Albania Disaster Risk Mitigation and Adaptation Project

1
Albania Disaster Risk Mitigation and Adaptation
Project

• World Bank presentation to the Ministry of
  Finance
• Tirana, April 12, 2008

2
AL-DRMAP SEE Disaster Mitigation Issues

• SEE exposed to a variety of natural disasters
• Floods
• Droughts
• Forest Fires
• Earthquake
• Landslides
• Natural disasters have severe impact on fiscal
  stability
• Socio-economic impacts on households and
  businesses

3
AL-DRMAP SEE Disaster Risk Mitigation and
Adaptation Program (SEE-DRMAP)

• Transboundary nature of disasters means that
  countries must coordinate mitigation and response
  actions
• SEE-DRMAP designed to foster regional cooperation
  on disaster risk mitigation and response
• Disaster risk and adaptation framework,
• disaster preparedness,
• disaster risk insurance and hedging instruments,
• risk mitigation and adaptation,
• contingency financing in case of disasters

4
AL-DRMAP Albania Disaster Risk Issues

• Albania is vulnerable to man-made and natural
  disaster floods, earthquakes, droughts, forest
  fires
• Effects on the economy and population are
  exacerbated by lack of disaster preparedness,
  inadequate data collection and sharing, and lack
  of insurance

5
AL-DRMAP Proposed Project

• Objective to strengthen institutional capacities
  to (a) reduce Albanias vulnerability to the
  natural and man-made hazards and (b) limit
  human, economic, and financial losses due to
  these disasters
• Two-phase adjustable program loan (APL)
• Ministry of Interior has the overall project
  implementation responsibilities

6
AL-DRMAP Phase 1 Project Components

• Component 1 Disaster Risk Management and
  Preparedness (US4.89 million Euro 3.16)
• The component objective is to support capacity
  building for emergency response mechanism through
  provision of necessary equipment, and
  strengthening disaster risk mitigation planning
• Strengthening Disaster Risk Mitigation Planning
  and Emergency Management
• Enhancement of Emergency Response Capacity
• Implementing Agency GDCE (MOI)

7
AL-DRMAP Phase 1 Project Components

• Component 2 Strengthening of Hydrometeorological
  Services (US2.09 million Euro 1.35 )
• The component objective is to support disaster
  risk reduction through provision of accurate
  hydrometeorological forecasts and services
  tailored to the needs of disaster risk managers
  in weather-sensitive sectors
• Implementing Agency IEWE in cooperation with
  Synoptic Services and the National Aviation
  Authority

8
AL-DRMAP Phase 1 Project Components

• Component 3 Development of Building Codes
  (US0.36 million Euro 0.23 million)
• The component objective is to reduce risks from
  seismic activities through development of
  improved building codes and mechanisms for
  introduction of improved standards
• develop a national building code
• train engineers in new design standards
• develop a mechanism for licensing of engineers.
• Implementing Agency MOPWTT

9
AL-DRMAP Phase 1 project components

• Component 4 Catastrophe Insurance (US2.65
  million Euro 1.71 million)
• The component objective is provide access to
  private catastrophe risk insurance to households
  and small and medium enterprises (SMEs)
• A one-off equity contribution to the
  shareholders capital of SEE CRIF for Albania to
  join the insurance pool
• Public awareness and information campaigns.
• Implementing Agency MOF

10
SEE Catastrophe Risk Insurance Facility
(CRIF)DRMAP Insurance Component - US2 mm
country equity contribution - US0.5
insurance education campaign and regulatory work

• Will increase low catastrophe insurance
  penetration among homeowners and SMEs in Albania
  by offering affordable high credit quality
  insurance products (1 out of 100 houses is
  insured and almost no coverage for business
  interruption and property damage for SMEs at the
  moment) the program will also enable the
  government to reduce its fiscal risk exposure to
  natural disasters.
• To achieve better diversification CRIF will be
  set up as a regional insurance facility serving
  SEE 10 countries.
• In Albania, insurance policies will be sold
  through domestic insurance companies which will
  receive commissions and access to new clients.
• All risk originated under these insurance
  policies will be reinsured with CRIF.
• CRIF will be established in Switzerland and
  regulated by the Swiss Insurance Regulator. It
  will be capitalized by SEE member countries and
  supported by international donors and global
  reinsurers. World Bank will ensure the highest
  technical quality of its operations and risk
  management program.
• All technical feasibility work (of the order of
  US10 million) will be paid by donors.
• Albanian government will join as a shareholder
  and will have a board seat.
• In 5 years, the government will be given an
  option to sell its stake in CRIF to private
  investors at least at its book value or more.

11
AL-DRMAP Phase 1 Project Components

• Component 5 Project Management (US0.19
  million Euro 0.12 million)
• The component will finance some project
  management costs, such as procurement and
  financial management consultants, monitoring and
  evaluation activities, incremental operating
  costs of managing the project and project
  reporting and audits.
• Implementing Agency MOI

12
AL-DRMAP Project Costs
13
AL-DRMAP Project Financing
14
AL-DRMAP Catastrophe Deferred Drawdown Option
(Cat DDO)
15
AL-DRMAP Phase 1 Results Phase 2 Triggers

• Phase 1 Results
• A Disaster Risk Mitigation Strategy and
  Investment Program formulated and adopted by the
  Government
• Hydrometeorological data is shared among relevant
  national and regional agencies and effectively
  disseminated to Albanian decision-makers and
  regional partners
• New building code developed in accordance with
  European standards and
• Mechanisms for participating in the catastrophic
  risk insurance facility are in place.
• Phase 2 Triggers
• A Disaster Risk Mitigation Strategy and
  Investment Program approved by the Government
• Effective publication of data on public website
  of data gathered with the support of project
  financing, including digitized climate data and
• Government implementation of an institutional
  arrangement, with clearly defined roles and
  responsibilities, that facilitates coordination
  of the three public agencies officially involved
  in weather monitoring tasks.

16
FALEMINDERIT