations of the GoI and the GoU, apart from meeting the requirements of the relevant Bank’s Operational Policies on Environment Safeguards.

78. The Project triggers the following safeguard policies: i) Environmental Assessment (OP/ BP 4.01); ii) Natural habitats (OP/BP 4.04); iii) Physical and Cultural Resources (OP/BP 4.11); iv)Involuntary Resettlement (OP/ BP 4.12); and v) Forests (OP/ BP 4.36). The Project has been assessed to be Category B, based on the in-situ and moderate nature of the construction activities of the proposed sub-projects. No adverse or irreversible impacts of project interventions are envisaged. The Project’s impacts are limited and are technically and institutionally manageable. However, considering the fact that many of the Project activities are in the sensitive hilly environments, theESA will be carried out for the respective sub-projects as applicable, as per the ESMF developed for the Project.

79. The key environment management and safeguards related risks include i) insufficient attention/delays in effective implementation of Environmental Management Plans (EMPs) and Resettlement Acton Plans (RAPs)/ Social Management Plans (SMPs), ii) potential non-compliance with the World Bank Environment Safeguard Policies/ Guidelines due to a lack of implementation capacity iii) obstacles and delays in obtaining statutory clearances, (iv) lack of co-ordination between the key implementing agencies that may lead to a delay in the preparation of required documentation and implementation,and v) improper monitoring and irregular reporting of compliance by line departments.

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/ BP 4.01) [X] [ ] Natural Habitats (OP/ BP 4.04) [X] [] Pest Management (OP 4.09) [ ] [X] Physical Cultural Resources (OP/ BP 4.11) [X] [ ] Involuntary Resettlement (OP/ BP 4.12) [X] [ ] Indigenous Peoples (OP/ BP 4.10) [ ] [X] Forests (OP/ BP 4.36) [X] [] Safety of Dams (OP/ BP 4.37) [ ] [X] Projects in Disputed Areas (OP/ BP 7.60) [ ] [X] Projects on International Waterways (OP/ BP 7.50) [ ] [X]

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Annex 1: Results Framework and Monitoring

I�DIA: Uttarakhand Disaster Recovery Project

1. Strategies for Results Planning and Monitoring

1.1 Overall Project Supervision, Reporting and Monitoring (SRM) Framework–The multi-tier implementation arrangements under the Project include supervision and monitoring roles and responsibilities of the various players involved in the implementation. Supervision will generally entail routine quality certification at various stages of construction, forming the basis of payment certification and other works.Monitoring will occur as a periodic function, and will include process reviews/audits, reporting of outputs, and maintaining progressive records. Broad thematic areas that will be supervised and monitored include the following:

I) Social and Environmental Monitoring II) Regular Quality Supervision & Certification III) Periodic Physical Progress Monitoring & Third Party Quality Audit IV) Monitoring and Evaluation

A summary is provided below:

I)Social and Environmental Monitoring - This will comprise of the following sets of activities:

a) Monitoring compliance with environmental regulations, social safeguards and Environmental and Social Assessment (ESA) provisions

b) Overall State-level monitoring and oversight of social and environmental issues at state/project levels.

II)Regular Quality Supervision & Certification – This will be carried out by the respective implementing departments, forming the basis of payment certification. Technical supervision staff shall be deployed by the implementing departments.

III)Periodic Physical Progress Monitoring & Third Party Quality Audit - Physical progress monitoring will be carried out by the implementing agencies (IAs) on a monthly basis. The IAs will carry out monthly surveys in their respective domains (districts) to record and report on the progress of works.They will also, in coordination with the respective beneficiaries and contractors, identify any constraints and delaying factors. In addition, a third party will be deployed for quality monitoring of works and compliance on social and environmental aspects.

IV)Monitoring and Evaluation (M&E) -Continuous monitoring of the Project, and its achievements would be taken up by the Core Committee. The Core Committee will also appoint special agencies to assist them.

V)Major Outcomes Expected from Project -The major outcomes expected from this Projectinclude: (i) Targeted affected households with multi-hazard resilient housing; (ii) Targeted affected villages with restored connectivity; and (iii) Departments that make use of information generated by USDMA. Corresponding quantifiable indicators for the measurement of these outcomes are included in the Results Framework as described below:

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Table 4: Results Framework Project Development Objective (PDO):To restore housing, rural connectivity and build resilience of communities in Uttarakhand and increase the

technical capacity of the State entities torespond promptly and effectively to an eligible crisis or emergency.

PDO Level Results

Indicators

Co

re Unit of

Measure

Base-

line

Cumulative Target Values

Frequency Data Source/

Methodology

Responsibility

for Data

Collection

�otes

YR 1 YR 2 YR3 YR 4

1. Targeted affected HHs with multi-hazard resilient housing

Percentage 0 10 40 100 ME Reports PMU Targeted affected HHs are 2,500 of the 3077 total affected HHs.

2. Targeted affected villages with restored connectivity

Percentage 0 10 30 75 100 Quarterly Field Reports/ Progress Reports

PMU Exact no. of targeted affected villages will be determined in the first year of implementation

3. Depts. that make effective use of information generated by USDMA

Number 0 0 0 3 7 Quarterly Field reports/ External evaluation will assess ability of depts. to make use of generated information at MTR and closing of project

PMU/ USDMA

Depts. Targeted include RD, PWD, Urban, Water supply, Environment & Forests, Tourism and Civil Aviation

I�TERMEDIATE RESULTS

Component 1 Level Result – Resilient Infrastructure Reconstruction

Intermediate Result

Indicators

Co

re Unit of

Measure

Base-

line



Methodology

Responsibility

for Data

Collection

�otes

Number of resilient houses reconstructed

Number 0 0 250 1000 2500 Quarterly Progress reports PIUs /PMU

Number of public buildings reconstructed

Number 0 0 8 15 20 Quarterly Progress reports PIUs / PMU

Component 2 Level Result – Rural Road Connectivity Intermediate Result

Indicator

Co

re

Unit of

Measure

Base-

line

Cumulative Target Values Frequency Data Source/

Methodology

Responsibility

for Data

Collection

�otes

Annual

19

Village Roads / Other District roads restored

√

Kms 0 100 800 2200 3600 Quarterly Construction works/Progress Reports

PIUs / PMU

Number of bridle bridges restored

√

Numbers 0 0 50 100 140 Quarterly Progress Reports PIUs / PMU

Bridle roads restored √

Kms 0 0 50 150 400 Quarterly Progress Reports PIUs / PMU

Component 3 Level Result – Technical Assistance and Capacity Building on Disaster Risk Management

Intermediate Result

Indicator

Co

re Unit of

Measure

Base-

line



Methodology

Responsibility

for Data

Collection

�otes

Complete multi hazard assessment

Percentage 0 0 0 50 100 Quarterly Progress Reports PMU

Creation of GIS database and analytical tools in USAC


Setting up of Decision Support Systems (DSS)

Number 0 0 0 1 Quarterly Progress Reports PMU

Completion of river morphology study

Number 0 0 0 0 1 Quarterly Progress Reports PMU

Completion of slope stabilization study

Number 0 0 1 Quarterly Progress Reports PMU

Installation of weather stations, river gauge stations and other hydro-met recording and forecasting equipment


Purchase of sets of emergency search & rescue equipment

Numbers (Sets)

0 0 2 Quarterly Progress Reports PMU

Component 6 Level Result – Contingent Emergency Response

Intermediate Result

Indicator

Co

re Unit of

Measu

re

Baseline



Methodology

Responsibility

for Data

Collection

�otes

Funds immediately available to respond to a major disaster

INR N/A N/A Annual Progress Reports PMU

20

Annex 2:DetailedProjectDescription


A. Description

1. This Projectwill be developed under a multi-sector framework with an aim to reduce risk and enhance resilience in the State of Uttarakhand.It has been over three months since the Uttarakhand disaster, and amongst the immediate recovery needs of the State are the reconstruction of damaged infrastructure and re-establishment of road connectivity. Particular attention will be given to enhance the technical capabilities and strengthen capacities on aspects of disaster risk management ofGovernment agencies andtechnical institutions with the larger objective of long term risk mitigation and response.

2. The Project, adhering to the post-disaster needs in the State, and will comprise the followingsix components:

Component 1: Resilient InfrastructureReconstruction– US$31 million

3. Subcomponent 1.1: Resilient Permanent Housing- US$27 million-As per the JRDNA in the affected districts of Bageshwar, Chamoli, Rudraprayag, Pithoragarh and Uttarkashi, about 670 units in the urban areas and 2,410 units in the rural areas, totaling to about 3,100 units were damaged.Many buildings that were partially damaged will require total rebuilding. At many locations, individual houses, clusters and even entire settlements have been washed away, and the land has become unstable and unsafe – these will need relocation. This subcomponent will support the reconstruction of 2,500 out of about 3,100damaged units. The remaining houses will be reconstructed by the GoU through other sources of funding.

Table5: Summary of Houses affected (in numbers)

District Urban Rural Total

Bageshwar 5 146 151

Chamoli 132 558 690 Pithoragarh 0 477 477 Rudraprayag 382 386 768 Uttarkashi 150 841 991

Total 669 2,408 3,077

4. The respective District Magistrates (DMs) offices, based on pre-defined criteria, will identify beneficiary households, prepare a list, and put the list through a process of public scrutiny and verification. The criteria for the selection of households to be rebuilt as part of UDRP will be those households whose homes were damaged in the June 2013 disaster and its aftermath, which require complete reconstruction.

5. All partially damaged buildings will be examined by a team of qualified engineers to ensure their feasibility for repair, taking into account the Government norms in accordance withthe seismic zone and other hazards.They will also assess the extent of restoration required. Based on this assessment, it will be determined whether the buildings need partial or total reconstruction.

6. Houses will be reconstructed under three categories:

• Category 1: Houses constructed on the land of households who have title deeds to their land and

21

that are safe for construction, as verified by the District Magistrates (DM) office. • Category 2: Construction of cluster houses for households that have lost both their houses and

land due to the disaster, on land available within the village area. • Category 3: Construction of cluster houses relocated to a new area for households that have lost

both their houses and land due to the disaster. The land for this category of construction will be provided by theGoU and developed within the Project with basic amenities and services such as school buildings, primary health centres, community centres, and water, sanitation, electricity, etc. connections in case these facilities do not exist within an approachable distance.

7. The GoU has proposed permanent houses with constructed plinth and a prefabricated super-structure for each unit within the cluster houses. The plinth area of about 40 sq. meters will include two rooms, a kitchen,a bath area,a toilet and a small covered veranda. Each house will have water connection, waste disposal arrangements, and electrical connections either through a grid connection or through a solar unit.

8. A model plan of the house, including sections showing the height of the plinth, specifications for the materials, and all other fixtures will be preparedand madeavailable for public viewing. To aid this process, a model prefab permanent shelter will be located at strategically selected cluster locations.

9. The relocation land for cluster houses will be agreeable to the beneficiary households. Land and houses will be transferred to the joint ownership of the husband and the wife. Where feasible, and to the extent possible, the relocation will be organised by the state in clusters on land identified within the village area, suitably located government land avoiding/minimizing land acquisition. For clusters, water availability will be assured.Depending on their needs and taking into account existing accessible facilities, one Primary health and Anganwadi

12 centre, primary school and community hall will be constructed.

10. In case of in-situ reconstruction, houses will be constructed on the land of households who have title deeds to their land and that are safe for construction, as verified by the DM office.

• Households will be free to choose whether they want to go in for a pre-fabricated house or a traditional house.

• Traditional houses will have to be constructed following seismic and other hazard resilient design criteria.

• Money will be released in tranches (into beneficiary bank accounts) based on achieved milestones as determined by the GoU.

• All owner-driven constructed houses will be constructed by the beneficiaries. Beneficiaries will be provided INR 5.013 lakhs lump-sum cash grant in four installments:

• First installment: INR 1.5 lakh – on signing of contract for construction • Second installment: INR 2.0 lakh – following certification of construction upto plinth

level • Third installment: INR 1.0 lakh – following certification of construction upto roof level • Fourth installment: INR 0.5 lakh – final installment following certification of completion

of house including roof and toilet • Any additional expense in the construction of the house beyond the agreed lump-sum

grant being provided by the GoU will be borne by the beneficiaries

12Anganwadi is a government sponsored child-care and mother-care center in India. It caters to children in the 0-6 age group 13Based on the current schedule of rate of Government of Uttarakhand

22

• Beneficiary will have to sign an undertaking to abide by criteria for construction as laid out in the GoU’s post-disaster housing reconstruction policy.

• Project will finance only those houses deemed completed upto the roof level with functioning toilets.

11. The reconstructed houses will be insured against the multiple disasters faced by the State for a minimum period of 10 years. The insurance will be bought by the Project in the name of the household through insurance agencies for the house only (not for the assets within).

12. All beneficiaries eligible for housing will be provided with a rental allowance amounting to INR 3,000 per month, for the period commencing June 15, 2013 and for a duration not to exceed the earlier of: (i) two years from that date; or (ii) the completion of the housing reconstruction for the respective Selected Beneficiary, all in accordance with the provisions of the OM.

13. The Reconstruction will be prioritised based on the availability of land and other factors. As land is identified and acquired, the DMs will start working on site development. The GoU will put in place a monitoring mechanism that includes photo identification and tracking system for beneficiaries. A NGO/CBO will assist with the beneficiary validation, motivation, facilitation of shifting, setting up of bank accounts, facilitating rentals, etc.

14. The USIDCwill be the implementing agency for Resilient Cluster Housing andtheimplementing agency for the ODCH houses will be the PMU through the respective DMs office. At the district level, the DM will be responsible for the finalization of the list of beneficiaries, identification of land, preparation of land, acquisition of consent of affected households, relocation and reconstruction of houses (both for urban and rural). The houses will be built by contractors, which will be chosen based on a standard tendering process. They will be wholly responsible for the entire process until the handing over of the houses. Category 1 houses will be built in-situ and following the approved design incorporating multi-hazard resistant features using the ODCH approach.An Agency will be appointed for Technical and Social support to the ODCH implementing agency.

Table 6: Costing for Reconstruction of Houses

Items Unit

(nos)

Unit Cost

I�R M

Total

I�R M US$M

i a Reconstruction of houses (In-situ) 2,500 0.60 1,500 25

i b Reconstruction of houses (relocated) ii PHC, School, others Facilities forRelocated

clusters (30%) 108 1.8

iii Insurance of INR 500 for a 10 year period 2,500 1.25 0.02 Total 26.8

15. Subcomponent 1.2: Resilient Public Buildings - US$4 million- A total of over 1,000 Public Buildings were damaged, which includes Education, Health, Women & Child Development Centres, Block offices, Panchayat Raj Institution (PRI) offices, Block offices, District offices, and technical education institutes. The disaster damaged infrastructure including equipment and amenities, which led to the disruption of the routine functioning of these facilities.

16. The UDRP,as per the State’s needs,will undertake the reconstruction of the PRIs, Block offices District offices, and technical education institutes that were either partially or totally damaged by the disaster. Some of this infrastructure, though partially damaged, may be required to be fully reconstructed. In some cases there may be a need for relocation. Furniture and other equipment essential to the functioning of this infrastructure will be replaced.

23

17. Large numbers of the affected buildings are partially damaged. All partially damaged building will be examined by a team of qualified engineers to ensure their feasibility for repair taking into account the Government norms in accordance withthe seismic zone and other hazards.They will also determine the extent of restoration required.

18. The estimated costs include a provision of 10% of total cost to account for furniture and equipment needs, and an additional 10% for complexities/ contingencies that may arise considering the difficult site conditions. There may also be a need to relocate some buildings; this will be examined on a case by case basis and the appropriate land will be identified for the same.

19. The designs should be properly prepared and incorporateproper structural designs, material specifications, and construction techniques,which will need to be followed. The process will need to be supervised by communities, technocrats and civil society organizations. The USIDC will be responsible for managing the repair and reconstruction of public buildings.

Component 2: Rural Road Connectivity –US$155 million

20. Subcomponent 2.1: Village/ Rural Roads-US$120 million - This will involvethe restoration/ reconstruction of damaged/washed away village roads totaling to about 3,600 kms. Limited realignments, where necessary, will be undertakentorestore connectivity. The design standards shall primarily follow the PMGSY specifications along with site-specific safeguard features as detailed in the ESMF.However, scope for incorporating improved designs for hilly areas may be added to enhance the quality and longevity of these roads to facilitate continued access to rural areas vulnerable to flash floods, landslides, torrential rains and other natural disasters. Civil works for roads will include the reconstructionof damagedculverts and bridges, construction of new bridges, cross drain structures, retaining walls and breast walls to prevent landslides, and limited realignments wherever necessary.

21. Subcomponent 2.2: Other District Roads (ODRs) -US$13 million - This willinvolvethe reconstruction of damaged/washed away Other District Roads (ODRs) totaling to about 675 kms, linking village roads to Major District Roads (MDRs), State Highways (SH) and/or National Highways (NH) to ensure road access to the nearest schools, hospitals, and other public services for the communities and provide opportunities for overall economic development.The PIU shall prioritize damaged ODRs for immediate restoration works to ensure movement of men and materials to facilitate the reconstruction of houses, public buildings, village roads and other essential services needed especially in the forthcoming winter months. Since the traffic on these roads is limited, the design and technical specifications are in line with the PMGSY standards. Civil works will be carried out for strengthening/reconstruction of existing/damaged culverts and bridges, construction of new bridges, cross drain structures, and provision of road furniture, retaining side walls to prevent landslides,and limited realignments wherever necessary and possible.

22. Subcomponent 2.3: Bridle Roads and Bridle Bridges-US$22 million - Bridle roads are widely used by the people in the hamlets/clusters high up in the hills for movement between villages, movement of cattle for grazing on the high grasslands/green belts, access to local markets and transport of goods on ponies, horses, small donkey/cattle drawn carts, etc., extensively, as more often than not these paths cut short distances and serve as the primary connectivity link between hamlets/villages or small habitations where no roads have been constructed until today and may not be constructed in the near future due to the lack of traffic and high investment costs. Further, many of these paths are also used by tourists for trekking, mountain biking and pilgrimage treks. This subcomponent will finance reconstruction/ development of 440 kms Bridle Roads and an estimated 140Bridle Bridges that were damaged,

24

destroyed/washed away to facilitate connectivity for habitations located at the higher reaches to the nearest village road/ODR/MDR/SH, as applicable.

23. There are no standard specifications that have been mandated for the construction of Bridle Roads due to the uncertainty of the terrains across the various regions.On account of the homogenous mix of users and the erosion of these BridleRoads, there is no set width that existed prior to the disaster or a general width that is followed for the establishment of these paths. Adequate demarcated spaces will be provided at various points along the route for safe loading/unloading areas for equestrian parking, turnaround space for horses or carts (ideally 4mx4m, the absolute minimum space required is a diameter of 3m onclear, flat ground with no protrusions or overhanging vegetation), with equestrian holding areas, gates at points where the paths exits into motorable roads or at Pegasus crossings, wayside equestrian waiting-resting pens/shelters for walkers/trekkers, cyclists, etc. The design of these Bridle Roads will primarily use local materials, compacted to the required strengths depending on the nature of the soil and other terrain conditions. General guidelines will be detailed in theOM to facilitate construction.

24. The type of Bridle Bridges required to be constructed varies in each location.Therefore, conformity to construction standards for bridges, including those required for suspended foot bridges, will be assessed on a case by case basis. The design specifications for these bridges should have provisions to allow for the use of this infrastructure by equestrians and must ensure the safety of all users. Safety features and designs will be site-specific and influenced by the local terrain.If the specifications cannot be achieved or seems inappropriate for any remote rural location, consultations for solutions with the local population will be carried out to determine acceptable alternatives.The design and construction of these bridges will follow the established guidelines by the Indian Roads Congress.

25. The Rural Road Connectivity component will be implemented by Public Works Department (PWD) of the GoU under the overall guidance of the Project Management Unit (PMU) under the Implementing Agency of the Project, in compliance with the administrative requirements of the GoU and the Bank as agreed in the legal agreements. PWD will, within a fortnight after Project appraisal, establish a separate Project Implementation Unit (PIU) under a Chief Engineer, and will ensure deployment of adequate staff for the entire duration of the Project, either drawn from the department and or from the open market on contract.The engineering staff from the PWD divisions in the field will supervise the implementation of approved subprojects. Additional support to the PIU will be provided through the engagement of consultants in the identification, design, procurement, construction, supervision, monitoring, evaluation, financial management and reporting, to ensure quality and support to PWD engineers in the field for timely implementation of the contract packages approved for execution.

26. Detail Project Reports (DPRs) will be prepared with technical designs, construction drawings, and estimated costs for each package.Approval of the PMU and the Bank will be obtained before the works are tendered for contracting. Extensive consultations will be held with the communities for the design of Bridle Pathways and Bridle Bridges to ensure the alignments are conducive and acceptable to the user community.Wherever possible, the community will be encouraged and trained on maintenance of these infrastructures.

Component 3: Technical Assistance and Capacity Building for Disaster Risk Management -US$38

million

27. Subcomponent 3.1:Risk Assessment, Modeling and Capacity Enhancement Uttarakhand

Space Application Centre (USAC)-US$10 million - The aftermath of the cascading disaster of June 15 to 17, 2013 has again underscored the State’s vulnerabilities and has called for a comprehensive approach to manage and mitigate disaster risks. This subcomponent will provide technical assistance to institutions

25

to plan, set-upand implement a multi-hazard risk assessment of Uttarakhand, through the development of risk modeling tools and capacity building of the GoU in employing and updating these tools on a regular basis.

28. Subcomponent 3.1.1:Development of the framework and implementation of multi-hazard risk

assessment for Uttarakhand:The Project will finance the hiring of an international or national consultant/firm to scope the multi-hazard risk assessment framework. Based on the scope of the work defined by the consultant/firm and agreed by stakeholders including the decision makers in the State government and the technical advisory group members, the implementation of the risk assessment will be undertaken by a separate appointed agency.

29. Subcomponent 3.1.2: Development of a historic hazard and loss database: A damage and loss database is an invaluable source of information that houses information on past natural disasters, their location, the nature of event, the number of people affected, as well as the economic losses. A damage and loss database will be designed and implemented to collect data from past events, as well as for future events. The damage and loss database is useful to capture the trends in the State’s disaster profile and identify priorities by highlighting recurring hazard events. It can also be useful as input into risk models, or as a validation of the outputs from probabilistic risk models. The structure and the data standards to be included in the database will adhere to the Bank’s recommended standards, based on experience from previous projects. The subcomponent will finance the hiring of an international or national consultant/firm through rigorous bidding process that conforms to the Bank’s procurement standards.

30. Subcomponent 3.1.3: Establishment of a technical advisory group for multi-hazard risk

assessment:A technical advisory group consisting of decision makers from the State government, DRM technical experts (national and international) familiar with natural hazard risks associated with mountainous areas, and DRM specialists from the Bank’s project team will be formed. The intention is to increase the technical capacity for managing, sharing and utilizing risk information within the State government. The technical advisory group will oversee the planning and implementation of the multi-hazard risk assessment. The data sharing mechanisms across the different departments within the State government and research instituteswill be guided by the recommendations of this group. The technical advisory group will also contribute to the monitoring and evaluation of the use of risk information in decision making processes following the risk assessment, as specified by pre-set indicators.

31. Subcomponent 3.1.4: Acquisition of high-resolution satellite data for risk assessment: High-resolution satellite data will be acquired for the State in order to enhance the capabilities for risk assessment, modeling and overall sustainable development planning.

32. Subcomponent 3.1.5: Development of training courses (training of trainers) to build sustainable

risk assessment capacity within the state officials and technical DRM expert community: Training courses will be developed to build understanding on why risk assessments are important and how the information can be derived and used, drawing from experiences from other case studies. The intention is to create a sustainable risk assessment training environment.

33. Subcomponent 3.1.6: Development of a monitoring and evaluation framework to ensure the

appropriate use of the risk information derived from the assessments: To ensure that the resulting data from the risk assessment is used in an optimal manner in subsequent decision making processes, the technical advisory group will be responsible for developing a monitoring and evaluation framework for the use of the risk assessment data.

34. Subcomponent 3.1.7: Development of tools that will allow for the optimal utilization of risk

information derived through the risk assessment and increase the resilience of the communities and

26

theDRM capacity of the State: Upon recommendations from the technical advisory group, tools like GIS based models with diagnostic/analytical capabilities will be developed that will leverage the information generated through the risk assessment activities on risk, as well as baseline data. An example is the InaSAFE tool that was developed for the Indonesian capital of Jakarta (estimated metro population of 2.8 million), based on the probabilistic flood and earthquake risk assessment that was carried out.

35. Subcomponent 3.1.8:Capacity enhancement of USAC: The center currently reports to the Department of Science and Technology of Uttarakhand, with DRM as one of its priority engagement areas. The capacity building activity will aim to develop a strategy to build upon its current strengths and establish USAC as a key institution within the DRM community in Uttarakhand to provide satellite data, as well as analysis related to all phases of the disaster cycle based on satellite data analysis. Due to the nature of DRM, the activities are envisioned to be multi-sectoral and to cover both baseline data creation as well as post-event hazard footprint extraction capacities. USAC will become the custodian of high quality spatial datasets that can be used in rapid damage assessments as well as recovery planning, monitoring and evaluation, which will make the assessments more effective. Increased coordination, information sharing and leveraging of expertise among the Government’s science, technology and disaster management institutions such as DMMC, the Wadia Institute for Himalayan Geology (WIHG), the Indian Institute of Remote Sensing (IIRS), and the National Remote Sensing Center (NRSC) will be pursued. One mechanism to achieve this goal would be to form a technical committee where all institutes and agencies participate to provide opportunities for discussion and develop solutions on DRM technical and policy issues. A high priority will be accorded to sharing scientific information among various actors and to finding ways to mainstream science and technology inputs into policies, regulations and implementation plans.

36. Subcomponent 3.2:Establishment of a Decision Support System (DSS)-US$3million -This will entail in setting up of a DSS in an integrated geo-spatial system. This will enablethe set-up of baseline data on disaster related damages, and all recovery works can be integrated into a management information system for better monitoring of the Project progress. The system will be designed for display and access in user-friendly ways. The DSSwill integrate and analyze information from multiple sources and will display it in user-friendly ways for: i) tracking and reporting financial and physical progress towards achievement of the targets; ii) enabling citizen feedback and grievance redress mechanism for active participation of communities in the recovery and reconstruction program. Dedicated helplines, social media channels and mobile apps will be used for collecting feedback; iii) improving response planning in areas such as determining evacuation routes, locating vulnerable infrastructure and vital lifelines, and estimating the relief and response supplies; and iv) maintaining an inventory of the State’s disaster preparedness and response resources.

37. Subcomponent 3.3: River Morphology Study-US$3 million -This will support the study of the entire morphology of some key rivers that were impacted by the disaster. The study will also analyze and identify critical protection works needed for river bank strengthening.

38. Subcomponent 3.4: Slope Stabilization Study-US$4 million -The heavy rain and the flash floods on June 15 to 17, 2013 caused many slopes to destabilize and cause landslides. As a result, many of the transportation routes became inaccessible, cutting off hundreds of communities. This subcomponent will include learning about slope stabilization from existing successful techniques, ongoing cutting edge work and research in this sector. It will introduce appropriate technology for slope stabilization for Uttarakhand through small demonstrative works. This will also enable the Government to identify measures needed for slope stabilization to safeguard the locations for in-situ housing construction and the proposed housing relocation sites that could impact the cost of reconstruction.

27

39. Activities to be financed include: (i) developing scope of the slope stabilization work; (ii) pilot demonstration of the slope stabilization works;and (iii) institutional arrangements to oversee the sustainable maintenance program for slope stability activities. The scope of the slope stabilization work will account for the current practices for slope stabilization in consultation with the relevant State entities. With a view to create a sustainable maintenance program to continue the slope stability work, institutional capacity to take on the responsibility of maintaining the slope stability works in the long run will be assessed. Based on the assessment, recommendations will be made in terms of the optimal institutional arrangements.

40. Subcomponent3.5: Strengthening of the Uttarakhand State Disaster Management Authority

(USDMA)- US$5 million -This will entail the institutional set-up of the USDMA, technical enhancements of the facilities at DMMC, training programs and regular drills at State and District Emergency Operations Centers, and a special skills development program for District Disaster Management Officers in all 13 districts of Uttarakhand. This would also include capacity building of the Disaster Management Department for mainstreaming DRM into development planning.

41. Subcomponent 3.6: Strengthening Hydro-meteorological �etwork and Early Warning

Systems (EWS)-US$10 million - This subcomponent will involve the appraisal of existing hydro-meteorological capabilities of the State and National agencies and the development of a hydro-meteorological modernization plan for Uttarakhand. Improved monitoring and forecasting has benefits in many areas beyond DRM such as agriculture, water resources management, aviation, the energy sector etc., and for assessing and predicting local climate variability and strengthen glacier and sediment monitoring. This subcomponent will undertake a:(i) sub-basin level review of existing hydrological and meteorological observation network, forecasting capacity and early warning systems, (ii) analysis of governance and institutional capacity gaps, (iii) analysis of costs and benefits of upgrading the hydro-meteorological network and improving lead time for forecasting (e.g. flooding, GLOFs, sediment monitoring), and (iv) recommendations for the design of a modernized hydro-meteorological system to strengthen disaster preparedness and resilience. This will also finance the review of existing early warning systems, critical gaps therein, and the establishment of a robust early warning system in the State for enhanced emergency preparedness and response to make optimum use of the existing networks and facilities such as NICNET, POLNET, and ISRO DMS Network. Accuracy of the disaster warnings, communications with local authorities and communities, warning data collection and sharing capabilities, and fail-safe emergency communication lines would also be targeted for improvement.

42. Subcomponent 3.7: Strengthening Emergency Response Capacity-US$3 million -This will focus on strengthening the capacity of the State’s disaster response force, fire services personnel and other immediate key response agencies in responding adequately to disaster situations through better search and rescue equipment and enhanced training. Search and rescue equipment will be procured for both geophysical and hydro-meteorological hazards for utilization in rural and urban settings. It will also support upgrading the navigational system for launching emergency response. Adequate training for use and maintenance of new equipment will also be provided to specific first responders.

Component 4:Financing Disaster Response Expenses –US$12 million

43. This component will support the financing of eligible expenses already incurred by the State during the immediate post-disaster response period. The expenses eligible include fuel for helicopter rescue missions, hiring of heavy equipment for clearing of roads and any other items listed as “positive goods” that are mutually agreed to for reimbursement by the GoU and the Bank.

28

Component 5: Implementation Support –US$14 million

44. This component will support the incremental operating costs of the Project, including the operation of the Project Management Unit (PMU) and the respective Project Implementation Units (PIUs). The component will also include the creation of small, temporary field implementation offices with necessary equipment, furniture, etc. In addition, the component will include consultancies required for the preparation and supervision of specific activities, trainings, exposure visits and knowledge exchange programs. An agency will be appointed to provide technical and social support to the Owner Driven Construction of Houses (ODCH).

Component 6: Contingency Emergency Response – US$0 million

45. Following an adverse natural event that causes a major natural disaster, the respective government may request the Bank to re-allocate project funds to support response and reconstruction. This component would draw resources from the unallocated expenditure category and/or allow the government to request the Bank to re-categorize and reallocate financing from other Project components to partially cover emergency response and recovery costs. This component could also be used to channel additional funds should they become available as a result of an eligible emergency.

46. Disbursements would be made against a positive list of critical goods or the procurement of works, and consultant services required to support the immediate response and recovery needs. All expenditures under this component, should it be triggered, will be in accordance with paragraph 11 of OP 10.00 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. In accordance with paragraph 11 and 12 of OP 10.00, this component would provide immediate, quick-disbursing support to finance goods (positive list agreed with the Governments), works, and services needed for response, mitigation, and recovery and reconstruction activities. Operating costs eligible for financing would include the incremental expenses incurred for early recovery efforts arising as a result of the impact of major natural disasters.

47. Goods, Works and Services under this component would be financed based on review of satisfactory supporting documentation presented by the government including adherence to appropriate procurement practices in emergency context. All supporting documents for reimbursement of such expenditures will be verified by the Internal Auditors of the Government and by the Project Director, certifying that the expenditures were incurred for the intended purpose and to enable a fast recovery following the damage caused by adverse natural events, before the Application is submitted to the Bank. This verification should be sent to the Bank together with the Application.

48. Specific eligible expenditures under the category of Goods include: (i) construction materials; water, land and air transport equipment, including supplies and spare parts; (ii) school supplies and equipment; (iii) medical supplies and equipment; (iv) petroleum and fuel products; (v) construction equipment and industrial machinery; and (vi) communications equipment.

49. Specific eligible expenditures under the category of Works may include urgent infrastructure works (repairs, rehabilitation, construction, etc.) to mitigate the risks associated with the disaster for affected populations. Specific eligible expenditures under the category of Services may include urgent studies (either technical, social, environmental, etc.) necessary as a result of the effects of the disaster (identification of priority works, feasibility assessments, delivery of related analyses, etc.).

29

Annex 3:ImplementationArrangements


I. ProjectInstitutional andImplementationArrangements

1. Under the Disaster Management Act 2005, Uttarakhand constituted the State Disaster Management Authority (USDMA).The State has also established the Disaster Mitigation & Management Centre (DMMC) which works as an autonomous institute under aegis of Department of Disaster Management Government of Uttarakhand. DMMC is the apex center in the field of Disaster Mitigation & Management in Uttarakhand which functions as a think-tank for the State and incorporate prevention, preparedness and mitigation aspects for all projects.

2. The Government of Uttarakhand (GoU)will setup a project monitoring and implementation mechanism with three levels. At the state level, overall project oversight will be ensured by a setup of two committees, one headed by the Chief Secretary for monitoring and another headed by the Additional Chief Secretary for providing sanctions and overall coordination of the reconstruction program. The second level will consist of a Project Management Unit, headed by full time project director supported by coordinators for each of the components and supported by function and technical experts. Third level consists of PIUs in the implementing agencies that at state level will have individual project coordinators supported by the functional experts and at field level implementing units with technical staff. Entire implementation setup will be exclusive to the Project and work full time. At district level additional coordination and oversight will be ensured by the District Magistrates (see figure 2). The following diagram gives a schematic arrangement of the Project implementation and monitoring arrangements (see figure 1):

Figure 1: State Level Implementation Arrangement

Government of Uttarakhand

High powered Sanctioning Committee

Core Committee for M&E

Project Management Unit

(USDMA)

PIU Roads (PWD)

PIU Technical Assistance

and Capacity Building (USDMA)

PIU Housing and Public

Buildings (USIDC & PMU)

State Level

Oversight

Managem

ent Im

plementation

30

3. The PMU will be responsible for the following: a. Coordination with the line agencies in approval of designs, assisting the PIUs in preparation

of: DPRs, bidding documents, tendering schedules, etc. b. Appointment of technical assistance consultants and others safeguards management support

to the implementing agencies. c. Quality Assurance through third party audits d. Maintaining MIS and Quarterly reporting. e. Progress reporting, financial management, monitoring and reporting. f. Implementation of owner driven construction of houses

g. Ensuring compliance with agreed implementation procedures and other Bank requirements, etc.

4. The PIU will be responsible for

a. Preparation of Detailed Project Reports including technical designs, surveys and investigations etc.

b. Tendering, bid evaluation, contract award, contract management etc. c. Financial Management and safeguards compliance d. Progress and expense reporting to the PMU e. Coordination with district level coordination committees, etc.

Figure 2: District Level Implementation Arrangement

5. In addition there would be a District Level Coordination Unitheaded by the District Magistrate that will have the following functions:

a. Coordinate and monitor among various district/block level executing agencies b. Identification and disclosure of beneficiaries c. Identification of small works such as bridle bridges and roads at block and district levels d. Grievance redress e. Resolving issues related to land identification, etc.

District Level District Coordination

Unit (DM)

District EA

District EA

District EA

District EA

District EA

District EA

Block EA

Block EA

Block EA

Block EA

Block EA

Block EA

Block EA Block EA

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II. Project administration mechanisms

6. The following table 7 lists the implementing arrangements for individual components and subcomponents.

Table 7: Implementation Department for Project Components

Components Implementing agency Comments

Resilient Housing

Resilient Relocated Cluster Housing

USIDC Under overall guidance of the PMU and in coordination with the district magistrate and block offices and in accordance with GoU guidelines

Resilient ODCH

PMU Through the offices of the respective DMs

ResilientPublic Buildings USIDC Upon completion the assets will be handed over to the concerned department

Roads and Bridges PWD

Risk Assessment and Modelling; and Capacity Building

PMU A separate PIU under direct control of PMU will take up the component and partner with USAC, DMMC and other technical agencies for specific activities.

Decision Support Systems PMU

Integrated Hydro-met and Early Warning Systems

PMU

Technical Studies PMU

7. Support and Monitoring of Reconstruction components: The PMU will put in place a monitoring mechanism that includes photo identification and tracking system for individual beneficiaries. In addition the PMU will also put in place a GIS based reporting and monitoring system for all other reconstruction works in the state. Partnership with NGOs/CBOs and consultations with communities will be integral to the reconstruction work particularly the housing and bridle roads and bridle bridges.

8. Project Management Consultants: PMU will hire consultants using pre-agreed Terms of References, for:

• Technical Support and Advise • Financial/Procurement Management and Project Audit • Developing the GIS based reporting and monitoring system • Result monitoring and impact evaluation, etc.

III. Financial Management,Disbursements andProcurement

Financial Management

9. Implementation and FM arrangements: The main implementing agencies for the Project are: USDMA (Uttarakhand State Disaster Management Authority), PWD (Public Works Department), and USIDC (Uttarakhand State Infrastructure Development Corporation).Under the USDMA a Project Management Unit (PMU) would be formed which would co-ordinate with all other agencies for all project related financial management requirements. Each implementing agency would have a PIU at the head office (nodal office) which would manage the FM requirements and coordinate with all divisions

32

working under it for ensuring proper accounting and reporting for the Project. The summary of the overall FM arrangements is provided below:

10. Budgeting:A budget head has been created for the Project with appropriate codes for USDMA-PMU to access the funds. The budget is expected to be passed before September end.

11. Fund flow:A personal ledger account has been created in the Treasury for USDMA-PMU to access funds. USDMA-PMU would be the nodal agency and would be receiving all the Project funds from Treasury. USDMA-PMU would open a project bank account (master account) and would withdraw money from the Treasury as per the work plan requirements. To ensure cash management quarterly withdrawals from the PLA would be done by USDMA-PMU. All other agencies would be permitted to open a link bank account (child account) to the master account so that only limits can be prescribed and used for payments instead of transferring the amounts. Similar arrangements need to be done at the division level for the implementing agencies. While opening bank accounts for USIDC and USDMA would be easy due to the legal nature of these entities, for PWD special orders needs to be provided by the GoU.These arrangements will be completed within three months of effectiveness. This arrangement is not in line with the country systems approach of Treasury payments however the government has requested for this arrangement looking at the emergency needs of the Project.

Figure 3: Fund Flow

12. FM Staffing and capacity building14: USDMA: The USDMA-PMU accounts section would be

headed by a Chief Finance Officer (from finance department), supported by a CA, commerce graduates, and other staff from the finance department. Each PIU would be headed by a finance controller who would be supported by accounts staff from the government. Also commerce graduates would be hired at the PIU to support in maintaining the Project accounts. Apart from the posts filled by the government, the Project can hire commerce graduates trained in computers to maintain the Project accounting system. These staff will be hired within three months of effectiveness.

13. Accounting System:As the fund flow is happening through Bank accounts, specific arrangements to maintain the Project accounts needs to be carried out. Since USDMA-PMU, would be the nodal agency, the accounts would be maintained in TALLY, which would be used for accounting as well as

14

In the case of USDMA, the accounting capacity is very limited, while USIDC and PWD have better accounting capacity systems.

Budget -PLA

USDMA-PMU

USIDC-PIU USDMA-PIU PWD-PIU

33

generating reports for the Bank. The USDMA would be required to maintain implementing agency wise total releases and expenditure for consolidation and reporting. Each of the nodal PIU would also be required to maintain the accounts in TALLY and report to the USDMA for accounting and reporting purpose. Details of the component wise expenditure and advances given would be maintained by the line departments and the executing offices. In case of field offices if they are amenable to TALLY accounting, TALLY would be implemented. Otherwise these offices would maintain a separate cash book to record project expenditure which would be reported to the nodal office for consolidation. Monthly reconciliation of the expenditure with the Bank account needs to be carried out by these offices.TALLY accounting can be carried out by either staff appointed for this purpose or through an agency that will maintain the accounts and submit the final reports to the Project. This would be decided based on the capacity assessment of the implementing agencies. The accounting system needs to be

established within three months of effectiveness. Most of the expenditure is in the nature of goods, works, services and consultancies and calculation of payments/expenditure would be made as per the established payments mechanism of the government.

14. Payments for Housing Component - The Housing component will be implemented either through contracting procedure or through the Owner Driven Construction.In case of contracts, payments would be made as per the contractual terms. In case of owner driven construction, an overall lump sum payment would be made in tranches. The tranche releases (grants) to beneficiaries will be based on achievement and certification of milestones for each tranche (detailed conditions included in the Operations Manual). Tranche releases will be made directly to beneficiaries’ bank accounts by way of payment advises. The first tranche will be released to the beneficiaries on validation of beneficiary list, opening of bank account, and signing of the contract by the beneficiary.The second tranche will be released on completion of construction of foundation and plinth and its certification, the third tranche will be released on completion of construction of roof and its certification, and final tranche would be released based on completion certificate. As tranche releases to beneficiaries are based on milestones, such actual transfers to the beneficiaries will be considered as project expenditure. The control framework for the housing component will also include: (i) a public disclosure policy at local level and also on the Project website; and (ii) supported by appropriate grievance redress mechanism (at the block, sub-division and district levels). The offices of the District Magistrates along with PMU will monitor the Housing component. Also all the above beneficiaries are eligible for rental allowance of INR 3000 per month for the period starting from the date of loss (retroactively) till such time alternate houses have been rebuilt, subject to a maximum of 24 months period. The rental allowance would be treated as project expenditure on actual transfer of the amount to the beneficiaries by the government.

15. MIS system: A commensurate MIS system to capture the technical and financial progress needs to be developed. This system would be developed department wise and the outputs should be aggregated at the state level. This MIS system has to be operationalized and maintained by the USDMA-PMU.

16. Report based disbursement: Interim unaudited financial reports (IUFR) based disbursement would be used for reporting as well as financial monitoring. IUFR shall be submitted to the Bank on a quarterly basis within 60 days from the end of the quarter. The IUFRs would disclose receipt and utilization of project funds (both Bank share and counterpart contribution).IUFR would be based on project accounts and would reflect the actual expenditure for the Project components based on figures reconciled with Bank. Any advances given by the Project would be separately shown in the IUFRs. IUFRs would provide contract wise payments and project progress in physical and financial terms.The IUFR format would be agreed and finalized during negotiations. In terms of disbursement, the Project would first spend from the budget and then claim reimbursement from the Bank. All expenditures

34

reported in the IUFRs would be subject to annual project audit. The IUFR would be submitted by the USDMA-PMU after collating all project expenditure from other implementing agencies.

17. External Audit: The annual audit of the Project Financial Statements (PFS) would be carried out by AG-Uttarakhandas per the terms of reference agreed with the Bank. All supporting records and documents under the Project would be subject to this audit. The PFS would summarize all receipts and expenditures reported in the IUFRs. The annual audit report would consist of (i) annual audited project financial statements (ii) audit opinion and (iii) management letter highlighting weaknesses, if any, and identifying areas for improvement. The auditor will audit all implementing agencies under the Project and provide a consolidated report for the Project. The annual project audit report and accounts would be submitted to the Bank by December 31 each year.Any difference between the expenditure reported in the IUFRs and those reported in the annual project audit reports would be analyzed and expenditures that are confirmed by the Bank as ineligible for funding would be adjusted in the subsequent disbursements. After negotiation, the GoU and DEA would be required to formally send the request for audit to the AG-Uttarakhand. Following audit reports would be monitored in the Audit Reports Compliance System (ARCS):

Table 8: Project Audit Reports

Implementing

Agency

Audit Auditors Due Date for Audit Submission

PMU ProjectFinancial Statement

AG-Uttarakhand

31stDecember (9 months after the end ofeach fiscal year)

DEA/ GOI Designated account CAG 30th September (6 months after the end ofeach fiscal year)

18. Internal audit: Internal audit would be an integral part of the Project design and would cover all activities under project. The internal audit would be carried out by the internal audit wing of GoU either through their staff or outsourcing it to a Chartered Accountancy (CA) firm. The Terms of Reference (ToR) for the internal audit would cover review of aspects covering internal controls and contract management. The auditors would be appointed based on selection criteria agreed with the Bank. The

auditor would be appointed within six months of project effectiveness. The audit reports along with the compliance would be shared with the Bank. PMU would review all the audit reports and follow up on the action taken.

19. Internal Control: All financial controls applicable to GoU expenditures would also apply to the expenditures under the Project. All payments would be approved/ vetted in accordance with the schedule of powers of GoU. All project related receipts and payments/ withdrawals would be reconciled with periodic Bank Statements.

20. Disclosure of information: Project would be required to disclose the following on the Project website: (i) Annual Project Audit report and (ii) details of major contracts.

21. Adequacy of FM Arrangements: The FM risk rating for the Project is currently rated as “Substantial” even though it is a ring fenced system but all agencies identified are new to the Bank FM arrangements.

22. Supervision plan: In the first year supervision would be done on a quarterly basis to support the setting up of the accounting and reporting systems. Once the system is established, then more desk reviews with half-yearly missions should be sufficient. In the first year, three to four weeks of FM involvement is expected.

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23. Disbursement Arrangements: Applicable disbursement methods will be Advance and Reimbursement.A Designated Account (DA) would be maintained in the Reserve Bank of India (RBI) for the Project and would be operated by the Controller Aid, Accounts and Audit (CAA&A) in accordance with the Bank’s operational policies. There would be a fixed ceiling of USD 25 million, up to which may be deposited into the DA at the request of Borrower. Reporting of use of the advances would be made based on quarterly IUFR to be submitted within 60 days from end of quarter by the Project. The Project would submit withdrawal applications supported by IUFRs to the Controller Aid, Accounts and Audit (CAA&A) in DEA for onward submission to Bank for replenishment of the DA or reimbursement. The Bank may replenish DA equivalent to the amount claimed on eligible expenditure by the Project and as reported in the IUFRs. All expenditures reported in the IUFRs would be subject to confirmation/certification by the annual audit reports. Any difference between the expenditure reported in the IUFRs and those reported in the annual audit reports would be analyzed and those expenditures which are confirmed by the Bank as being not eligible for funding (refundable to IDA), would be adjusted in the subsequent disbursements.

24. Disbursement categories: There would be two disbursement categories for the Project:

Table 9: Disbursement Categories

Category Amount of the Financing

Allocated (expressed in

SDR)

Percentage of

Expenditures to be

Financed

(inclusive of Taxes)

(1) Goods, works, non-consulting services, consultants’ services, Insurance Premia,Training and Workshops, and Incremental Operating Costs for Component 1 to 5 of the Project

163,000,000 100%

(2) Emergency Expenditures for the CER Component

0 100%

TOTAL AMOU�T 163,000,000

25. Retroactive financing: The Project is planning to finance certain works/supplies/services under retroactive financing. The Project would provide the list of such expenses for scrutiny of the Bank before these payments are agreed and paid. Following are the Bank rules for retroactive financing:

a. the activities financed are included in the Project description; b. the payments are for items procured in accordance with applicable Bank procurement

procedures; c. such payments do not exceed 40%of the loan amount; and d. payments were made by the Borrower not more than 12 months before the expected date of Loan

Agreement signing. e. date after which payments may be made is agreed at appraisal, confirmed during negotiations,

and recorded in the Loan Agreement.

26. Agreed Actions: Following are the agreed actions for the Project which would be documented in the minutes of negotiation:

a. Bank accounts to be established for PMU and PIU’s within three months of effectiveness; b. Staffing to be hired for PMU and PIU’s within three months of effectiveness; c. Accounting system to be established for PMU and PIU’s within three months of effectiveness; d. AG-Uttarakhand to be intimated for audit within three months of effectiveness;

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e. Appoint internal auditor within six months of effectiveness; and f. Finalize modalities for payments of housing payments to individual beneficiaries.

IV. Procurement

A. General

27. Procurement for the proposed Project would be carried out in accordance with the World Bank’s Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by the World Bank Borrower” dated January 2011 (Procurement Guidelines), “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by the World Bank Borrowers” dated January 2011 (Consultants Guidelines) and the provision stipulated in the Legal Agreement. The general description of various items under different expenditure category is described below. For each contract to be financed by the Loan/Credit/Grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame will be agreed between the Borrower and the Bank project team in the Procurement Plan to be developed for the first 18 months by appraisal and will be updated at least annually.

B. Selection of Consultants:

28. Most of the consultancy services are required to be hired immediately for rehabilitation and reconstruction. Single-Source Selection of consulting firms and individuals may be used only if it presents a clear advantage over competition for the required consulting services in accordance to paragraph 3.8. Selection of Consulting Firms through Consultants’ Qualification (CQS) may be appropriate for assignments estimated to cost US$300,000 equivalent in accordance with paragraph 3.7 of the Consulting Guidelines. Advertisement for expression of interest may be forgone or limited to State level for assignments estimated to cost less than US$300,000. For assignments that are estimated to cost less than US$100,000, advertisement is not mandatory as long as a shortlist of at least three qualified firms is established. In certain cases other methods of consultant’s selection methods may be adopted depending on the nature of the activities. For Quality and Cost Based Selection (QCBS) method, shortlist of consultants for services estimated to cost less and US $800,000 equivalent per contract may be composed entirely of national consultants (paragraph 3.7). If enough firms have not submitted the expressions of interest, shortlist may have lesser than 6 firms.

C. Procurement of Works and Goods:

29. Direct Contracting: Direct contracting for the procurement of civil works and goods (paragraph 3.7 of the procurement Guidelines) may be used to extend an existing contract or award a new contract. For such contracting to be justified, the Bank should be satisfied that the price is reasonable and that no advantage could be obtained by further competition. The direct contracting may be from the private sector, UN agencies/programs (for goods), or contractors or NGOs that have required skills.

30. Shopping: Shopping method in accordance with paragraph 3.5 of the Procurement Guidelines will be adopted for procuring readily available off-the-shelf goods of value less than US$500,000, or simple civil works of value less than US$1,000,000. For shopping procedure, list of vendors/contractors already registered with government departments may be used for inviting quotations. The procurement plan should determine the cost estimate of each contract, and the aggregate total amount. The Borrower should solicit at least three price quotations for the purchase of goods, materials, small works, or services (non-consulting), to formulate a cost comparison report. Alternatively the implementing agency may choose to use limited tender enquiry procedure of GoU.

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31. �ational Competitive Bidding (�CB): Any contract estimated to exceed shopping threshold will be subject to NCB. The following NCB provision shall apply:

a. Only the model bidding documents for NCB as agreed with the GOI Task Force (and as amended from time to time), shall be used for bidding.

b. Invitation to bid shall be advertised in at least one widely circulated national daily newspaper (or on a widely used website or electronic portal with free national and international access along with an abridged version of the said advertisement published in a widely circulated national daily inter-alia giving the website/electronic portal details from which the details of the invitation to bid can be downloaded), at least 30 days15 prior to the deadline for the submission of bids. For smaller packages (lesser than US$1 million for Works and US$500,000 for Goods), advertisement in state newspapers will be accepted with at least 15 days given for submission of bids;

c. No special preference will be accorded to any bidder either for price or for other terms and conditions when competing with foreign bidders, state-owned enterprises, small-scale enterprises or enterprise from any given State;

d. Except with the prior concurrence of the Bank, there shall be no negotiation of price with the bidders, even with the lowest evaluated bidder;

e. For prior review contracts, extension of bid validity shall not be allowed with reference to Contracts subject to Bank prior review without the prior concurrence of the Bank (i) for the first request for extension if it is longer than four weeks; and (ii) for all subsequent requests for extension irrespective of the period (such concurrence will be considered by Bank only in cases of Force Majeure and circumstance beyond the control of the Purchaser/Employer);

f. For prior review contracts , re-bidding shall not be carried out with reference to Contracts subject to Bank prior review without the prior concurrence of the Bank;

g. The system of rejecting bids outside a pre-determined margin or “bracket” of prices shall not be used in the Project;

h. Rates contract entered into by Directorate General of Supplies and Disposal (DGS & D) will not be acceptable as a substitute for NCB procedures unless agreed with the Bank on case to case basis. Such contracts will be acceptable however for any procurement under the Shopping procedure;

i. Two or three envelop system will not be used (except when using e-procurement system assessed and agreed by the Bank.

32. International Competitive Bidding (ICB): No ICB contracts have been foreseen at this point, however, if it comes up the Borrower shall use Bank’s SBDs.

33. Force Account: When contractors/suppliers are unlikely to bid at reasonable prices because of the location and risk associated with the Project or a certain government agency has a sole right in certain type of works/supply, borrowers may use their own government departments’ personnel and equipment or government owned construction unit may be the only practical method, provided that the borrower has sufficient managerial capacity and possesses the required technical and financial controls to report to the Bank on expenditure as per paragraph 3.9 of the Procurement Guidelines.

34. Framework Agreements: DGS&D rate contracts will be acceptable as framework agreement for procurement of Goods. Implementing agencies also have option to set-up new framework agreements as per paragraph 3.6 of Guidelines.

15 For year 1 (until June 2014) for works the bidding period for NCB’ will be 15 days considering the emergency nature of the project

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35. Other conditions: Bank will also consider further simplification of procedures if so requested by the implementing agencies and are within overall framework of Bank Guidelines.

D. IMPLEME�TATIO� ARRA�GEME�TS A�D CAPACITY ASSESSME�T OF THE

IMPLEME�TI�G AGE�CIES

36. The implementation of disaster recovery program in Uttarakhand shall be decentralized at the sectorial level. The PMU will have a procurement specialist (focal person) responsible for all procurement activities including carrying out prior reviews at the project level. The procurement specialist will be supported by dedicated procurement personnel in each line agencies either from department or from outsourced agency to carry out procurement activities and maintain records related to procurement. Agreements on staffing structure will be reached in the following missions. The PMU also use e-GP system developed by the State government once it is cleared by the Bank of its use. PIUs will be set up in each of the implementing agencies and will be suitably staffed.

37. The capacity assessment of the implementing agencies was carried out during the project preparation stage16. The assessment looked at the resources and internal procedures as well as its understanding and familiarity with the Bank’s guidelines, procedures, documentation etc. In general, the overall system looks fairly good, however, there is an increased risk of fraud and corruption, in particular with regards to the abuse of simplified procurement procedures because contractual terms and conditions may not be observed or applied and hence, risk for this project has been rated as high.

38. Due to the perceived high risk rating for this project, the following mitigation measures has been proposed: (i) recruitment of procurement support consultants; (ii) training of procurement personnel; (iii) hand holding support from the Bank; (iv) procurement post review by the Bank; (v) increased supervision support mission; and (vi) external audit by an independent agency. Once the proposed risk mitigation measures are put in place, the overall risk rating is determined as Substantial. This risk rating will be however reviewed and updated periodically as the project progress.

Procurement Risk Assessment

39. Table 10 below lists major procurement related risks and the mitigation plan. The risk ratings have been decided based on both the probability of occurrence of various events [including fraud and corruption risks related to procurement] as well as their likely impact. Based on the risk factors and mitigation measures, the overall residual procurement risk rating for the project is determined as substantial. The residual rating on procurement will however be reviewed and updated periodically by the Bank.

Table 10: Procurement Risk and Mitigation Plan

Risk Factor Initial Risk Mitigation Measure Residual

Risk

Record keeping and documentation Moderate • Training on record keeping Low Fiduciary Risk relating to main principles of the Bank Procurement Guidelines

High • Training on Bank procurement procedures Substantial

Inefficiencies and delays in procurement process

High • Continuous dialogues and constant follow up

Substantial

Insufficient competition in procurement High • Town-hall meeting with the contractors Substantial Contract Management High • Training on Contract management Substantial

16 Capacity Assessment of the implementing agency (ies) was/were carried out using situation of urgent need of assistance or capacity constraints guidelines.

39

Risk Factor Initial Risk Mitigation Measure Residual

Risk

Probability of staff handling procurements being transferred

High • Continuous dialogue with the government to retain same staff as much as possible

Substantial

Fraud and corruption risks [including collusion and outside interference] in contracting process

High • Creating awareness on effects of fraud and corruption

• Regular reviews such as PPR, internal Audit, external audit etc.

• Promoting transparency through use of e-platforms such as using e-GP system, procurement plan monitoring tool (SEPA).

Substantial

Weak complaint redress mechanism Substantial • Enforcement of existing redress system Substantial Overall Risk High Substantial

E. PROCUREME�T PLA�

40. The GoU will initially prepare simplified Procurement Plan for the Project implementation which will provide basis for the procurement method. This simplified Procurement Plan will be later used to prepare detailed plan covering 18 months period. The Procurement Plan once finalized will be made available in the Project’s database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The Project will also use the proposed procurement monitoring tool SEPA as the Project Implementation advances.

F. FREQUE�CY OF PROCUREME�T SUPPERVISIO� A�D REVIEW BY THE BA�K

Frequency of Supervision

41. The Bank will normally carry out the implementation support mission on semi-annual basis. The frequency of the mission may be increased or decreased based on the procurement performance of the Project.

Review by the Bank

Prior Review

42. The Bank will prior review following contracts:

Works: All contracts more than US$10 million equivalent;

Goods: All contracts more than US$1million equivalent;

Services (Other than consultancy): All contracts more than US$1 million equivalent;

Consultancy Services: > US$500,000 equivalent for firms; and

> US$200,000 equivalent for individuals

43. First contract issued by each implementing agency will be prior reviewed by the Bank irrespective of value. In addition, the justifications for all contracts to be issued on LIB, single-source (>US$30,000) or direct contracting (>US$30,000) basis will be subject to prior review. These thresholds are for the initial 18 months period and are based on the procurement performance of the Project, these thresholds will be modified. The prior review thresholds will also be indicated in the procurement plan. The procurement plan will be subsequently updated annually (or earlier/later, if required) and will reflect

40

the change in prior review thresholds, if any. In addition, the Bank will carry out an annual ex post procurement review of the procurement falling below the prior review threshold mentioned above.

44. Procurement Methods:

Table 11: Procurement Methods

Category Method of Procurement Threshold (US$Equivalent) Goods and �on-

consulting services(excluding TI

contracts)

ICB >3,000,000

LIB wherever agreed by Bank

�CB Up to 3,000,000 (with �CB conditions)

Shopping Up to 500,000

DC As per para 3.7 of Guidelines

Force Account As per para 3.9 of Guidelines

Framework Agreements As per para 3.6 of Guidelines

Works ICB >40,000,000

�CB Up to 40,000,000 (with �CB conditions)

Shopping Up to 1,000,000

DC As per para 3.7 of Guidelines

Force Account As per para 3.9 of Guidelines

Consultants’ Services CQS/LCS Up to 300,000

SSS As per para 3.9-3.11 of Guidelines

Individuals As per Section V of Guidelines

QCBS/QBS/FBS for all other cases

(i) International shortlist (ii) Shortlist may comprise

national consultants only

>800,000

Up to 800,000

V. Monitoring&Evaluation

45. Project monitoring will occur as a periodic function, and will include process reviews, accounting audits, social audits, reporting of outputs, and maintenance of progressive records. Broad thematic areas that will be supervised and monitored include the following: i) Social and Environmental Monitoring; ii) Regular Quality Supervision & Independent Quality Monitoring; iii) Periodic Physical and Financial Progress Monitoring; and iv) Monitoring and evaluation.

46. Social and Environmental Monitoring: This will comprise the following sets of activities: i) monitoring compliance with environmental regulations, social and environmental safeguards and Environment and Social Assessment provisions; and ii) overall monitoring and oversight of social and environmental issues at the state/project level.

47. Regular Quality Supervision and Third Party Quality Audit: Regular quality supervision will be carried out by the respective IAs. Third party quality monitoring will be instituted by the PMU in Uttarakhand. Detailed quality management guidelines would be evolved by PMU/PIUs and adopted by all the IAs and other stake-holders.

48. Periodic Physical and Financial Progress Monitoring: Physical progress monitoring will be carried out by the IAs on a monthly basis and reported to PMU/PIU which will in turn share the reports on a quarterly basis with the concerned line agencies and the World Bank. Financial progress will be reported by the IAs through the quarterly IUFRs.

49. Monitoring and Evaluation:Continuous monitoring of the Project, its achievements would be taken up by the Core Committee. The Core Committee will also appoint special agencies to assist them.

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VI. Social (including Social Safeguards likely to apply)

50. Potential environmental and social impacts would arise mainly due to the biophysical and socio-economic characteristics of the Project areas, such as soil fragility, forests, biodiversity, poverty and a high dependence of the population and livestock on the natural resource base. This has led to stressed environmental resources like land, sand, water resources, grasslands and forests. The Project considers these aspects and does not envisage any significant, irreversible impacts due to the small scale of the proposed interventions. The Project components would result in overall positive environmental and social impacts, if planned, designed and implemented with environmentally and socially sound practices.

51. The Environment and Social Management Framework (ESMF) is prepared to minimize and mitigate adverse impacts and enhance positive impacts to the environment and affected populations. The ESMF includes Environment and Social Assessment (ESA) as a tool for decision making to promote environmental sustainability and equity which are the envisaged project outcomes. In order to address safeguard policies, the ESMF includes a criteria for screening and exclusion of sub-projects that may have irreversible impacts; formats to carry out ESA during the preparation; and guidelines for mitigation of environment and social impacts with monitoring indicators that can be used at the local level. These would help identify and consider the potential social and environmental impacts of different interventions early in the decision making process, i.e., during the preparation, through a participatory process. This ESMF will consist of a process; through measures such as screening, consultations, preparation and implementation of Environment Management Plans and Resettlement Action Plans (RAP) and extension of entitlements. The ESMF integrates such mitigation measures into the sub-project planning, design, implementation, operation and maintenance.

52. The Project’s infrastructure and connectivity components will involve restoration and/or rebuilding of damaged and lost infrastructure. These activities may involve certain adverse social impacts and some limited land acquisitions in some cases. The size and scale of these impacts could be assessed when the sub-projects are finalized. Under these conditions, there is some possibility that private land may be required for reconstruction of houses, public buildings, roads, bridle roads and bridges on a very limited scale.

53. Several measures for minimizing the adverse impacts, such as usage of vacant government land for project facilities as a first option, are incorporated into the ESMF. Where such government land is not available, private land may be acquired through i). Direct purchase through negotiations, ii). Voluntary donation and iii) Consent award using the land acquisition process. The ESMF stipulates replacement cost for the lost land and structures. Further it proposes shifting allowance and subsistence allowance for those displaced. Those losing residence/ commercial structures are entitled alternate house/ commercial sites and allowance for building the same. Those who lose their livelihoods on account of project activities will be provided with livelihood assistance through the Project with the provision of Income Generating Assets and Training.

VII. Environment (including Environment Safeguards likely to apply)

54. Project components largely include reconstruction works and limited new constructions that have the potential to create adverse environment impacts. While project interventions are generally identified at appraisal, specific details of components related to planning and designing of sub-projects will be known later during the detailed design process. As sub-projects will be located across the affected districts, an ESMF approach has been adopted for the Project.

55. Potential adverse environmental impacts could include: i) issues related to poor selection of location (such as in the case of housing component, minor realignment of roads, etc.) planning and

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design of sub-projects, particularly affecting drainage (such as in case of roads, bridges, etc.);ii) impacts related to availability and extraction of resources such as stone, earth and sand that will be required for re-construction works;iii) issues related to forest and biodiversity arising out of realignment or existing roads through forests;iv) occupational health and safety issues related to various construction operations; and v) improper disposal of debris and other waste materials. While the Project itself is designed to benefit the flood affected communities, the management of unwarranted/ adverse impacts is proposed to be managed through the application and implementation of the said ESMF. The systematic application and implementation of the ESMF will also assist in achieving compliance with the applicable laws and regulations of GoI and the GoU, apart from meeting the requirements of the relevant Bank’s Operational Policies on Environment Safeguards.

VIII. Other Safeguards Policies Triggered

56. The Project triggers the following safeguard policies: i) Environmental Assessment (OP/ BP 4.01); ii) Natural habitats (OP/BP 4.04); iii) Physical and Cultural Resources (OP/BP 4.11); iv) Involuntary Resettlement (OP/ BP 4.12); and v) Forests (OP/ BP 4.36). The Project has been assessed to be Category B, based on the in-situ and moderate nature of the construction activities of the proposed sub-projects. No adverse or irreversible impacts of project interventions are envisaged. The Project’s impacts are limited and are technically and institutionally manageable. However, considering the fact that many of the Project activities are in the sensitive hilly environments, ‘Environmental and Social Assessment’ will be carried out for the respective sub-projects as applicable, as per the ESMF developed for the Project.

57. The key environment management and safeguards related risks include i) insufficient attention/delays in effective implementation of Environmental Management Plans (EMPs) and RAPs/ Social Management Plans (SMPs), ii) potential non-compliance with the World Bank Environment Safeguard Policies/Guidelines due to lack of implementation capacity iii) obstacles and delays in obtaining statutory clearances, iv) lack of co-ordination between the key implementing agencies may lead to a delay in the preparation of required documentation and implementation and v) improper monitoring and irregular reporting of compliance by line departments.

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/ BP 4.01) [X] [ ] Natural Habitats (OP/ BP 4.04) [X] [] Pest Management (OP 4.09) [ ] [X] Physical Cultural Resources (OP/ BP 4.11) [X] [ ] Involuntary Resettlement (OP/ BP 4.12) [X] [ ] Indigenous Peoples (OP/ BP 4.10) [ ] [X] Forests (OP/ BP 4.36) [X] [] Safety of Dams (OP/ BP 4.37) [ ] [X] Projects in Disputed Areas (OP/ BP 7.60) [ ] [X] Projects on International Waterways (OP/ BP 7.50) [ ] [X]

43

Annex 4: Operational Risk Assessment Framework (ORAF)

I�DIA:Uttarakhand Flood Recovery Project

1. Project Stakeholder Risks Rating Substantial

Description :

• There could be resistance or constrained to accept or take up implementation of activities under theProject components by administration, civil society organizations and other social service workers already working on ground to execute their existing action plan, due to enormity of the displacement and destruction due to the disaster, leading to increased accountability amidst widespread social demands.

Risk Management:

• The Project will carryout consultations at every stage of implementation to ensure synergies among the state level departments and all stakeholders such as communities, NGOs, civil society organizations, social service workers, etc., to maximize acceptance and impact of investments. • Provisions for contracting additional staff and consultants to support the existing personnel of the State working in relief and rehabilitation activities, in addition to training and capacity building of the State personnel, is included in the Project to facilitate implementation.

• Environment and Social Framework will be disseminated and stakeholder workshops will be conducted. In addition the Project will also have a communication strategy to continuously and productively engage with the stake holders. Resp:Client Stage:

Appraisal

Due Date :

Ongoing

Status:

�ot yet Due

2. Implementing Agency Risks (including fiduciary risks)

2.1Capacity Risk Rating: Substantial

Description :

• Stretched capacity of implementing entities due to current recovery, reconstruction and rehabilitation works. Though the state is known for its relatively good governance this disaster and the monsoon season has severely challenged its capacity and the state faces major implementation capacity shortfall in carrying out post disaster reconstruction works.

Risk Management : • The proposed Project focuses on institutional strengthening of capacity and systems for delivery at the state and local levels. Emphasis will be on capacity augmentation, including project management for Bank operations. Under the Project, the following will be financed: training of staff in planning and program management & monitoring, community outreach and MIS will be established in Uttarakhand.

44

• Fiduciary risks:Some of the departments have benefitted from increased capacity during the implementation of various bank financed projects in the State, there is a risk that due to the still ongoing relief activities, the ability to absorb additional resources is less, in addition to onerous approval procedures, especially in procurement, could slow down implementation. • Possibility of delays/inaccuracy in preparation and submission of periodic financial reports and internal control could arise

• For procurement purposes the procurement support consultant will be trained on banks operations, post-review will be undertaken by the Bank and external audit by an independent agency. • The preparation and management of the Project would be assisted through support provided by the Project implementation unit.Additional staff specifically to boost institutional capacity for disaster risk assessment and management will be recruited and trained. Dedicated staffin the PMU and PIUs for World Bank project has been agreed with Government of Uttarakhand. • In addition, Bank will also provide support through providing resources locally within the PMU and PIUs. Resp: PMU and PIU Stage: Due Date : Status:

2.2Governance Risk Rating: Substantial

Description:

• While the Government of Uttarakhand has established governance structures, there could still be challenges due to elaborate bureaucratic processes, delayed decision making and oversights and on account of capacity constraints.

Risk Management:

• The process of decision making would be assisted through continuous discussions and engagements with PMU on activities and overall program. • In addition, the state level empowered Review and Monitoring Core Committee and High Powered Committee for sanction of Post Disaster reconstruction Works chaired Chief Secretary and Additional Chief Secretary respectively will oversee the Project, higher level decision making, coordination among various departments and provide policy guidance. • An MIS system will assist procurement,financial monitoring, public disclosure of procurement performance and outcomes of PMU/ PIU on a regular basis. and facilitate grievance redress mechanism at the PMU Level

Resp: PMU Stage: Due Date :

Ongoing

Status:

�ot yet due

45

3. Project Risks

3.1 Design Rating: Moderate

Description :

• TheProject is multi-sectoral and complex by nature; it is spread over a wide geographical area with large number of direct beneficiaries.It involves many departments: PMU, Public Works Department, USIDC, USAC and USDMAin Uttarakhand.These Departments generally do not have experience of working together under one nodal agency and it would be a continuous challenge that may potentially create confusion and slow project implementation.

• Insufficient/inadequate involvement of communities can lead to neglected public constructed/ created infrastructure and a stage may come when it may not be in operable state when needed. Relative inexperience in this aspect may be an issue in terms of decision-making and implementation effectiveness.

Risk Management:

• Roles of implementing departments have been defined to reduce complexity. Design guidelines and standards are documented in the Operation Manual. • Community involvement is ensured from the planning to actual implementation of the Project.

• Disclosure of project activities to local communities/ stakeholders in local languages at prominent locations at the local (Panchayat) level as well as disclosure of the beneficiary selection and verification list in public spaces plus websites will ensure transparency

Resp:Client Stage: Due Date :

Ongoing

Status:

�ot yet due

3.2 Social & Environmental Rating: Substantial

Description :

• The Project triggers the following safeguard policies: i) Environmental Assessment (OP/ BP 4.01); ii) Natural habitats (OP/BP 4.04); iii) Physical and Cultural Resources (OP/BP 4.11); iv) Involuntary Resettlement (OP/ BP 4.12); and v) Forests (OP/ BP 4.36). • Safeguard risks: Environment management and safeguards related risks are as follows: (i) lack of co-ordination between the key implementing agencies may lead to a delay in the preparation of required documentation; (ii) insufficient attention/delays in effectiveimplementation of Environmental Management Plans (EMPs), Resettlement Action Plans (RAPs) and Social Management Plans (SMPs); (iii) Obstacles and delays in obtaining statutory clearance; (iv) improper monitoring and irregular reporting of compliance by line department and (v) potential non-compliance with Bank environment safeguard policies/guidelines due to lack of capacity.

Risk Management :

• Measures such as screening, consultations, preparation and implementation of Environment Management Plans (EMPs) andResettlement Action Plans (RAPs) and extension of entitlements are included in project design to ensure early evaluation of the impacts of land purchases and the integration of suitable mitigation measures into subproject planning, design, implementation, operations and maintenance. • An Environment and Social Management Framework (ESMF) has been prepared to mitigate adverse impacts and improve benefits to the affected population. The ESMF includes Environment and Social Assessment (ESA) as a tool for decision making to promote environmental sustainability and equity which are the envisaged project outcomes. • The Environmental and Social Assessment will be designed in a user-friendly manner, providing clarity on key issues. • Social and environmental monitoring will be undertaken periodically which will comprisethe following – i) monitoring compliance with environmental regulations, social safeguards and environment and social assessment provision,

46

• Resettlement/relocation would require a detailed investigation on safe locations and willingness of communities to relocate. Such plans would also require inputs from town/ country planning professional, statutory clearances, geological investigations, land acquisitions etc. These activities could be highly time consuming and may result in delays.

and ii) continuous social impact monitoring at the community levels and oversight at the state/project level.

Resp: PMU/PIU and

concernedline departments

Stage: Due Date :

Ongoing

Status:

�ot yet due

3.3 Program & Donor Rating: Low

Description :

• While the engagement and commitment of donors as well as NGOs and CBOs is not considered a risk, there may be overlaps in program implementation.

Risk Management :

There is extensive donor engagement in State of Uttarakhand. The ongoing and proposed donor projects are well-aligned in terms of project objectives and overall goals. During preparation and implementation, the Project will continue to ensure synergies with ongoing projects, activities and programs run by NGOs and CBOs. The team will contribute to information sharing and collaboration through the established mechanism for donor coordination.

Resp:PMU and partners Stage: Due Date:

Ongoing

Status:

�ot yet due

3.4 Delivery Monitoring & Sustainability Rating: Moderate

Description :

• The Implementation capacities of the newly formed high powered committee responsible for program monitoring and implementation will be challenged as they move from relief to reconstruction mode.

Risk Management :

• A critical element of improved service delivery is by strengthening M&E which would be supported under the Project through several initiatives:(i) up- gradating of the integrated MIS system developed; (ii) third-party monitoring (surveys & validation of MIS data); (iii) assessment of project innovations; (iv) participatory social audits; and (v) regular project reviews. • Project staff will be given adequate training and capacity building as part of preparation and as an integral component of the Project during implementation to ensure effective delivery of programs.

• The Project intends to strengthen the USDMA as a capable institution that would enable a sustained investment in risk mitigation and its mainstreaming into development. Assessment will be carried out towards staffing, equipment and institutional capacity building for operationalization of this nodal agency

Resp: PMU, PIU and line

departments

Stage: Due Date :

Ongoing

Status:

�ot yet due

4. Overall Risk Rating in Implementation

Substantial The Government has given high importance to the Project and partnership with the Bank in disaster management showing strong commitment and sense of

47

ownership that enhances sustainability of the Project.

48

Annex 5:Implementation SupportPlan


I. Strategy andApproachforImplementation Support

1. The Implementation Support Plan (ISP) for Uttarakhand Disaster Recovery Project has been developed based on the specific nature of the Project activities, lessons learned from past project of the Bank and the Project’s risk profile in accordance with the Operational Risk Assessment Framework (ORAF). The plan will be regularly reviewed and revised as required.

2. The ISP includes frequent review of implementation performance and progress, especially given the wide geographical spread and multiple departments involved in Uttarakhand. The Bank team will monitor progress on several fronts including: (i) key performance indicators as defined in the Results Framework; (ii) State, district, and block level project implementation plans; (iii) independent verification of project activities; (iv) proper fiduciary management of all activities carried out by the PMU, local PIUs and other implementing agencies; (v) reconciliation of payments with contracts; (vi) supervision of large numbers of District-level procurement activities, especially in relation to Component 1: Resilient Infrastructure Reconstruction - Construction of multi hazard resilient permanent houses and Public infrastructure and Component 2 –Rural Road connectivity and (vii) monitoring of key legal covenants.

3. Information from various sources will be used to assess and monitor the progress of the Project throughout its implementation. In addition to the data generated through the Project’s MIS and M&E systems, the Bank will also review the findings and results of third party assessments and environmental and social audits which will be undertaken during the course of project implementation.

4. In addition to formal semi-annual implementation support missions and field visits to Uttarakhand and the Project components target areas, in all project districts of the state, annual workshops with PMU, PIU and the Implementing Agencies will be held to review progress against the implementation plan and take corrective actions as necessary. The semi-annual Implementation Status Reports will be produced to provide management with progress updates, tracking risk development and efficacy of mitigation measures. In addition, as required frequent ‘Thematic’ missions will be made to provide targeted support to address emerging issues.

5. The Bank’s procurement, financial management, and environmental and social safeguards specialists will also provide timely and effective support to the GoU. In addition to carrying out an annual ex-post review of procurement that falls below the prior review thresholds, the procurement specialist will lead thematic and focused missions depending on the procurement needs and as agreed to by the GoU. The financial management specialist will review all financial management reports and audits and take necessary follow-up actions as per the Bank procedures. These team members will also help identify capacity building needs to strengthen procurement and financial management capacity. Semiannual inputs from the environmental and social specialists will be required throughout the Project, and formal supervision missions and field visits will ensure that the ESMF is implemented in accordance with the Bank safeguard policies.

6. The following Implementation Support Plan reflects the preliminary estimates of the skill requirements, timing, and resource requirements over the life of the Project. Keeping in mind the need to maintain flexibility over project activities from year to year, the ISP will be reviewed annually to ensure that it continues to meet the implementation support needs of the Project.

49

II. Implementation SupportPlan 7. The table 12below indicates the level of inputs that will be needed from the Bank to provide implementation support for the proposed Project.

Table12: Implementation Support Plan Time

Year

Focus Primary Skills

�eeded

�umber of

Trips

Resource

Estimate

(US$)

Partner Role Comments

1 • Project launch

• FM systems functioning effectively

• Procurement practices following Bank norms

• ESMF is in place

• Team lead • FM,

Procurement • Safeguards

Specialist • Disaster

Management Specialist

• Communication Specialist

• Road Specialist

• Sept 2013 • Dec. 2013 • June 2014

• 45,000 • 45,000 • 45,000

• Staff up PMU/ PIU

• Contract PFMC consultants

• MOU signed with partner organization

• Project will likely become effective in December 2013.

• Task team to support smooth start-up following effectiveness

2 • Monitor implementation of project activities

• FM, Procurement, Safeguards





• Road Specialist

• NGO/CSO

• Dec. 2014 • June 2015

• 45,000 • 45,000

• Scale up of pilot activities

• Prepare comprehensive project progress report in advance of each mission

• Support PIU at local level as necessary

• Ensure safeguards arrangements are built into implementation plans

• Mid-Term Review

3 • Monitor implementation of project activities

• Mid-Term Review

• FM, Procurement, Safeguards





• Road Specialist

• NGO/CSO

• Dec. 2015 • June 2016

• 45,000 • 45,000


• Mid-term review

Support to monitor progress of activities, provide technical oversight, ideas for improvement, etc.

4 • Project withdrawal and closure

• Scaling up of successful




• Dec. 2016 • June 2017

• 45,000 • 45,000

• Prepare comprehensive project progress report in advance of

• Support to monitor progress of activities, provide technical

50

Time

Year

Focus Primary Skills

�eeded

�umber of

Trips

Resource

Estimate

(US$)

Partner Role Comments

models with GoU


• Road Specialist

• NGO/CSO

each mission oversight, ideas for improvement, etc.

5 • Project withdrawal and closure

• Scaling up of successful models with GoU





• Communication Specialist

• Road Specialist

• NGO/CSO

• Dec 2017 • Mar 2018

• 45,000 • 45,000


• ICR Mission

51

Annex 6: Governance Accountability and Action Plan I�DIA: Uttarakhand Disaster Recovery Project

1. The Project has identified two main risks in the area of governance, accountability and institutional effectiveness and designed specific risk mitigation measures as part of the overall project implementation strategy:

i. Experience and capacity of the newly formed empowered committee in including local communities, managing and sustaining disaster risk mitigation measures is limited

ii. The Project is multi-sectoral and complex by nature and it is spread over a wide geography and has a large number of direct beneficiaries.

2. In India, incomplete decentralization and persisting uncertainties in the allocation of responsibility and resources between local administration and the state government make the implementation of centrally or state sponsored programs and policies particularly challenging17.

3. The concerned governments have demonstrated institutional will and a proactive and dynamic attitude towards DRM.To address the disaster needs in the State the government has formed a high powered committee to critical monitor all projects. All the stake-holders of the proposed Projecthave a strong interest and intention in reducing the natural disaster risks in State of Uttarakhand. To achieve this goal, the Project emphasizes the need for synergies among the state level sectors and the local stakeholders such as communities, NGOs etc. to maximize the impact of investments.

4. The program implementation is vulnerable to fraud and corruption, not only in procurement but also in the financial transactions. This risk is mitigated thanks to a strengthened and effective grievance redress mechanism and through public information disclosure (based on the effective utilization of India’s Right to Information Act of 2005).

5. The main grievance anticipated is the selection of beneficiaries for the housing reconstruction program.The lists of beneficiaries will be established after due process. Grievances will be initially addressed at the Sub Divisional Magistrate level with an appellate mechanism: the District Magistrate’s office, will ensure grievance redress in the process of re-verification of the list of beneficiaries at the local level. In case grievance is not addressed by the DM, the beneficiaries can approach the office of the Commissioner, whose decision will be final.

6. A separate module for tracking of grievance redress will be included as part of the MIS and an annual audit will be carried out to provide feedback to the PMU.

7. Public disclosure of documents, reports, procurement process and results and physical and financial progress will be carried out by integrating a public viewing portal on the MIS as well as on billboards in public places at the local (Panchayat) level. Disclosure of project activities to local communities/stakeholders including beneficiary lists will be made available in local languages at prominent locations at the respective project sites. As per the Right to Information Act of 2005, the PMU would disclose information proactively and on-demand in response to requests. Informationdisclosed will include procurement results, project preparation and implementation documents, financial audit reports, ESMF, PAD, technical reports, environmental and social assessments and action plans, physical and financial progress, etc. A designated office will be made responsible in each of these institutions.

17 Cf. the sixth report of the Second Administrative reforms commission of the Government of India on Local Governance, October 2007.

52

8. The Project success will depend, in part, on effective coordination between different line departments, the state and district administrations, involving all stakeholders and importantly on a sustained and dynamic involvement of the community along with building capacity of both state and non-state actors in risk reduction, management and mitigation.

9. To mitigate this risk, the Government of Uttarakhand (GoU) has constituted a high empowered core committee and a Sanctioning Committee. PMU will be primarily responsible for the preparation and implementation of the Project, as well as for coordination with the various project Implementing Units (PIUs). The roles and responsibilities of each involved institution will be laid out in the Operations Manual.

10. The Project implementation will be strengthened through trainings and capacity building programs for the PMU/PIUs. A Project orientation workshop will be organized before the launch of the Project. In order to augment the Project implementation capacity of the PIUs, the GoU will hire technical experts as necessary. Orientation training and refresher courses will be organized for the staff involved in implementation.

11. The involvement of multiple implementing agencies calls for consistency in implementation. The Project will partner with local resources where specialized skills are needed, for example, increasing awareness of risks among local communities.

Weak Monitoring and Evaluation Systems

• Monitoring and evaluation – An internet supported MIS will be installed based on formats for review and monitoring that have already been agreed upon and developed. PMU & PIU will hire an experienced agency for development and customization of this system. Responsibility for the management and periodic updates of the system will lie with the PMU in cooperation with the concerned PIUs. The Project will also set up a base line for monitoring and evaluation of results through a Monitoring and Evaluation agency who will be appointed by the PMU & PIU.

• Third party quality audit – A third party quality audit firm will be hired based on a pre-agreed ToR that would monitor compliance to standards and specification as defined in the bidding documents. The audit party would also report on specific issues related to compliance on the ESMF and other social and environmental management actions. This would be done on a random and continual basis throughout the Project. The audit system will also be linked to the payment mechanism to ensure effective resolution of issues prior to payments to contractors.

• Financial and procurement audits – External procurement audits will be carried out for all the post review contracts. Statutory and internal audits will be conducted for the Project as detailed in Annex 3.

• Procurement processes – PMU will provide procurement support to the PIUs and standard Bank controls will apply.

53

Table 13: Governance Accountability and Action Plan

Risks and

Concerns

Risk Control and Mitigation Responsibility Target

Weak

Governance

Structures

1. Appointment of Project Director in PMU and Project Coordinators/Manager in the PIUs

PMU/PIU October 31, 2013

2. Establish nodal PIUs in implementing departments.

PMU/PIU Completed

3. Update and install a fully functional MIS. PMU/PIU June 2014 Weak Project

Management

capacity

Process

4. Preparation of Guidelines/manuals – operational, procurement, financial management and reporting. Environmental and social management framework, M&E framework.

PMU/PIU

Completed

Capacity building 5. Appointment of third party quality audit

consultants and internal and external auditors.

PMU

April 2014

6. Appointment of Project Management Consultants

PIU April 2014

7. Orientation training and refreshers courses for staff involved in project implementation.

PMU/PIU Ongoing starting in November 2013

Monitoring and

evaluation

capacity

M&E system 8. Functioning web-based GIS enabled MIS

system to cover monitoring of: physical and financial progress; procurement, compliance and results as per project’s Results Framework.

PMU/PIU

June 2014

9. Creation of base line data for monitoring of outcomes indicators.

PMU/PIU June 2014

Monitoring and reporting process 10. Centralized project subcomponent approval

process will be followed at PMU level.

PMU/PIU

Established and ongoing

11. PMU to generate monthly reports using the MIS database for project monitoring, collate quarterly progress reports and share with GoU and the Bank.

PMU/PIU Starting a month after project effectiveness

12. Monitoring and Evaluation Core Committee and appointed agency.

PMU/PIU Established and ongoing on monthly basis

Procurement: Low Transparency in bidding process, lack of competition in contracts, disclosure of procurement information,

Monitoring 13. Establishment of procurement monitoring

database within the Project MIS. Reports compiled from the MIS to be uploaded on website for public viewing.

PMU/PIU

March 2014

54

Risks and

Concerns


corruption in procurement etc.) 14. External procurement audits, including post-

reviews by the Bank, to evaluate the transparency of bidding processes, range of competition, variations between estimated and bid prices, number of re-bids, etc.

15. Capacity augmentation support through the Bank’s local resources

Bank December 2014

Established and ongoing

Disclosure, Transparency and Competitiveness 16. National Competitive and Transparent

Bidding, including specific disclosure requirements such as web-based dissemination of bidding documents and results.

17. First procurement performance report published.

PMU/PIU PMU/PIU

Ongoing March 2014

Weak Financial

Management

Process 18. Internal audit of financial transactions by

internal auditors appointed by PMU. 19. Annual audit of project’s financial statements

by external auditors

PMU/PIU

Ongoing Annual, starting FY 2014

Disclosure 20. Disclosure of financial information through

the web that will include financial reports such as Interim Financial Reports and audited statements.

PMU/PIU

February 2014

Lack of

community

participation,

oversight and

grievance redress

Community Participation 21. Consultations with beneficiary communities

during project preparation and implementation and involvement in Housing

PMU

Ongoing

Grievance Redress 22. Establishing a grievance redress mechanism

as part of the web enabled MIS for complaints handling and resolution tracking, with a specific focus on beneficiary re-verification.

PMU/PIU District and sub District administration

By effectiveness

Disclosure 23. Disclosure of project activities to local

communities/stakeholders in local languages at prominent locations at prominent locations at the local (Panchayat) level.

24. Disclosure of beneficiary selection and verification list in public spaces and on project website.

PMU/PIU Ongoing Immediate

25. As per the Right to Information Act of 2005, disclose information in response to requests.

PMU/PIU Ongoing

55

Risks and

Concerns


Informationdisclosed will include procurement results, project preparation and implementation documents, financial audit reports, ESMF, PAD, technical reports, environmental and social assessment and action plans, physical and financial progress etc.

Fraud and

corruption in

distribution and

payment of

allowances

Preventive: 26. Transparency (disclosure of information to

the public as per the Right to Information Act of 2005).

PMU/PIU

Ongoing

Delay in startup

and project

implementation

Level of Preparation 27. Ongoing investments.

PMU/PIU

Ongoing

28. Preparation of DPRs and other technical scoping study.

PMU/PIU December 2013 and ongoing

29. PMU/PIU to be fully staffed. PMU/PIU December 2013

56

Annex 7: Economic and Financial Analysis


1. Uttarakhand by virtue of its very origin is prone to natural disasters. Every year, the state faces massive losses, particularly during the monsoon season, due to rains, cloudbursts, flash floods, landslides, floods, hailstorms and water logging events. Small and marginal farmers in the hills lose a substantial portion of their agricultural produce and sometimes permanently lose their agricultural lands due to these events. In addition, Uttarakhand is also prone to forest fires, avalanches and droughts. The entire State also falls within Zone IV and Zone V (Zone V represents the highest level of seismicity) of the Earthquake Zoning Map of India. The districts of Bageshwar, Chamoli, Pithoragarh, Rudraprayag and Uttarkashi all fall within the Seismic Zone V. In the recent past the State has witnessed two major earthquakes (Uttarkashi 1991 and Chamoli 1999).

2. The recent unexpected (June 15-17, 2003) cloud bursts and heavy to very heavy rainfall in several parts of the higher reaches within the State resulted in a sudden increase in water levels giving rise to flash floods in the Mandakini, Alakananda, Bhagirathi and other river basins and also caused extensive river bed and toe erosion, and landslides at various locations. The worst impact happened in the Mandakini river valley around the Kedarnath shrine region (Rudraprayag district) and its downstream areas. Rock falls resulted in the partial blockade and impoundment on the river channels. Adding to this, continuous rains and melting of the Chorabari glacier (that feeds the Gandhi Sarovar Lake or Chorbari Lake) caused waters in the Chorabari Lake to rise. The lake’s weak moraine barrier gave way and a huge volume of water along with large glacial boulders came down the channel to the east, devastating Kedarnath town, Rambara, Gaurikund and other places in its wake.

3. Since the event coincided with the peak tourist and pilgrimage season, it resulted in a significant number of causalities, missing, and affected populace, thereby compounding the impact of the disaster. The continuous rain disrupted normal life resulting in a total of 580 human lives being lost, over 5200 persons missing and over hundred thousand pilgrims being stranded. This event also left over 70,000 tourists and 100,000 local inhabitants stranded in the upper reaches of the mountain terrain. The numerous landslides by the sediment loaded rivers caused breaching of roads / highways at many locations and washed away several bridges (steel girder bridges, beam bridges, suspension/cable bridges). Traffic was also disrupted along all national highways and link roads, along with the disruption of telecommunication lines, all adding to the impact of the disaster.

4. The northern region of the State was severely impacted by the disaster. There are reports of entire villages and settlements getting washed away resulting in numerous losses of lives. Many hotels, rest houses and shops around the temple in the much visited Kedarnath Township were completely destroyed.

5. Given the risks faced by the state, the proposed emergency project is expected to yield significant benefits in terms of reduced future non-market and market losses. While the cost involved is mainly the cost of the Project investments, the annual operation and maintenance cost, while the benefit is in the reduction of capita asset losses (physical, natural, human and social capital) in the absence of which vulnerable communities living in the state will continue to suffer from extreme events which may well be accentuated by climate change.For a state that is much dependent on tourism for its economic wellbeing a speedy recovery will significantly lessen the economic impact of the recent events.

6. Recently a joint team from the WB and ADB team conducted a damage assessment in coordination with the different Heads of Department within the Government of Uttarakhand and the Disaster Mitigation and Management Centre (DMMC). This was a first attempt at identifying immediate

57

and medium term recovery, rehabilitation and reconstruction needs on the basis of relevant information received and the expertise of the multi-institutional and interdisciplinary assessment team. An overview of the Damage and Needs Assessment are presented in Table 14.18

Table 14: Summary of Damages and Preliminary Estimates of Reconstruction Cost

Sectors

Cost

(I�R million)

Cost

(US$million) Housing 1505 25.08 Public Buildings 1029 17.15 Roads and Bridges 27103 451.71 Urban Infrastructure (Water Supply, Roads, Drains and Sewerage and Sanitation)

1268 21.13

Rural (Water Supply and Sanitation) 1305 21.75 Livelihoods(Agriculture, Livestock,Fisheries, Tourism linked livelihoods, Microenterprisesandother)

1668 27.80

Irrigation 1393 23.22

Tourism 1166 19.44

Energy/Power 2662 44.37 Forests and Biodiversity 542 9.03 Grand Total

39,641 661 Note: The total value has been rounded off. Currency Conversion rate US$=INR 60.

7. While serving as a wakeup call, this disaster also provides a window of opportunity to address several underlying developmental and risk reduction issues. However, addressing the immediate and longer term recovery and reconstruction needs and putting into place appropriate mitigation and risk reduction measures towards building resilience is important. Moving ahead, there are several interventions that must be undertaken in order to reconstruct the damaged assets and to restore the economy of the affected areas. For example, restoration of connectivity and urban infrastructure will help bring back economic activity in tourism and help restore livelihoods.

8. As the IPCC reports and recent scientific literature demonstrate, the intensity and possibly frequency of such events can be expected to rise as global warming proceeds. Coupled with economic expansion and population growth in regions vulnerable to multiple hazards including climate change, the impact of disaster on development objectives is likely to increase possibly dramatically (see Box 1).

18 Since many assessments, surveys and specific sectoral analyses are still ongoing, the figures here should be considered as the best estimate possible given available data and time constraints. The tourism loss is much underestimated because of data limitations.

58

Box 1:Turn Down The Heat: Climate Extremes, Regional Impacts and the Case for Resilience

In 2012, the World Bank released a report19 – Turn Down the Heat – which concluded the world would warm by 4°C by the end of this century if concerted action was not taken now. A new report, released today, spells out an alarming scenario that could unfold as a result of global warming.

Recently, a sequel to the 2012 report - Turn Down The Heat: Climate Extremes, Regional Impacts and the Case for Resilience - was released (coincidentally on June 17, 2013 when the floods were still ravaging in most of Uttarakhand).The report looks at the likely impact of warming on agricultural production, water resources, coastal ecosystems and cities across three regions - South Asia, Sub-Saharan Africa, and South East Asia. It assesses impacts at present day temperatures of 0.8°C above pre-industrial levels, as well as in a world that is warmer by 2°C and 4°C.

The 2013 report finds that if the world warms by 2°C - which may happen within the next 20 to 30 years - widespread food and water shortages could unfold, together with prolonged droughts, unprecedented heat-waves, more intense rainfall and flooding, and a significant threat to energy production. These are not challenges looming at the end of the century, according to the report. Rather, severe impacts can begin to appear within the next 10-20 years, within the span of the current generation. Already, a warming trend has begun to emerge over South Asia, and India’s large and growing population is experiencing water stress in many parts.

Increasing temperatures, changing rainfall patterns, declining snowfall, retreating glaciers, and declining groundwater can make the situation even worse. Impacts can be aggravated by rising sea-levels and more intense tropical cyclones, precipitating a major crisis for food security and the rural economy.

According to the report, the case for resilience has never been stronger. Already, our world is 0.8°C above pre-industrial levels of the 18th century. Irrespective of future emission paths, the warming already underway will lead to a number of climate impacts. Many of the worst impacts could still be avoided by holding warming below 2°C, but the window for action is narrowing rapidly.

9. Investments in disaster recovery and risk reduction can generate high economic returns both for promoting hard and soft resilience.20 Benefits encompass all the avoided losses that would have occurred if the mitigation activity had not been implemented. While, they are much more difficult to measure until an actual natural hazard event occur, some benefits such as the elimination or reduction in property damage, are easy to measure. Other benefits, such as reductions in: casualties, homelessness, environmental damage, and direct and indirect business interruption are not easily estimated, simply because data are not often collected on these categories after a disaster.

10. Nonetheless, benefit-cost ratios of 4 and higher are widely documented in the literature (see Box 1). Evidence suggests that investment in disaster recovery and risk reduction reduces: (i) allocations for future emergency; (ii) vulnerability to disasters, and at the same time, increases society’s resilience to cope with disasters; and(iii) livelihood disruptions in the long term.

19 World Bank (2012); “Turn Down The Heat: Why a 4°C Warmer World Must be Avoided.” November 2012. 20 Hard resiliency focuses primarily on structural measures, whereas soft resiliency incorporates different types ofstructural measures with process, policy and other types of mitigation measures. In essence, soft resiliency is about learning to live with risk, rather than creating the false assumption that risk can be eliminated.

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Box 2: Cost-Benefit Analysis—U.S. Case

According to a report released by the Multi-Hazard Mitigation Council: “On average, a dollar spent by FEMA on hazard mitigation (actions to reduce disaster losses) provides the nation with about $4 in future benefits. More specifically, the study found that at present values, every dollar spent through FEMA mitigation grants, achieved savings of $3.65 to the Federal treasury in avoided disaster relief and tax revenue losses. The discounted net present value of societal benefits from the $3.5 billion invested in hazard mitigation was estimated as $14 billion – which brings the total benefits up to $4. Applying CBA to such investments has been a key factor in financing decisions in the U.S. for thousands of flood control and other disaster risk reduction projects since the 1950s.

Source:UN ISDR (2007).Information Note No 3; Costs and Benefits of Disaster Risk Reduction.

Economic Analysis

11. One of the major challenges of promoting disaster mitigation and prevention is to demonstrate that its potential benefits in terms of saved lives and property far exceeds its costs. Cost estimation of disaster risk reduction is relatively straightforward, while the estimation of their benefits is complicated by their probabilistic nature. In the end, the actual level of benefits will be realized depending on the degree of severity of the disaster event occurring over the life of the investment. Although the economic effects cannot be fully ascertained, there are indications of positive economic efficiency with respect to the Project’s mitigation investments. Accordingly, specific analysis undertaken here includes the costs and benefits of measurable strengthening capacities as well as of mitigation investments. Given the data constraints, in many cases extrapolation is used from similar analysis done in India to arrive at the benefit estimates.

12. Given the disaster risks faced by Uttarakhand, the proposed Project is expected to yield both tangible and intangible benefits in long run. Overall, as detailed below, the Project is economically feasible, yielding positive net present values with acceptable indicators and benefit-cost ratios exceeding 1. A key point to note, however, as demonstrated below is that not all interventions are likely to be equal with respect to their costs and benefits, particularly in relation to climate change, non-monetized and distributional considerations. Strategic assessment of costs, benefits and the assumptions underlying estimates is, as a result, essential. As discussed further below, distinctions between in the cost-benefit profiles of strategies may depend heavily on the degree which they rely on soft versus hard resilience strategies and, thus, the vulnerability of projected benefits to critical threshold values. Finally, while financial analysis is often difficult in these types of “public goods” investments, considering the disaster related indirect costs, this Project has the potential to reduce the annual need of external financing for post-disaster reconstruction, and reduce risk to achieving broader economic development and poverty alleviation goals.

13. The recovery and reconstruction framework developed in this Project has two distinct components. The first one is the reconstruction projects at the sectoral level and the second is the risk mitigation and management investments. The sectoral project includes private housing, public building (Panchayati Raj Offices, Block Offices, technical education institutions, District Offices), rural road connectivity.The risk mitigation components are built in all sector level projects as well as in targeted infrastructure development (e.g. an early warning system) in management and mitigation risk and institutional capacity building to enhance resilience to disasters.

14. In the benefit cost analysis, the benefit estimation is carried out in two steps. First, the benefit of sectoral level project components is identified and estimated separately for resilient infrastructure reconstruction, rural roads connectivity. Second, the benefit of risk mitigation from all project

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components is identified and a total avoided damage is estimated. For example, the avoided deaths and injuries from the relocation of new housing construction of higher safety standards is combined with the damage avoided (e.g. building) from the investment in the early warning system.

15. The key results of the economic analysis are presented in Table 15. The detailed the discussion of CBA for each sector is presented in the following sections.

Table 15:Benefit Cost Analysis of Uttarakhand Disaster Recovery and Restoration Project

Project component Time

horizon Project cost Benefit cost ratio

(years) (US$million) discount rate

5% 10%

Resilient Infrastructure Reconstruction 10 31.0 4.1 3.2 Rural Road Connectivity 10 155.0 15.6 12.4

Technical Assistance and Capacity Building in DRM 10 38.0 4.4

Resilient Infrastructure Reconstruction

Housing and Public Buildings

16. Multi hazardresilient houses and up-gradation of public buildings are relevant for the beneficiary households, as they would not only minimize future infrastructural damage costs, but also improve vulnerable households’ ability to secure their belongings during future disasters. Evidence from other states in India suggests that there is a clear benefit to building permanentresilient structures in disaster prone areas. One common way to assess benefits in this case would be compare the cost-benefit of building a permanent structure versus building a disaster prone “kutcha” structure at a lot cheaper rate.

17. The benefit of housing and other buildings up-gradation mainly comes from three sources. These include: (1) avoided mortality and injuries from more disaster resilient structures located in safer areas, (2) the direct welfare benefits to the local residents who lost their homes in the aftermath of the disaster, and (3) economic benefits accruing to local communities through employment creation of housing construction project21.

18. Given the valuation of avoided mortality and injuries is likely much higher than the sum of (2) and (3), the benefit estimation focuses only on (1). The benefits of disaster risk mitigation projects, such as the construction of better housing in less risk prone locations and up-gradation of public buildings, are measured by the expected number of deaths and injuries avoided as a result of the Project.The expected number of deaths due to various types of major disasters in absence of a project is the sum, over the relevant population, of the probability that the disaster occurs times the probability that an individual dies, conditional on the occurrence of the disaster.By reducing the conditional probability that an individual dies, the housing project will save a number of statistical lives. This will be the sum of reductions in risk of death over the relevant population.

19. The Value of a Statistical Life(VSL) is the sum of what individuals would pay for risk reductions that sum to one statistical life (Cropper et al, 2009). The estimation of mortality and injuries is based on existing estimates of a VSL from studies for India: US$150,000 from (Bhattacharyaet al, 2007) and

21The welfare benefit can be estimated using the rental incomes available before the disaster. For the assumed life span of 10 years of all houses built through this project, the total benefit is the annual rental income times the total households to be covered by this project. The employment benefit can be estimated using the local prevailing wages and total number of people employed in the housing construction project.

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US$235,000 (Cropper et al 2009)22.

20. The benefit cost ratio is calculated under certain assumptions. First, a 10-year return period of a major natural disaster is assumed for this region. The types of natural disasters covered include major floods such as that occurred in July 2013, or earthquakes, which are common in Uttarakhand. This implies a 10% chance of disaster occurrences in any one year during the 10 years life span of the housing project of the same intensity. Second, the population in Uttarakhand is assumed to remain more or less constant throughout the 10 years period (i.e.10,116,752 based on 2011 census).

21. The total benefit measured the avoided mortality and injuries over the 10 years life span of the upgraded housing is calculated using the following formulae developed by Smyth et al (2004):

Avoided mortality = ∑ (VSL * Prob (mortality| Prob of disaster))/ (1+d) t.

22. The valuation of avoided injuries is estimated based on the conversion factors suggested by Cropper et al, (2009). Based on the ratio of total costs of injury (by MAIS groups) relative to the cost of a fatality, an MAIS 5 injury is equivalent to 0.71 lives lost and MAIS 4 to 0.22 lives lost. Given no information about injury during the 2013 disaster in Uttarakhand, this component is omitted in the estimation.

23. The total benefit in the form of avoided mortality from a disaster of similar scale of that 2013 over 10 years is between US$103 million using a discount rate of 5% or US$82 million using 10%.Using the projected cost of housing construction (both temporary and permanent) ofUS$25 million, the benefit cost ratio is 4.1 using 5% discount rate and 3.2 using 10% based on a value of US$25,000 VSL (UN, 2009).This ratio goes up to 25 when using US$150,000 of a VSL from Bhattacharyaet al (2009)using a 5% discount rate, and 20 using 10% discount rate.This means for everyone one dollar the investment in better housing located in safer areas, about 20 dollars is generated from avoided deaths and injuries using a 10% discount rate.

24. The estimated benefit cost ratio should be regarded as an underestimate of the Project benefit. The welfare benefit of housing (equivalent of rental incomes) and employment generated from the housing project are not factored in.Also, the majority population who benefit from the housing projects are likely low income and vulnerable population, the poverty and distribution impact of this project provides additional benefit to this Project.

Rural Road Connectivity

25. The benefit of investments to restore ruralroad connectivity (roads and bridges) is likely to cover both the entire state of Uttarakhand, including households and businesses, and the neighbouring states if between-state trade is a significant part of the local economy.Given the data limitations, the benefit estimation focuses only on the first round effect of the Project (i.e. not including the cross-state trade impact as a result of transportation improvement), under the assumption that the Project only restores to the pre-disaster level of GDP for Uttarakhand (US$9.75 billion in 2012).

26. The proposed rural road connectivity investment plan includes both restoration and up-gradation. The life span of these infrastructures is assumed to be 10 years. Under this assumption, the benefit and cost ratio is 15.6 using a 5% discount rate and 12.4 using 10%.This is an understatement of the benefits

22Bhattacharya, Alberini and Cropper (2007) report a VSL for commuters in Delhi, India of $150,000 USD; Using the transfer method by Cropper et al (2009), a VSL of US$235,000 for India is estimated assuming an income elasticity of one (i.e., multiplying by the ratio of Indian to US per capita income in PPP terms).

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as Uttarakhand economy depends on tourism and restoration of roads will spur further tourist arrivals benefiting the local economy.

Technical Assistance and Capacity Building for Disaster Risk Management

27. Early warning infrastructures play a major role in disaster risk reduction. The objective of this component is to strengthen early warning infrastructure in the state including hydro-meteorological services in order to enhance the capabilities of the government entities and others in risk mitigation and response. Further this will lead to establishment of a Decision Support System (DSS) and integration of an integrated hydro-meteorological and early warning system. The benefits of early warning systems, for example, come from the savings in natural disaster-related damages, and they could be either direct or indirect (see figure 4).

28. Usually ‘visible’ physical losses arising out of direct contact with extreme weather events are direct damages. For example, flood and wind damage to buildings, infrastructure, and crops.Indirect damages are the consequences of direct damages such the interruption and disruption of socioeconomic activities such as production losses resulting from flood damage of machinery. From an economic perspective, flood damages could be both tangible and intangible. Tangible impacts include the loss of things that have a monetary (replacement) value (for example, buildings, livestock, infrastructure) and can be assigned a dollar as they are traded in the market place (see table 16). On contrary, intangible impacts include the loss of things that cannot be bought and sold (e.g., lives and injuries, environmental damage).

Table16: Impacts of Disasters: Tangible vs. Intangible23

Disaster

Consequences

Losses Measure

Tangible Intangible

Deaths Loss economically of active individuals

Social and psychological effects on remaining community

Number of People

Injuries Medical treatment needs, temporary loss of economic activity by productive individuals

Social and psychological pain and recovery

Number and injury severity

Physical damage

Replacement and repair cost

Cultural losses Inventory of damaged elements

Emergency operations

Mobilization cost, investment in preparedness capability

Stress and overwork in relief participants

Volume of manpower, man-days employed, equipment and resources expended to relief

Disruption to economy

Value of lost production Opportunities, competitiveness, reputation

Number of working days lost, volume of production lost

Social disruption

Temporary housing, relief, economic production

Psychological, social contacts, cohesion, community morale

Number of displaced persons, homeless

Environmental impact

Clean-up costs, repair cost Consequences of poorer environment, health risks, risk of future disaster

Scale and severity

23Adapted from United Nations Development Programme, 1994; “Vulnerability and Risk Assessment”.2nd Edition.Cambridge Architectural Research Limited. Cambridge. P.27.

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Figure 4: Direct and indirect tangible and intangible impacts of natural disasters24

24AusAID (2005), Tool Two: A Toolkit for Assessing the Costs and Benefits of Disaster Risk Management Measures in the Pacific. Prepared by the University of the South Pacific (USP) and the South Pacific App lied Geoscience Commission (SOPAC) for the Australian Agency for International Development (AusAID).

Total Damages

Tangible Impacts

Impacts concerning goods and services that can be bought and sold in markets

Intangible Impacts

Impacts concerning goods and services for which market values do not exist

Direct Impacts

Impacts caused during actual hazard event e.g. houses destroyed

Indirect Impacts

Flows of goods and services affected by direct damage and disruption after disaster e.g. reduced agricultural productivity lowers income after disaster

Direct Impacts Impacts caused during actual hazardevent e.g. humancasualties, environmental damage

Indirect Impacts

Flows of goods and services affected by direct damage and disruption after disaster e.g. outbreak of cholera caused by poor sanitation after disaster

Macroeconomic impacts

Changes to macroeconomic variables caused by direct and indirect impacts

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29. The risk mitigation investment components covered here include, development of early warning system and capacity building in disaster risk reduction and preparedness.

30. The benefit of the overall risk mitigation investment is the avoided damage cost as a result of these project components. It can be measured as the difference in the damage cost that are directly related to disasters between the baseline scenario (damage cost from a natural disaster without any risk mitigation investment) and a future scenario with the Project and a natural disaster occurrence, everything else being the same.In this analysis, the damage assessment from this 2013 disaster is used as the baseline estimate.

31. The damage cost includes both the direct costs and indirect costs. The direct costsare the valuation of physical assets and human capital that have been damaged or destroyed by the disasters in the absence of risk mitigation.The indirect costs includes loss of production output due to power failure or transportation destruction, or loss of agriculture production due to soil salinity contamination of storm surges, and the indirect health impact on the population. The health impacts, although difficulty to quantify, is often more important than the output losses in the event of a natural disaster.

32. To avoid double counting of the benefits from risk mitigation investments, the benefit is estimated using: (1) the damage assessment in all sectors presented in the Uttarakhand damage assessment report; and (2) the avoided deaths and injuries calculated in this analysis. The benefit cost ratio of the overall mitigation components is about 4.4 using a 5% discount rate.

Additional benefits

33. Two other important benefits should be noted in this analysis despite the difficulties associated with quantifying them. First is the so-called creative destruction effect (Skidmore and Tuya, 2002, Alabab-Bertrand, 1993). In Uttarakhand, where buildings and capital stock are often outdated, the events of disasters such as floods may generate positive economic effect through capital upgrading (e.g. new housing with improved safety standards) and speed up investment embodied with new technology, generating productivity effect.

34. The second benefit is the distributional impact of these projects. It is likely that the benefits of the Project’s reach the poor segment of the population in Uttarakhand disproportionally as they were relocated to better and safe areas. The distributional impact, not analysed here due to time constraints, is likely of a first order importance given the poverty and development objective of public polices and investment of many World Bank financed projects. The differential impact cross socio-economic groups (age, gender and income) should be explicitly quantified wherever feasible to better inform policy-makers of the social impact of the Project.