Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport i Mobility and Transport Connectivity Series Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport Guillermo Diaz Fanas, Jing Xiong, Helen Gall © 2025. The World Bank 1818 H Street NW, Washington, D.C., 20433, USA Telephone: +1-202-473-1000; Internet: www.worldbank.org Internet: https://www.worldbank.org/transport Standard disclaimer This work is a product of the staff of The International Bank of Reconstruction and Development/ World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of Executive Directors of the World Bank or the governments they represent. 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The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport v Table of Contents Acknowledgments.........................................................................................................................................viii 1. Roadmap for Private Sector Participation in Railways Resilience.................................................... 1 1.1. Risk assessment and project pipeline development........................................................................... 2 1.2. Incorporating resilience considerations into PSP projects.............................................................. 15 1.3. Funding and financing for resilient railway projects....................................................................... 28 2. Roadmap for Private Sector Participation in Road Transport Resilience..................................... 33 2.1. Risk assessment and project pipeline development........................................................................ 34 2.2. Incorporating resilience considerations into PSP projects............................................................. 49 2.3. Funding and financing for resilient road projects............................................................................ 65 3. Roadmap for Private Sector Participation in Urban Transport Resilience....................................68 3.1. Risk assessment and project pipeline development........................................................................ 69 3.2. Incorporating resilience consideration in PSP projects................................................................... 80 3.3. Funding and financing for resilient urban transport projects....................................................... 93 References.......................................................................................................................................................99 List of Figures...................................................................................................................................................vi List of Tables....................................................................................................................................................vi List of Boxes.....................................................................................................................................................vii Image Credits................................................................................................................................................ 103 Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport vi List of Figures Figure 1.1. Examples of climate and natural hazards for railways................................................................3 Figure 2.1. Examples of climate and natural hazards for roads.................................................................. 35 Figure 2.2. Roads exposed to high flood risks in Mozambique.......................................................................37 Figure 2.3. Estimated maximum benefits over 35 years and maximum BCRs of adaptation options for identified links in the national-scale road network in Viet Nam....................................... 40 Figure 3.1. Examples of climate and natural hazards for urban transport ...............................................70 Figure 3.2. Flood danger map for Douala............................................................................................................72 List of Tables Table 1.1. Delay costs based on adaptation actions.......................................................................................11 Table 1.2. Cost-benefit analysis for adaptation plans....................................................................................11 Table 1.3. Opportunities for collaboration........................................................................................................ 14 Table 1.4. Legal and regulatory instruments................................................................................................... 17 Table 1.5. Main types of private sector participation models and their potential scope .................... 20 Table 1.6. Indicative risk allocation for resilience considerations............................................................... 21 Table 1.7. Opportunities for collaboration........................................................................................................27 Table 1.8. Opportunities for collaboration....................................................................................................... 32 Table 2.1. Cost summary of initial adaptation investment for building prototype climate resilient roads in Viet Nam................................................................................................................ 39 Table 2.2. High-level cost-benefit analysis for province-scale road networks........................................ 41 Table 2.3. Vulnerable road sections and proposed interventions............................................................... 45 Table 2.4. Opportunities for collaboration....................................................................................................... 48 Table 2.5. Main types of private sector participation models and their potential scope for private partners............................................................................................................................ 52 Table 2.6. Indicative risk allocation for resilience considerations.............................................................. 54 Table 2.7. Opportunities for collaboration....................................................................................................... 64 Table 2.8. Opportunities for collaboration .......................................................................................................67 Table 3.1. Opportunities for collaboration........................................................................................................79 Table 3.2. Overview of PSP models and the potential roles of private sector......................................... 82 Table 3.3. Indicative risk allocation for resilience considerations.............................................................. 85 Table 3.4. Opportunities for collaboration....................................................................................................... 92 Table 3.5. Opportunities for collaboration ...................................................................................................... 98 Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport vii List of Boxes Box 1.1. Collaboration with the Government of Viet Nam in high-level climate and disaster risk analysis............................................................................................................................ 4 Box 1.2. Collaboration with the Government of India to strengthen disaster resilience of railways...............................................................................................................................................6 Box 1.3. Emphasis on resilient railways in climate change policies........................................................... 7 Box 1.4. Network Rail Western Route flooding case study.......................................................................10 Box 1.5. Climate and disaster risk assessment informs resilient railway project in Tanzania ........ 12 Box 1.6. Identification of the relevant PPP models for resilient railway projects................................ 18 Box 1.7. Key questions and illustrative consideration for qualitative VfM assessment....................24 Box 1.8. Sovereign green sukuk issuance by Indonesia with railway-related use of proceeds........ 30 Box 1.9. Green bonds by PPP railway concessionaire................................................................................. 31 Box 2.1. Collaboration with the Government of Mozambique in assessing climate and disaster risks and their impact on roads....................................................................................... 36 Box 2.2. Collaboration with the Government of Viet Nam to conduct high-level climate and disaster risk and adaptation investment analysis for national and province-scale roads.......................................................................................................................... 38 Box 2.3. Development of data resources for climate and disaster risk analysis..................................42 Box 2.4. Developing climate resilient investment plan for roads in Dominica..................................... 45 Box 2.5. The PPP Code of the Philippines identifies the PPP models, sectors, and resilience objective............................................................................................................................... 51 Box 2.6. OPRCs in Mozambique that integrated resilience considerations ..........................................57 Box 2.7. Key questions and illustrative consideration for qualitative VfM assessment.................... 61 Box 3.1. Douala Urban Mobility Project’s flood risk study ........................................................................72 Box 3.2. Resilience actions for BRT project component of Douala Urban Mobility Project .............. 77 Box 3.3. The PPP Code of the Philippines identifies the PPP models, sectors, and resilience objective ............................................................................................................................. 83 Box 3.4. Key questions and illustrative consideration for qualitative VfM assessment................... 89 Box 3.5. Green bond issuance by Mexico City ............................................................................................. 95 Box 3.6. Green bond issuance by a private rail company ......................................................................... 96 Box 3.7. Climate-resilient light rail transit in Costa Rica ..........................................................................97 Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport viii Acknowledgments This report was prepared by a World Bank team led by Guillermo Diaz Fanas and Jing Xiong, composed of Helen Gall, Arturo Ardila Gomez, Eric R. Lancelot, and Martha B. Lawrence, and a consortium between CPCS Transcom Limited and GRID Engineers led by Elan Cusiac-Barr and Rallis Kourkoulis, with significant contributions from Chang-Boong Lee, Clémentine Sallée, Marianna Loli, Hubert Jenny, and Atinuke Adigun. The team would like to thank Daniel Pulido, Mariana C. Silva Zuniga, and Jyoti Bisbey for their pertinent contributions in developing this report. Ammara Shariq, Philippe Neves, Maxence Guillaume, Carlos Bellas Lamas, Julie Anne Farmer, Christopher De Serio, Daniel Alberto Benitez, Gisele Saralegui, John Gregory Graham, Kulwinder Singh Rao, Rakesh Tripathi, Rob Pilkington, Satheesh Kumar Sundararajan, and Yasser Mohamed Ibrahim also provided invaluable support. The team is also grateful for Juan Samos Tie, Jia Li, and William L. Davies for their valuable peer review inputs. The team would like to thank Binyam Reja, Nicolas Peltier, and Jane Jamieson for their support and guidance, and to Faustina Chande who provided excellent administrative support. The team would like to thank Jonathan Davidar for leading the creative direction and editing production of this report, which was edited and designed by RRD GO Creative. The team wishes to acknowledge the generous funding provided for this report by the Public-Private Infrastructure Advisory Facility (PPIAF). About PPIAF PPIAF helps developing-country governments strengthen policy, regulations, and institutions that enable sustainable infrastructure with private-sector participation. As part of these efforts, PPIAF promotes knowledge-transfer by capturing lessons while funding research and tools; builds capacity to scale infrastructure delivery; and assists subnational entities in accessing financing without sovereign guarantees. Donor-supported and housed within the World Bank, PPIAF’s work helps generate hundreds of millions in infrastructure investment. While many initiatives focus on structuring and financing infrastructure projects with private participation, PPIAF sets the stage to make this possible. 1 Roadmap for Private Sector Participation in Railways Resilience Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 2 The railway sector is essential to economic growth and connectivity, offering efficient and sustainable transport solutions. However, growing threats from climate change and natural disasters are placing increasing strain on railway infrastructure. To maintain long-term operational stability, resilience must be embedded into the planning, investment, and management of railway systems. This starts with high-level risk mapping to identify vulnerabilities, followed by assessments of infrastructure exposure and potential economic impacts. These insights guide the development of adaptation strategies and inform policy and investment decisions that prioritize durable, reliable systems. Mobilizing support for resilient railway projects also requires a compelling investment case grounded in measurable targets, cost-benefit analyses, and clearly defined performance indicators. Private sector participation can significantly contribute to this agenda by offering technical expertise, financing, and lifecycle efficiency—especially when resilience is built into project design and contracts from the outset. Selecting the right PSP models and funding mechanisms, including green bonds and concessional finance, is key to making projects financially viable and scalable. This chapter outlines how to align resilience goals with private sector engagement to ensure railway networks remain safe, functional, and future-ready. 1.1. Risk assessment and project pipeline development The railway sector may be exposed to wide-ranging climate and natural hazards depending on the location, size, and characteristics of the network. For instance, long-distance rails that traverse mountainous or hilly terrains may be more prone to landslides and soil subsidence, leading to significant track damage. Urban rails in areas with poor drainage systems and high levels of impervious surfaces may be prone to flash floods that submerge tracks and stations. Figure 1.1 illustrates how various types of climate and natural hazards may impact the railway assets and services. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 3 Figure 1.1. Examples of climate and natural hazards for railways Floodin L ndslid s nd rockf lls Exc ssiv h t • T mpor r loss of • Tr ck f ilur du to • D form tion of tr cks, s rvic bilit du to diff r nti l mov m nt or loss v n bucklin , du to r il inund tion of support t mp r tur lo ds • Tr ck d m ( . ., bucklin , • D m to brid s du to • R duc d tr in sp d w rpin , mis li nm nt) du found tion round l din to d l s to diff r nti l mov m nts mov m nts • Pow r suppl probl ms du induc d b b ll st loss nd • D m to tr cks nd to f ilur of ov rh t d pothol form tion block s du to f llin quipm nt soil/rock R sili nc inv stm nts str n th n infr structur ss ts nd s rvic s inst clim t nd n tur l h rds Drou ht E rthqu k s Riv r/Co st l Erosion • Risk multipli r for rosion • Pot nti l d m to brid s, • Loss of tr ck support l din nd fir risk tunn ls, r t inin structur s to diff r nti l mov m nt • Risk multipli r for fl sh nd tr cks l din to follow d b bucklin , flood du to limin t d op r tion l disruptions w rpin , nd mis li nm nt, v t tion cov r • Risk of tr in d r ilm nt • D m to brid s, culv rts • Equipm nt d t rior tion in • Tr ck nd infr structur nd r t inin structur s trucks/tr ins nd public d m du to diff r nti l tr nsport fl ts mov m nts • Pot nti l pow r out s, ff ctin communic tion s st ms nd tr in op r tions Source: World Bank Note: The examples are illustrative and non-exhaustive. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 4 1.1.1 Conduct high-level climate and disaster risk analysis for railway network Governments should conduct a high-level risk analysis to map the exposure of railway assets to the relevant hazards at levels such as national, state, and provincial levels In addition, the analysis can include network-level i) vulnerability assessment which identifies the potential impact of different hazards on the railway sector, and ii) criticality assessment which addresses which routes and locations are the most critical for ensuring service continuity. Such analysis may serve the following purposes: • Developing the economic case for resilience investments for the whole railway sector. This includes estimates of economic losses from disruptions, asset damage, and other causes if the climate and disaster risks are not addressed at the systemic level. • Supporting project identification and investment planning. The government can use the findings to plan resilience investments at a wider scale and inform preliminary identification of i) specific projects to be delivered to enhance resilience of brownfield assets, and ii) greenfield projects that require climate-proofing. • Development of data resources that enable project-level risk analysis. Another key benefit of the high-level risk analysis is to identify, improve, and consolidate various data sources for assessing climate and disaster risks and their impacts on the railway network. These resources may include geospatial data and global models which can then downscaled to project-level risk analysis at a later stage. The examples in Box 1.1 and Box 1.2 show how climate and disaster risk analysis can support government partners in strengthening the resilience of the railway sector. Box 1.1. Collaboration with the Government of Viet Nam in high-level climate and disaster risk analysis Background The World Bank Group collaborated with the Government of Viet Nam to conduct a study that analyzes critical and vulnerable points of the transport network including the railway network. The study conducted climate and disaster risk analysis at both the national and provincial levels, analyzing hazards as well as key aspects such as vulnerability and criticality. Based on the study: • 20 percent of the transport network is estimated to be most critical in terms of its exposure to future disaster risks. • For the railway sector, the study found that disruptions can potentially result in severe economic losses, with economic losses on the busiest routes ranging from US$2.3 to 2.6 million per day. • Hazard-specific, high-risk locations in Viet Nam’s railway network had been identified. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 5 Box 1.1. Collaboration with the Government of Viet Nam in high-level climate and disaster risk analysis (cont.) As a result of this study, the government has developed a strong economic case for investing in building the resilience of Viet Nam’s transport networks including the railway network. Further, the mapping of high-risk locations can support future analysis and preparation of specific resilience investment projects. Key resilience actions This study supported the government’s efforts in updating its Nationally Determined Contribution (NDCs) and set out its next medium-term public investment plan for 2021- 2025. Viet Nam’s updated National Adaptation Plan (NAP) emphasized this study’s findings, prioritizing the improvement of standards, regulations, and guidelines for climate-resilient railway and transport infrastructure. Another key contribution of the study is the creation of unique datasets and modeling resources including: • First-of-a-kind representations of topologically connected geospatial national-scale railways, roads, inland waterways, and maritime multimodal transport networks with flow assignments. • Detailed agriculture crops and commodity or industry level network flows mapped onto the multimodal transport networks increase understanding of the domestic freight flow patterns. • codebase was developed in Python programming language as an open-source The study’s resource (available at this link). Further, a separate user document on the compilation and creation of underlying data and code is also made public (available at this link). Conclusion The network models were created from geospatial data that needed post-processing to fill gaps in the underlying raw datasets identified from sources including the Ministry of Transport, international organizations, research institutes, and private data providers. Notably, the study made use of global models to develop national data that can be used in the local context for further analysis on the transport systems including the railway networks. This includes deriving flood maps by downscaling global distributed hydrological models to give country scale maps. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 6 Box 1.2. Collaboration with the Government of India to strengthen disaster resilience of railways Background India’s rail network is one of the largest in the world, transporting as many as eight billion passengers annually and 1.1 billion tons of freight. Due to climate change and other factors, the railway network faces the challenges of increasing intensity and frequency of natural hazards. Thus, it is imperative to strengthen the resilience of the rail network. Key resilience actions Dedicated Freight Corridor Corporation of India Limited (DFCCIL), a Government of India enterprise under the Ministry of Railways, collaborated with the World Bank Group to enhance the resilience of its Eastern Dedicated Freight Corridor (EDFC) Project, which was a US$ 2.1 billion program financed by the World Bank. A study was conducted on the natural hazards and how to increase disaster resilience of the Eastern Dedicated Freight Corridor which provided recommendations for appropriate early warning systems and measures for strengthening operational emergency preparedness and weather hazard resilience. Conclusion This supported DFCCIL’s efforts to integrate climate risks in the development of its freight corridors. Further, DFCCIL initiated dialogue with the Indian Meteorological Department for advance sharing of hydrometric information that can help to streamline and improve operations of DFCCIL. 1.1.2 Incorporate railway resilience investments into policies and investment planning As noted by the example in Box 1.1, governments should use the findings of high-level risk mapping to incorporate the policy objective of investing in resilient railways into key policies. These may include: • Nationally Determined Contributions (NDCs) • National Adaptation Plans (NAPs) • Long-term Strategies (LTSs) • Climate change legislations • National transport policies or masterplans • Disaster management policies This enabling action represents a major area of opportunity as the study shows that resilient railways have not been widely addressed in the main climate change policies, despite their high relevance to climate change adaptation, as summarized in Box 1.3. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 7 Box 1.3. Emphasis on resilient railways in climate change policies A 2023 study by the International Union of Railways (UIC) found that only around 25 percent of the Parties to the UNFCCC mention railway and that only 10 percent have specific railway-related targets in NDCs. Where mentioned, railways are typically addressed for climate change mitigation. Railways are rarely mentioned with regards to climate change adaptation and resilience despite being highly vulnerable to extreme climate conditions. Therefore, the UIC calls for increased inclusion of railway resilience targets in the NDCs. • The UIC has identified Viet Nam’s updated NDC (2022) as a good practice. The policy integrated the findings from the joint study with the World Bank Group and GIZ to establish the threat of climate risks on its transport sector, including the railways sector. Particularly, the government identified that increased rainfall could create risks of landslides and flooding for about 20 percent of the total length of the railway network, potentially leading to disruptions that cause economic losses of US$ 2.3-2.6 million per day. • Another good practice highlighted by the UIC is Uganda’s updated NDC (2022). The policy has identified a list of priority adaptation actions for key economic sectors including transport. The list includes building climate-resilient roads, bridges, water, and railway transport infrastructure systems, in which the government targets to build climate-resilient railway roads of 482 km by 2025. To ensure the policy objective is translated into investment planning, the government should integrate resilient railways as a target area within programming documents that set out the government’s upcoming investment priorities, whether through public investment or public-private- partnerships (PPP). Such documents may include the medium-term public investment plans and PPP program. Once resilient railways have been recognized in policies and investment planning framework, governments will have a formal basis to systematically identify and prepare resilient railway projects. 1.1.3 Develop resilience investment case for railway projects Developing a pipeline of investment projects is the next key step to deliver the policy objective of investing in the resilience of railways. Governments are recommended to assess climate and disaster risks, identify adaptation solutions, and establish resilience investment cases for specific projects following the actions proposed in this section. The project-level analysis at this stage can take advantage of any high-level risk analysis as previously discussed, which can provide benchmark and cross-reference for location-specific findings related to hazard, vulnerability, criticality, and economic analysis. In addition, the findings from this project-level analysis should be used to integrate resilience considerations in the PSP projects from design to construction and operation to maintenance. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 8 Checklist for policymakers Set disaster resilience targets and measurable objectives: • Define system-level performance indicators. • Evaluate interdependencies with critical systems (energy, communication, markets, industries). • Consider current and future conditions for both brownfield and greenfield projects. • Prioritize key resilience areas: – Passenger and personnel safety. – All-weather accessibility, especially for remote areas. – Operational reliability through alternative transport modes and contingency plans. Identify and characterize hazards affecting the railway network: • Assess potential hazards, including climate-related risks. • Conduct analysis for current conditions and future projections using climate change models. Assess network vulnerability: • Create an inventory of railway assets (tracks, stations, rolling stock, power supply, maintenance facilities, ICT, level crossings, etc.). • Map hazard exposure and interdependencies within the railway network, communities, and economy. • Identify critical network links and nodes, including choke points and interdependencies that could lead to cascading failures. Appraise physical infrastructure vulnerability: • For greenfield projects, conduct qualitative assessments in the planning phase and refine them in the engineering phase. • For brownfield assets, analyze past disruption data and vulnerabilities. • Rank asset susceptibility based on: – Construction material (e.g., concrete vs. steel bridges). – Residual asset age. – Operational thresholds (e.g., temperature limits for track buckling). – Historical failures due to natural hazards. – Absence of adaptation measures (e.g., inadequate drainage). Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 9 Assess potential impacts and losses on the network: • Evaluate the direct and indirect impacts of each hazard, including: – Infrastructure damage. – Ridership and revenue loss. – Connectivity disruptions. – User safety risks. – Socioeconomic consequences of railway isolation. Develop adaptation strategies: • Identify and evaluate alternative strategies, such as: – Modifying corridors or capacity to match future demand. – Implementing early warning systems for extreme weather events. – Enhancing flood protection (e.g., improved drainage capacity). – Establishing alternative transport links (e.g., bus services during railway disruptions). Conduct an economic cost-benefit analysis of adaptation strategies: • Assess direct adaptation costs (e.g., capital works for structural protection). • Evaluate indirect costs (e.g., network downtime during capital works). • Consider wider economic benefits, including: – Risk reduction during construction, operations, and maintenance. – Socioeconomic advantages (e.g., uninterrupted travel, increased land value, user safety). – Higher residual project value. • Consolidate into decision metrics (e.g., net present value, benefit-cost ratio, payback period). Derive the resilience investment case for informed decision-making: • Use analysis to recommend resilience investments that provide net benefits. • Support project prioritization within funding constraints. • Balance trade-offs, such as: – Upgrading brownfield assets (higher cost, legacy design challenges). – Developing greenfield projects (greater flexibility for new technologies and risk mitigation). Box 1.4. and Box 1.5 demonstrate how resilience investment case can be developed for railway projects. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 10 Box 1.4. Network Rail Western Route flooding case study Background Network Rail Limited (Network Rail) is the owner and infrastructure manager of most of the railway network in the United Kingdom. It is responsible for approximately 20,000 miles of track; 30,000 bridges, tunnels and viaducts; and thousands of signals, level crossings and stations. Network Rail conducted a cost-benefit analysis on its adaptation plans for the Western Route at Cowley Bridge Junction (CBJ) This demonstrates how a resilience investment case can be built, when considering the impact of socio-economic benefit estimates. Key resilience actions Based on Network Rail’s climate risk assessment, the CBJ had severe flooding vulnerabilities which were expected to cause operational disruptions. Using the findings on flood hazard and asset vulnerability, Network Rail identified two adaptation plans with their direct investment cost quantified as follows: • Adaptation Plan 1: Enlarge the flood relief culvert, install slab track, sheet pile wall to protect slab track, with a projected cost of £6.5m. • Adaptation Plan 2: Enlarge the flood relief culvert, install slab track and lift 500mm, sheet pile wall to protect slab track, and lift Cowley Bridge, with a projected cost of £13.4m. To understand the resilience benefits, Network Rail estimated the delay cost associated with each of the adaptation plans which indicate the benefits in terms of avoided delay due to the resilience investments. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 11 Box 1.4. Network Rail Western Route flooding case study (cont.) Table 1.1. Delay costs based on adaptation actions Frequency Delay cost per event Delay cost per year (events per year) (£m 2010) (£m 2010) Do nothing 2025 0.11 4.7 0.50 2050 0.12 12.62 1.46 Adaptation Plan 1 2025 0.01 4.7 0.05 2050 0.01 12.62 0.15 Adaptation Plan 2 2025 0.00 4.7 0.00 2050 0.00 12.62 0.00 Source: RSSB (2016). Finally, a detailed cost-benefit analysis was conducted which considered wider socioeconomic benefits such as user time savings, severance minimization, and reputation. The analysis showed substantial gains resulting from the resilience investments, demonstrating the strong resilience investment case of both adaptation plans. Table 1.2. Cost-benefit analysis for adaptation plans Adaptation Plan 1 Adaptation Plan 2 Present value of benefits (£m 2010) 67.1 74.6 Net present value (£m 2010) 57.7 55.3 Benefit-cost ratio (BCR) 7.1 3.9 Payback period (years) 3.0 6.3 Source: RSSB (2016). Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 12 Box 1.4. Network Rail Western Route flooding case study (cont.) Network Rail eventually implemented the necessary resilience investment which involved the installation of two new flood relief culverts, 70 meters of track, river embankments, and spillways. As a result of the resilience investment, it was estimated that a severe event which may close the railway will now occur only once every ten years instead of once every two years, leading to significantly improved resilience against flooding and broader socioeconomic benefits. Conclusion This case study shows how the resilience investment case can be developed for a brownfield railway infrastructure project. Network Rail conducted a robust climate risk and vulnerability assessment which formed the basis to develop adaptation plans. Importantly, extensive assessment of the economic impacts of these plans were made through cost-benefit analysis that accounted for wider socioeconomic benefits such as user time savings, severance minimization, and reputation. This allowed Network Rail to demonstrate the resilience investment case to influence investment decisions and generate the observed socioeconomic benefits. Box 1.5. Climate and disaster risk assessment informs resilient railway project in Tanzania Background In Tanzania, the flooding of the Kilosa-Gulwe-Igandu railway section leads to railway closure for about three to four months every year. The recurring flooding is mainly due to heavy rainfalls and lack of adequate soil cover upstream of the basin catchment. When heavy rains occur in upstream areas, the high runoff often causes flash floods downstream including at the Kilosa-Gulwe-Igandu railway section. Further, there is a recognition that actions to strengthen the resilience of the railway section may require additional investments beyond the railway infrastructure. In this case, it included the restoration of six flood control reservoirs at the upstream catchment area, which can determine the water levels downstream where the Kilosa-Gulwe-Igandu section is located. Key resilience actions To address these challenges, the Government of Tanzania collaborated with the World Bank Group and other development partners to undertake detailed studies to guide the design of resilience investment projects. The key studies include: • Climate and disaster risk assessment study along the Dar es Salaam-Isaka line to inform the designs of the infrastructure activities, supported by a Japan-funded Quality Infrastructure Investment Partnership World Bank-executed trust fund. • Technical assistance to deepen the climate risks assessment and provide an investment rationale with flexible planning under uncertainties for the implementation of nature- based-solutions and water reservoirs reinforcement to increase the railway’s resilience, supported by the Global Center on Adaptation. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 13 Box 1.5. Climate and disaster risk assessment informs resilient railway project in Tanzania (cont.) • Data collection and digitization of the Tanzania central railway network and catchment area for resilience and operational efficiency, supported by the Korea Green Growth Trust Fund. • Engineering design for the rehabilitation of additional railway sections and lines to climate resilient standards. These studies shall inform the development of resilience investment projects including: • Rehabilitation of the flood-prone section at Kilosa-Gulwe-Igandu (84 km). This section faces periodic flooding and will be rehabilitated by raising the embankment and providing flood protection infrastructure along the railway section. • Rehabilitation of the six existing flood control reservoirs. The project will support the feasibility study and detailed design of flood relief structures (ponds/reservoirs) at the Kinyasungwe catchment area that quantify the flooding (flood modeling) along the Kilosa- Gulwe-Igandu section and propose the design for rehabilitation/restoration for effective flood control of the railway segment. National Irrigation Commission (NIRC) will be responsible for operation and maintenance of the reservoirs and the project has included a legal covenant to ensure a maintenance program is developed and approved by the Ministry of Agriculture (MoA), including a sustainable source of funding for maintenance of rehabilitated/restored reservoirs by December 30, 2026. Conclusion This example shows how climate and disaster risk assessment can support the development of resilience investment projects for the railway sector. A unique element in this example is that the boundary of resilience actions stretches beyond the railway sector and involves partners such as the MOA and NIRC who play crucial roles in managing infrastructure that contributes to flood protection. A robust and comprehensive risk assessment is thus even more critical in such situations where multi-sectoral challenges and complexity need to be holistically addressed. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 14 1.1.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions recommended in Section 1.1.3, as presented in Table 1.3. Table 1.3. Opportunities for collaboration Potential government stakeholders • Ministry of Transport including the rail agency (Lead) • Ministry of Finance • PPP Unit • Ministry of Environment and Climate Change Opportunities for collaboration Expected outcomes Enabling actions Technical assistance: 1. Increased availability and usefulness of climate and disaster data for the railway  onduct high-level climate and disaster 1. C sector risk analysis for railways (and other sectors through a system-of-systems methodology) 2. Enhanced capacity among government at national and subnational levels, which officials to i) screen climate and disaster may include: risks; and ii) identify preliminary concepts for resilient railway projects a. Developing a national railway asset register 3. Enhanced climate change and disaster management policies that address railway- b. Creating climate and disaster datasets specific considerations and modeling resources for the railway sector 4. Enhanced investment planning (both PIM and PSP feasibility) and policy alignment for c. Analyzing criticality and vulnerability of resilient railway projects railway networks d. Estimating (macro)economic losses from unmitigated climate and disaster risks ntegrate railway resilience into climate 2. I change and disaster management policies ntegrate railway resilience into investment 3. I planning Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 15 Project-level actions Technical assistance: 1. Increased number of pipeline railway projects, both greenfield and brownfield, 1. Conduct climate and disaster risk that integrate adaptation strategies and assessment at the project levels for strong resilience investment case railways, potentially in a system-of-systems and/or multisectoral approach 2. Increased volume of resilience investment in the railway sector a. Integrate the risk assessment findings into the design and structuring of PSP 3. Enhanced capacity among government projects officials in developing resilient railway projects 2. Develop and appraise adaptation strategies for railway projects 4. Enhanced institutional assets (e.g. guidelines and terms of reference) for implementing a. Greenfield projects (e.g. embedding and quality control of resilience-focused resilience in railway network and service project preparation activities expansion) b. Brownfield projects (e.g. rehabilitation, upgrades, and enhanced maintenance) 3. Conduct economic cost-benefit analysis that integrates the resilience benefits for railway projects 4. Develop guidelines on the methodology of the above actions for the railway sector 5. Develop sample terms of reference (ToR) for engaging experts to conduct the above actions for the railway sector 1.2. Incorporating resilience considerations into PSP projects 1.2.1 Identify the relevant PSP models for the railway sector The range and applicability of PSP models in a jurisdiction will rest on: i) the country-specific legal and regulatory framework for PSP, and ii) the existing industry structure of the railway sector when it comes to public versus private ownership, market competition, and vertical separation between railway infrastructure ownership and provisions of railway services. Terminologies may differ depending on country specific jurisdictions. Generally, the main PSP models for the railway sector include: • Public-private partnerships for infrastructure and operations. This form of PPP procurement is based on a long-term contractual arrangement between the contracting authority and private partner to deliver both infrastructure and operational services. PPP contracts may include variations of scope and risk transfer for the design, build, finance, operation, and maintenance Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 16 of infrastructure and services such as: Design-Build-Finance-Operate-Maintain (DBFOM) which includes private finance, and Design-Build-Operate-Maintain (DBOM) where the private partner does not finance the project and the public sector assumes financing risks. • Operating concessions. This may involve a contract for integrated train services, where the government would transfer “above the rail” assets (e.g. rolling stock) and the right to operate rail services to a private company for a fixed, long-term period. Franchises are a form of concessions, which typically grant a private operator the right to provide passenger rail services. For freight, some governments contract wagon operators to provide and manage rolling stock through an Equip-Operate-Transfer arrangement (EOT). • PSP under open access regimes. To promote market competition, multiple private operators may be granted rights to provide services on the same railway infrastructure owned by a third party, typically a state-owned entity. • Services agreement. Private operators assume responsibility for operations and maintenance of a part of or even an entire railway. Contracts may vary significantly from where the operators take no financial risk to variations where compensation is at least partly based on performance incentives. • Privatization. Privatization involves private ownership and operations of railway infrastructure and services. Privatization has been used to introduce private investment and management skills to increase investment and efficiency. In some cases, governments may encourage the development of private railway lines to support the exploitation of mineral deposits and other commodities. Governments may rely on various legal and regulatory instruments to govern and establish the basis for entering into PSP projects in the railway sector, as illustrated in Table 1.4. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 17 Table 1.4. Legal and regulatory instruments Legal and regulatory instruments PPP • PPP laws and regulations • Railway sector laws and regulations • PPP contracts between private partners and contracting authorities Operating • PPP laws and regulations concessions • Railway sector laws and regulations • Concession agreements between concessionaires and contracting authorities PSP under Open • Track access law and regulations access • Competition laws • Track access agreements between private partners and public owner Services agreement • Railway sector laws and regulations • Contracts between private partners and contracting authorities Privatization • Railway sector laws and regulations • Privatization agreements between private companies and governments Importantly, a good practice is to explicitly identify resilience as a policy objective within the applicable legal and regulatory instruments. Box 1.6 demonstrates how a PPP regulation identifies the relevant PSP models, the eligibility of railway projects, and the integration of resilience consideration. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 18 Box 1.6. Identification of the relevant PPP models for resilient railway projects The government of the Philippines has published the Implementing Rules and Regulations (IRR) of Republic Act No. 11966, also known as the Public-Private Partnership (PPP) Code of the Philippines in the Manila Bulletin on March 22, 2024, which has become effective on April 6, 2024The IRR has demonstrated two important elements. • Establishing legal and regulatory basis of PPP models for the railway sector The PPP Code provides that the contracting authorities and private partners may enter into PPPs for infrastructure development and services in land transportation systems, including railways, transit-oriented developments, intermodal terminals, park and ride, and related facilities. In addition, the PPP Code also identifies the relevant PPP models that may be used by contracting authorities including Build-Operate-Transfer (BOT), Rehabilitate-Operate- Transfer (ROT), lease agreements, and operations and maintenance (O&M) contracts. As such, the PPP code provides clarity to the private sector about the legal and regulatory basis for structuring PPP projects in the railway sector. • Integration of climate resilience as a policy objective The PPP Code formally identified climate resilience as a consideration across the relevant sections that govern PPP project definition, preparation, and approval. Section 2. Declaration of Policy: “The State shall also ensure the integration of climate resilience, sustainability, and gender and development policies and programs in the planning, design, and implementation of PPP Projects.” Section 5. Infrastructure or Development Projects and Services: “The Implementing Agency and the Private Partner may enter into a PPP for, among others: (cc) Climate change adaptation… and disaster risk reduction and management infrastructure.” Section 18. Guiding Principles in Developing PPP Projects: “In developing PPP Projects, the following shall be considered, among others: (e) Climate resilience and sustainability.” Governments should review the applicable laws and regulations that govern PSP in the railway sector to identify the relevant models. At the end of this review, the governments should have identified which types of PSP models are at their disposal, which would allow them to take the next steps. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 19 1.2.2 Identify general entry points for resilience in the relevant railway PSP models PSP projects in the railway sector can have a high level of variation in aspects such as project scope, risk allocation, and performance standards. Table 1.5 provides an overview of the potential scope for the main types of PSP models in the railway sector which may involve various combinations of project components. Notwithstanding the variation, it is possible to characterize the general entry points for resilience consideration for each PSP model. This can allow the governments to identify on a preliminary basis the potential actions at the project level to structure PSP that maximizes resilience benefits for resilient railway projects. Table 1.6 provides an illustrative allocation in the main PSP models for railways with respect to the following key entry points for resilience consideration. • Site selection. Site or corridor selection for the railway network, including stations and ancillary facilities such as train depots, should seek to avoid climate and disaster hazards to the extent possible based on the best available data and projections. • Design. The design for the railway infrastructure should integrate resilience standards with the necessary measures such as flood risk management, heat and cold resistance, and sustainable materials based on robust risk assessment and resilience planning. • Construction. The railway infrastructure should be developed according to the pre-determined resilient design, passing the necessary inspection, testing, quality assurance, and safety certification to confirm that all resilient measures are in place and operational. • Fitness for purpose of rolling stock. The rolling stock procured should meet the resilience standards for aspects such as emergency preparedness (e.g. backup power supplies, communication systems, and fire suppression), climate adaptation measures (e.g. improved cooling systems or insulation to address extreme temperatures), and robust design (e.g. reinforced structures). • Service and operational continuity. The operations of railway services should integrate good practices such as i) advanced monitoring and information systems that alert operators against extreme events, update passengers on service disruptions, track the conditions of railway infrastructure, and provide adaptive railway traffic control; ii) business continuity plans that outline procedures during and after disruptions; iii) back-up plans such as bus services as replacement during temporary railway disruption. • Maintenance cost and standards. The maintenance of railway infrastructure should optimize the lifecycle costs (e.g. enhancing maintenance procedures to minimize rehabilitation costs and maximize asset value after project completion) through measures such as preventive maintenance which addresses potential issues and reduces long-term costs, predictive analytics to forecast maintenance needs using sensor data, and regular training for maintenance staff on the latest techniques. • Emergency preparedness, response, and recovery. The railway operators should institute the necessary planning and soft measures to enhance resilience against emergencies such as conducting drills and training for staff, coordination protocol with local emergency services, emergency equipment within trains and stations, and public communication system to facilitate evacuation. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 20 • Insurance for extreme events. The railway operators and owners should obtain sufficient insurance coverage against the significant climate and disaster risks to provide financial protection and facilitate service recovery after extreme events. Please note that these key entry points and their descriptions are indicative and may not be exhaustive. Table 1.5. Main types of private sector participation models and their potential scope Project components Public-private Operating PSP under Services partnerships (e.g. concessions Open access agreement DBFOM, DBOM) (e.g. concessions, (e.g. wagon (e.g. service franchise, EOT) operators) management contracts and outsourcing) Construction of Yes, for DBFOM No No No infrastructure and DBOM Rehabilitation Potentially, scope Potentially, scope No No and upgrading of may vary by may vary by infrastructure contract contract Procurement of Yes, for DBFOM Potentially, scope No No electromechanical and DBOM may vary by and other equipment contract Procurement of Yes, scope may Yes, scope may Yes, scope No rolling stock vary by contract vary by contract may vary by contract Operations and Yes Yes Yes Yes maintenance Note: DBFOM (Design-Build-Finance-Operate-Maintain), DBOM (Design-Build-Operate-Maintain), EOT (Equip-Operate-Transfer). Privatization is another type of PSP model which involves private ownership of railway infrastructure and services. Please refer to Appendix C for more information. Source: Authors’ adaptation based on Pulido, Darido, Munoz-Raskin, Moody. (2018). The Urban Rail Development Handbook; WBG. (2017). Railway Reform: A Toolkit for Improving Rail Sector Performance. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 21 Table 1.6. Indicative risk allocation for resilience considerations Indicative risk allocation Key entry Public-private Operating Open access Services points partnerships concessions agreement Site selection Shared. Both Public. Private Public. Private Public. Private contracting partners are partners have no partners have no authority and typically granted influence over site influence over site private partners operational rights selection of the selection of the should ensure to existing railway railway network railway network avoidance of network and have climate and no influence over disaster hazards to site selection the extent possible (if the PPP involves greenfield projects) Design Private. Private Private. Private Public. Private Public. Private partners should partners should partners have partners have ensure the design ensure resilient no influence over no influence over is resilient to design (if the the design of the the design of the identified hazards concession involves railway network railway network (if the PPP involves track upgrading infrastructure and rehabilitation) development) Construction Private. Private Private. Private Public. Private Public. Private partners should partners should partners have partners have ensure the ensure any no influence over no influence over civil works civil works for construction of the construction of the deliver railway upgrading comply railway network railway network infrastructure as with the resilient per resilient design design (if it (if the PPP involves involves track construction) upgrading) Fitness for Private. Private Private. Private Private. Private Public. Private purpose of partners should partners should partners should partners may not rolling stock ensure the ensure that rolling ensure the be involved in the rolling stock stock procurement rolling stock procurement of procured meets meets the procured meets rolling stock the resilience resilience the resilience standards (if standards (if the standards the PPP involves concession involves purchase of rolling their replacement stock) or addition) Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 22 Service and Shared. Private Shared. Private Shared. Private Shared. Private operational partners should partners should partners should partners should continuity ensure service ensure service ensure service ensure service continuity up continuity up continuity up continuity up to pre-defined to pre-defined to pre-defined to pre-defined performance performance performance performance standards standards standards, but standards, but (e.g. specified (e.g. specified be excused for be excused for intensities of intensities of disruptions due disruptions due extreme events) extreme events) to infrastructure to infrastructure performance issues performance issues attributable to the attributable to the public owners public owners Maintenance Private. Private Private. Private Private. Private Private. Private cost and partners should partners should partners should partners should standards implement implement implement implement maintenance maintenance maintenance maintenance protocols that protocols that protocols that protocols that ensure adequate ensure adequate ensure adequate ensure adequate performance, asset performance, asset performance, asset performance, asset quality, and cost- quality, and cost- quality, and cost- quality, and cost- effectiveness effectiveness effectiveness effectiveness Emergency Private. Private Private. Private Shared. Private Shared. Private preparedness, partners should partners should partners should partners should response, and ensure emergency ensure emergency ensure emergency ensure emergency recovery preparedness preparedness preparedness of preparedness of and activate any and activate any their operations their operations contingency plans contingency plans and support and support contingency plans contingency plans by public owners by public owners Insurance Private. Insurance Private. Insurance Shared. Private Shared. Public for extreme coverage should coverage should owners and private owners and private events be required where be required where partners self- partners self- available and cost- available and cost- insure or purchase insure or purchase effective effective insurance coverage insurance coverage for respective risk for respective risk exposure exposure Note: This risk allocation is indicative; Specific projects require allocation based on project context and negotiations with the private sector. Private Public Shared Source: Authors Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 23 1.2.3 Assess the suitability of PSP model for specific projects The decision on the optimal delivery approach for a resilient railway project – whether as a public investment project or PPP project – may be driven largely by the same determinants that shape the decision for delivering a typical railway project. • Existing industry structure is a key factor, as the railway sector in a country may involve varying degree of i) public versus private ownership, ii) market competition, and iii) vertical separation between railway infrastructure ownership and provisions of railway services. Such sector- level conditions can affect the availability of PSP opportunities, whether the railway sector is considered attractive, and the perceived risk level by the private sector. • Other key factors include value for money (VfM), financial feasibility, and the alignment with the governments’ policy objectives for the specific projects. Climate and disaster resilience consideration should be viewed as a relevant concern in PSP suitability assessment for the railway sector, with the caveat that a complete PSP suitability assessment must holistically consider other key factors as previously noted. In this regard, a VfM assessment represents an essential tool to assess whether the PSP delivery model will achieve greater value to the public compared to a traditional public sector delivery model. VfM compares the estimated total project costs of delivering public infrastructure using PSP relative to the traditional delivery model.1 As part of the public investment management (PIM) process, all projects generally should be subject to the same upstream processes up to and including the project appraisal, during which the VfM assessment should take place to determine the procurement modality (whether a project should continue preparation as a PSP or public investment project).2 It is important to recognize that integrating climate and disaster consideration in PSP projects represents a relatively nascent field of practice globally. As such, the lack of data benchmarks and reference transactions is a major barrier in conducting a detailed quantitative analysis of VfM in aspects such as costs, delay, and user benefits. There are two approaches to address this barrier. First, the governments should at least conduct qualitative VfM assessment, addressing the key questions as illustrated in Box 1.7.  1 Quantitative VfM analysis requires access to reliable data for the risk analysis and benchmark data for the public sector comparator and traditional procurement. The public authorities may also lack the resources or experience in undertaking this analysis. Depending on the policy and legal framework, the requirement for conducting a VfM exercise may be exempted and/or a qualitative VfM exercise is allowed. This should be coupled with a robust economic analysis to demonstrate the business case of the project, along with the expected technical, commercial, financial, legal, and fiscal feasibility assessments. 2 Depending on the jurisdiction’s legal framework, the VfM assessment can be undertaken again once the preferred bidder is selected  to confirm the value for money derived from the transaction.. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 24 Box 1.7. Key questions and illustrative consideration for qualitative VfM assessment Is the private partner better able to manage any climate or disaster risks? • For illustration, consider a greenfield railway project to develop train stations facing earthquake and flooding risks. – The private partner would be involved in all phases of project development from site or corridor selection, design, construction to operations, thus providing extensive opportunities and control to integrate resilience consideration. – There is good availability of affordable insurance that protects the stations and adjacent buildings against the identified risks of earthquake and flooding. – In this case, the contracting authority can structure the project as an availability- payment Design-Build-Finance-Operate-Maintain (DBFOM) contract, transferring these specific risks to the private partner, which can then be incentivized to both embed resilient design for the stations and buildings and purchase insurance coverage. • Whenever possible, the private partner should be required to manage the climate or disaster risks by: i) proactively incorporating adaptation strategies, and/or ii) purchasing insurance coverage. • But if such actions are not possible or too costly, there is limited or no scope to share climate and disaster risks with the private partners. • For instance, this can be a challenge in a vertically separated structure where the existing infrastructure built by a public owner lacks the basic resilient design and measures. In this case, if PSP models such as open access operators and service agreements are used, the private partners may have limited ability to share and manage climate and disaster risks. Such PSP models may still be used for other reasons, but the private partners’ limitations in managing climate and disaster risks should be noted and addressed. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 25 Box 1.7. Key questions and illustrative consideration for qualitative VfM assessment (cont.) Is a long-term contract viable and favorable to both parties in view of climate change- induced uncertainties? • Climate change can introduce significant uncertainties to the costs of operation, maintenance, and adaptive capital works in railway projects. This may necessitate flexibility to initiate changes to the PSP contracts, otherwise, the contractual rigidity may hinder effective resilience actions. • If it is too challenging to build in PSP contract clauses that allow flexibility and/or there is limited capacity to implement them, entering into a long-term PSP contract may not be suitable. • For illustration, consider a potential vertically integrated greenfield railway project. – The contracting authority is considering tendering the country’s first Build-Operate- Transfer (BOT) contract for developing, operating, and maintaining a new freight rail network between two growing cities previously not connected by rail. – A climate risk assessment indicates significant flooding risks which require gradual adaptive capital works and adjustments to maintenance requirements over its project life. – Since this is the first BOT railway project in the country, the contracting authority has very limited experience in both designing and implementing complex contractual requirements. • In this case, the contracting authority may consider unbundling the project components and only use PSP on a more limited basis, for instance a PPP for acquiring, financing, and maintaining rolling stock, while using traditional public procurement for other project components and implementing the adaptation strategies. Is it possible to define clear resilience-focused performance requirements in contracts and monitor them during project implementation? • To add resilience-focused performance requirements in PSP contracts, the private sector in the railway sector must have the risk appetite and capacity to implement those requirements. • Where there is low risk appetite and/or capacity in the private sector in this regard, the potential in using the performance-based mechanism of PSP contracts to deliver adaptation strategies would be more limited. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 26 Second, the governments should review its PSP projects in the railway sector to collect data that can enable quantitative VfM assessment in the future. For instance: – Comparison of bid submissions and awarded contracts for PSP versus traditional public procurement on the prices for comparable resilience specifications. – Review of the track record of projects procured under a PSP model versus those under traditional public procurement; key comparatives measures include probability and cost of overruns, probability and cost of delays, project delivery timeliness, and outcomes in managing climate and disaster risks. This will provide valuable quantitative benchmarks to help the governments refine their assumptions and estimates in future quantitative VfM assessments. Incorporate resilience-focused performance requirements and KPIs Performance requirements are highly specific to a railway project and their development should consider the project design, feedback from market sounding, and experience in the country with similar contracts. To integrate resilience consideration into PSP contracts, the governments are recommended to address the specific aspects when developing performance requirements for a railway project. The Disaster and Climate Resilient Transport Guidance Note provides examples specific to this sector. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 27 1.2.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions in Table 1.7. Table 1.7. Opportunities for collaboration Potential government stakeholders • Ministry of Transport including the rail agency (Lead) • Ministry of Finance • PPP Unit Opportunities for collaboration Expected outcomes Enabling actions Technical assistance: 1. Enhanced capacity among government officials to assess PSP suitability in general 1. Develop a strategic action plan outlining the and with respect to resilience consideration relevant PSP models and their respective for railways entry points for climate and disaster resilience in the railway sector 2. Enhanced PSP project preparation approach among government officials which 2. Develop guidelines on addressing resilience addresses the key entry points for resilience consideration in the PSP suitability consideration for railways assessment for the railway sector 3. Capacity building on PSP suitability assessment and integrating resilience consideration for the rail agency and the PSP approving authorities Project-level actions Technical assistance: 1. Increased number of pipeline railway projects, both greenfield and brownfield, 1. Develop sample terms of reference (ToR) for that go through robust PSP suitability engaging transaction advisors to conduct assessment including for resilience feasibility study which includes a robust PSP considerations suitability assessment including addressing resilience consideration for railways 2. Increased volume of investment in resilient railway projects delivered through PSP 2. Develop guidelines on how to structure resilience-focused performance 3. Enhanced capacity among government requirements and KPIs for railways based on officials in developing resilience-focused risk assessments performance requirements and KPIs for PSP projects for railways 3. Implement pilot resilient railway projects involving PSP which include 4. Enhanced institutional assets (e.g. guidelines PSP suitability assessment that covers and terms of reference) for implementing resilience consideration, resilience-focused and quality control of resilience-focused performance requirements and KPIs project preparation activities Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 28 1.3. Funding and financing for resilient railway projects 1.3.1 Address funding need through project-level resources A funding gap arises when the revenue that can be generated by a specific railway project involving PSP falls short of the total investment, operational and maintenance costs of the project. Investing in the resilience of a railway project would in many cases increase upfront costs and maintenance costs, thereby widening the funding gap, even though the investment can lead to lower total lifecycle costs compared to a baseline scenario without resilience measures. The governments should assess the possibility of recovering the additional costs of resilience investments by incorporating a tariff component within the user tariffs, noting that users’ willingness and ability to pay should be carefully studied and considered. The tariff components can be split into: • Base facility charge: Covers capital costs, operating costs, debt repayment and returns to equity. • Resilience investment charge: Covers the additional costs associated with resilience investments. In general, resilience investment charge can be levied when the willingness and ability to pay of users are higher than the regulated prices (if any) set by the governments, whereby such prices can be adjusted upward, without breaching the estimated willingness and ability to pay. It is important to note that the implementation of resilience investment charges in the transport sector may require the governments to address the potential challenges such as political sensitivity, difficulty in quantifying and communicating resilience benefits, equity and affordability concern, and the lack of legal and regulatory frameworks. When the resilience investment charges are not feasible or can only recover part of the costs, governments may provide viability gap funding to close the funding gap. This, however, needs to be applied with caution and be reserved for cases where all other funding instruments have been proven inadequate, otherwise there is a risk that private partners may implicitly pass a large portion of resilience investment cost to the contracting authorities through the viability gap funding. Hence, it is advisable that in case the economic analysis demonstrates an actual benefit of resilience investments (in the form of reduced operational losses for repairs and maintenance), this benefit is factored in first, and that the funding support is provided in the form of a loan that the private partner will have to repay, where possible. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 29 1.3.2 Deploy public funding support to address project-level funding gaps Beyond seeking to generate funding through user charges, governments would need to deploy public funding support such as viability gap funding to increase the bankability of resilient railway projects with un-funded investment needs so that PSP can be mobilized. In this regard, the governments should develop a funding strategy to cover the additional funding needs of resilient railway projects for the following purposes. • Project preparation. This concerns the additional costs for climate-related project preparation activities, including climate risk and vulnerability assessment, feasibility studies including adaptation solutions, and integrating resilience considerations in procurement and contracting. • Project investment. As previously discussed, resilient railway projects often need additional investments upfront and during the operational period, which increase the project investment costs. • Dealing with contingencies. Contingency funding is important for addressing residual climate and disaster emergencies. In practice, it is neither feasible nor cost-effective to over-specify and over-invest in resilience measures that aim to prevent all identified climate and disaster risks. Therefore, making available contingency funding is key to enable timely recovery from the unmitigated impacts of any extreme events. 1.3.3 Explore using innovative financial instruments Innovative financial instruments can facilitate and improve the financing outcomes of resilient railway projects that have been properly prepared to ensure commercial and financial feasibility. Use-of-proceed instruments, such as green and sustainability bonds, can be used to raise financing for railway projects that contribute to climate change mitigation and adaptation. These instruments can help the issuers (e.g. sovereign governments and railway project companies) to demonstrate their commitment to climate actions. This may potentially enable the issuers to reach a broader investor base and achieve more favorable costs of capital in some cases. The ability of green instruments to generate more favorable costs of capital may vary by issuance and remain an evolving subject as the thematic bond market continues to develop. For instance, sovereign and municipal governments may issue sovereign or sub-sovereign green bonds to raise public debts, and then use the proceeds in a blended finance approach to support the project companies of resilient railway projects with PSP. In green bonds, the sovereign and municipal governments would have to ensure the proceeds are only used for the green investment projects (e.g. resilience investments for railways). The feasibility of doing so may depend on a country’s public financial management framework that governs whether these entities have the legal ability to borrow, and meet the technical requirements for green bond issuance (e.g. ring-fencing of proceeds). Box 1.10 provides an example of green issuances by a sovereign government where the use of proceeds supported railway projects by state-owned railway companies. While the project delivery approach may be different under a PSP, there is similarly significant potential for governments to use green issuances to finance resilient railway projects involving PSP. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 30 Box 1.8. Sovereign green sukuk issuance by Indonesia with railway- related use of proceeds To support Indonesia’s commitment in climate actions, the Indonesian government has issued sovereign Green Sukuk, an innovative financial instrument guided by the Green Bond and Green Sukuk Framework. Sukuk is an interest-free bond that generates returns to investors without infringing the principles of shari’ah (Islamic law) which prohibits the payment of interest. It is a shari’ah-compliant security backed by a specific pool of underlying assets. The proceeds of a green sukuk can only be used to fund environmentally- friendly projects. The issuances included: • 2018: Indonesia global green sukuk amount of USD 1,25 billion with a tenor of 5 years; • 2019: green Sukuk amount of USD 750 million with a tenor of 5,5 years; • 2020: green Sukuk amount of USD 750 million with a tenor of 5 years; and • 2021: green Sukuk global amount of USD 750 million with a tenor of 30 years (the first green Sukuk in the world with a length tenor of 30 years). The 2020 Green Sukuk supported the financing of the double track line in South Line Java Railways Network upgrade. The multi-year project aims to upgrade from single to double track connecting Cirebon City in West Java Province to Jombang Regency in East Java Province. The government continues to improve the railway transport to facilitate a shift from the usage of private modes of transportation (e.g. cars and motorcycles) to public railways transport, providing both socio-economic and climate benefits. • The Greater Jakarta Commuter Line is expected to reduce GHG emission by 172,001 tCO2e (2020), 557,522 tCO2e (2019), and 564,345 tCO2e (2018). • The South Java Double Track line (activated in 2020) is expected to reduce GHG emission by 121,850 tCO2e, increase passenger km by 1.3 times (or 2,547,965,852 passengers are expected to shift from bus/ private car/ motorcycle) and reduce travel time by 30 minutes on average compared to the existing road transport modes. Railway companies represent another group of potential issuers which may use green issuances to raise financing for supporting resilient railway projects. These can include companies tasked to undertake responsibilities such as i) development and management of railway infrastructure; ii) procurement of rolling stock; and/or iii) the operation of a railway system. Depending on the structure of a country’s railway sector, railway companies may be state-owned or owned by a private partner. For example: • State-owned railway company. In 2021, Georgia Railway issued a US$500 million green bond on the London Stock Exchange for refinancing, which supported the modernization of the railway network and various enhancements of railway infrastructure. This included measures such as capacity expansion, safety improvements, more robust technology to reduce deterioration of tracks and wheels, which may contribute to the resilience of the railway network. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 31 In 2022, the Moroccan National Railway Company (ONCF) issued green bonds to refinance existing debt taken on to complete the financing of a new electrified high-speed rail line in Morocco. This attracted EUR19.2 million of investment from the European Bank for Reconstruction and Development, with the remaining investors expected to include local institutional investors and mutual funds, therefore diversifying sources of financing. • Private rail operator. Via Mobilidade issued green bonds worth USD480 million to support eligible activities including investment projects in the ‘Clean Transport’ category as aligned with Climate Bonds Initiative’s Taxonomy and the European Union’s Sustainable Finance Taxonomy. Box 1.9. Green bonds by PPP railway concessionaire The International Finance Corporation (IFC) structured a PPP transaction in Brazil in which Lines 8 and 9 of Sao Paulo Metropolitan Trains were transferred to the private sector. The transaction involves the concession of passenger transport services for the operation, maintenance, upgrade of services and stations along these two lines, and the supply of rolling stocks and signaling systems. The successful bidders were Via Mobilidade CCR and Grupo Ruas, which will hold the concession for 30 years. It is estimated that they will inject BRL3.2 billion (US$650 million) in private capital expenditures for upgrading the train system. Further, the company has been adopting measures to reinforce the safety of its employees and train users, through preventive maintenance and the implementation of a better communication system, which may make the train system more resilient. Sustainability-linked instruments, such as sustainability-linked loans and bonds, represent another innovative approach in that issuers explicitly commit to future improvements in sustainability outcomes with a predefined timeline. When the set targets are met, the issuers may benefit from a reduction in interest payment. Thus, these instruments can provide financial incentives for positive sustainability outcomes, including resilience, besides promoting good practices such as target setting and monitoring. Railway companies and those providing related services may also issue sustainability-linked loans or bonds. Currently, in the market of sustainability-linked instruments issued by private companies, climate change mitigation-related objectives, particularly emissions reduction, are the main focus of the targets defined in most transactions. For instance, in 2022, Knorr-Bremse AG, a global leader in rail braking systems, issued its sustainability-linked bond worth EUR 700 million, with an annual coupon rate of 3.25 percent. The coupon rate is also linked to the achievement of a specific sustainability target by the company, as defined within its Sustainability-Linked Bond Framework. The sustainability objective is to achieve a Scope 3 emissions reduction target, which focuses on the company’s value chain. Although the market is relatively nascent, there is a significant potential for sustainability- linked instruments to incorporate targets related to climate change adaptation and resilience. Such instruments can be used to incentivize railway companies in undertaking robust resilience investments. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 32 Access international concessional climate finance Railways as a low-carbon transport mode may qualify for concessional climate finance on both climate change mitigation and adaptation rationale. Governments should explore collaboration with multilateral development banks (MDBs), bilateral development finance institutions (DFIs), and concessional finance facilities (for example, Green Climate Fund, Global Environment Facility, and Adaptation Fund) to access concessional climate finance for promoting PSP in resilient railway projects. Particularly, blended finance instruments such as concessional loans and guarantees can help improve the risk-return profile of resilient railway projects to mobilize additional private investment. 1.3.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions recommended in Section 1.3, as presented in Table 1.8. Table 1.8. Opportunities for collaboration Potential government stakeholders • Ministry of Transport including the rail agency (Lead) • Ministry of Finance including PPP Center • Capital market authorities Opportunities for collaboration Expected outcomes Funding Technical assistance: 1. Increased number of pipeline resilient railway projects that have developed 1. Conduct funding and financial structuring sustainable funding and financing structure for resilient railway projects to mobilize PSP 2. Increased volume of green bond issuance 2. Conduct feasibility studies that include by resilient railway projects and railway analysis on willingness and ability to pay for companies involved in such projects resilient railway projects 3. Increased volume of concessional financing 3. Advise on the issuance of green bonds by to resilient railway projects and railway entities such as sovereign governments and companies involved in such projects railway companies 4. Increased volume of private investment Financial support: mobilized for resilient railway projects 4. Provide concessional financing to governments to invest in resilient railway projects 5. Provide concessional financing to railway companies involved in PSP for resilience investments 2 Roadmap for Private Sector Participation in Road Transport Resilience Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 34 Road networks are vital to economic activity, yet they are increasingly exposed to risks from climate change and natural disasters that can compromise their reliability and safety. Strengthening the resilience of these networks is essential for maintaining connectivity, minimizing economic disruption, and protecting lives. This requires a proactive approach that integrates climate and disaster risk assessments, vulnerability mapping, and adaptation planning into both policy frameworks and infrastructure investment strategies. Private sector participation (PSP) can accelerate this transformation by contributing capital, technical expertise, and operational efficiency, particularly when resilience considerations are embedded from the outset. To realize this potential, governments must develop a robust pipeline of resilient road projects, identify appropriate PSP models, and incorporate performance-based requirements that align with long-term sustainability goals. Tools such as output- and performance-based road contracts (OPRCs) can help incentivize resilience throughout the project lifecycle. At the same time, bridging funding gaps through public resources, innovative financing instruments, and international concessional finance is critical to making projects bankable and scalable. This chapter outlines the steps required to embed resilience in road infrastructure development and unlock the full value of private sector engagement. 2.1. Risk assessment and project pipeline development The road sector may face wide-ranging challenges in managing climate and disaster risks, depending on the location, size, and characteristics of the roads. For instance, expressways may serve high- speed traffic which increases the risk of extreme climate events turning into safety hazards. Urban roads located in areas with high infrastructure density may be affected by failures of adjacent infrastructure systems, such as poor city drainage leading to flooding of urban roads. Rural roads may be harder to maintain due to their remote locations, making them more vulnerable to damage from extreme events. Figure 2.1 illustrates how various types of climate and natural hazards may impact road assets and services: Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 35 Figure 2.1. Examples of climate and natural hazards for roads Floodin L ndslid s nd rockf lls Exc ssiv h t • T mpor r disruption of • Cr cks, hol s, coll ps s of • Asph lt nd p v m nt tr ffic du to inund tion ro dw s, brid l m nts, d t rior tion ff ctin • D m to ro d surf c nd r t inin s st ms v hicl sp d nd tir lif tim du to rosion • Imp ct f ilur of structur s • Incr s d risk of pow r • Loss of support/coll ps nd si n out s du to fir of ro dw s du to • Block of ro ds du to mb nkm nt f ilur . f ll n soil/rock m ss s • P rti l/tot l f ilur of r t inin structur s l din to ro dw mov m nt R sili nc inv stm nts str n th n infr structur ss ts nd s rvic s inst clim t nd n tur l h rds Drou ht E rthqu k s Riv r/Co st l Erosion • Risk multipli r for rosion • D m to brid s, tunn ls, • Gr du l d t rior tion nd fir risk r t inin structur s, nd of ro dw s • Risk multipli r for fl sh ro dw s l din to p rti l/ • Diff r nti l s ttl m nts, flood du to limin t d tot l op r tion l disruptions l din to ro d v t tion cov r • Pow r out s du to th cr cks, pothol s, nd • Asph lt d t rior tion in f ilur of pow r lin s structur distr ss ro ds nd quipm nt ff ctin li htin nd • D st bili tion of structur l d t rior tion in trucks/tr ins communic tion s st ms compon nts l din to nd public tr nsport fl ts p rti l or tot l coll ps of brid s, culv rts nd r t inin structur s Source: World Bank Note: The examples are illustrative and non-exhaustive. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 36 2.1.1 Conduct high-level climate and disaster risk analysis for road network To better understand climate and disaster risks, governments should conduct a high-level risk analysis to map the exposure of road assets to the relevant hazards at levels such as national, state, and municipal levels. The analysis at this stage is “high-level” in that it analyzes the risks at national and/or subnational levels, in contrast to project-level analysis to be discussed in the next section. In addition, the analysis can include network-level i) vulnerability assessment which identifies the potential impact of different hazards on the road sector; ii) criticality assessment which addresses which routes and locations are the most critical for ensuring service continuity; and iii) economic assessment which analyzes the economic impact of extreme climate and disaster events on roads and stakeholders. Such analysis may serve the following purposes: • Developing the economic case for resilience investments for the road sector. This includes estimates of economic losses from disruptions, asset damage, and other causes if the climate and disaster risks are not addressed at the systemic level. • Supporting policy and investment planning. The government can use the findings to inform policies on climate change and the transport sector and incorporate resilient roads as a priority in investment planning. This stage also provides an opportunity to adopt a system-of-systems methodology to analyze the road sector alongside other modes (or individual transport systems) such as railway and inland waterways as a collective multi-modal system at the national and sub-national levels. Box 2.1 and 2.2 show how climate and disaster risk analysis can support government partners in strengthening the resilience of the road sector. Box 2.1. Collaboration with the Government of Mozambique in assessing climate and disaster risks and their impact on roads National climate and disaster risk assessment The World Bank Group collaborates extensively with the Government of Mozambique to address the impacts of climate change and natural disasters. This includes a national climate and disaster risk assessment which determined the extent of the country’s economic vulnerability to climate variability, establishing the imperative for incorporating resilience as a policy objective into national economic planning and development strategies. The study examined the exposure of the key sectors to the climate and disaster risks: • Infrastructure, which focused on the network of roads and railways. • Communities, which covered the general population and households. • Agricultural sector, which involved the production of maize and sorghum The study estimates that flooding would affect about 150,000 people and 33,000 households every year, with 50 percent of the affected population located in Gaza and Zambezia provinces. Further, 100 km of roads are projected to be affected yearly. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 37 Box 2.1. Collaboration with the Government of Mozambique in assessing climate and disaster risks and their impact on roads (cont.) Country Climate and Development Report (CCDR) The World Bank’s analysis in the CCDR found that about 60 percent of the total road network in Mozambique lies in flood-prone areas (Figure 2), with the economic damage from climate events to the road network potentially reaching USD160 million or 1.1 percent of the country’s GDP per year, in addition to estimated traffic disruption costs of USD139 million. The analysis further demonstrates that maintaining the road network in good condition could reduce economic losses caused by floods by 27.5 percent. In addition, paving all classified roads can reduce the potential climate risk by 58 percent, given that paving roads would enhance the resilience of the road network and add offer more alternative routes, thereby further reducing economic disruption. The analysis also considers transport multimodality, which may contribute to higher resilience of transport network overall. The multimodality analysis found that integrating road and rail transportation may reduce the economic risk of climate events by 10.3 percent compared to the baseline scenario. Further, the modal shift toward rail could bring a climate benefit of US$ 12.2 million Figure 2.2. Roads exposed per year. to high flood risks in Mozambique The analysis further supported investment planning by estimating the annual cost of maintaining all classified roads in good condition at US$ 401 million per year on average, while the annual cost of paving all roads were estimated at US$ 807 million per year on average. Conclusion High-level climate and disaster risk analysis is key to understanding the impacts of climate change and natural disasters on the road sector, including their economic impact and the amount of required resilience investment. The findings from such analysis can then be used to develop the case for making resilience investment to influence policies and support additional downstream work in investment planning. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 38 Box 2.2. Collaboration with the Government of Viet Nam to conduct high-level climate and disaster risk and adaptation investment analysis for national and province-scale roads Overview The World Bank Group collaborated with the Government of Viet Nam to conduct a study that analyzes critical and vulnerable points of the transport network including the road network. The study conducted climate and disaster risk analysis at both the national and provincial levels, analyzing hazards as well as key aspects such as vulnerability and criticality. Importantly, the study used these findings to evaluate the costs and benefits of investing in resilient roads. The study provides important findings for the government including, but not limited to, the following. • Road disruptions can potentially result in severe economic losses which can potentially reach US$ 1.9 million per day. • The Benefit-Cost Ratios (BCR) of adaptation investments into national-scale roads are mostly greater than one. General estimate of adaptation investment costs In the Viet Nam-specific context, the relevant resilience measures typically include a combination of the following: Pavement strengthening, improved pavement drainage, earthwork protection, slope protection, and improved cross drainage. Based on these measures, the study identified four climate-resilient road prototype designs namely “national mountain”, “national flat”, “district mountain”, “district flat”, and “bridge”. For each prototype road, the study designed a sample climate-resilient, 100-meter section by creating a bill of quantities, specifying the amounts and unit costs of quantities needed. This has led to a general estimate of adaptation investment costs in USD per km for upgrading existing national and district roads to prototype climate-resilient road standards, as shown in Table 2.1. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 39 Box 2.2. Collaboration with the Government of Viet Nam to conduct high-level climate and disaster risk and adaptation investment analysis for national and province-scale roads (cont.) Table 2.1. Cost summary of initial adaptation investment for building prototype climate resilient roads in Viet Nam Prototype road Terrain Adaptation investment cost (USD/km) National road (two-lane, 22.5 meters wide) Flat 1,535,000 Mountain 1,828,500 District road (One-lane, 6.5 meters wide) Flat 808,000 Mountain 1,439,000 Bridge All 10,179,000 Source: World Bank calculations, with inputs provided by Dr. Jasper Cook National-scale road network adaptation costs and benefits Among others, a major contribution of the study is the estimate of the benefits of resilience investment for roads which can allow the identification of priority resilient road projects. Part A of the figure shows the maximum estimated benefits over 35 years of resilience investments in individual road links in the national-scale road network. The results show substantial benefits of investing in resilient roads, particularly along the expressway sections toward the eastern coastline. Part B of the figure below shows the maximum benefit-cost ratios (BCRs) of adaptation investment for all identified road links. The BCRs highlights where resilience investments can be prioritized: Road links that have high BCRs which are much greater than one. The results show that the expressway link between Nghe An and Thanh Hoa has the highest BCR (197), making it a high priority for adaptation investment. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 40 Box 2.2. Collaboration with the Government of Viet Nam to conduct high-level climate and disaster risk and adaptation investment analysis for national and province-scale roads (cont.) Figure 2.3. Estimated maximum benefits over 35 years and maximum BCRs of adaptation options for identified links in the national-scale road network in Viet Nam. Part A. Maximum benefits over time (USD million) Part B. Maximum Benefit-Cost Ratio (times) Source: WBG (2019). Addressing Climate Change in Transport, Volume 2, Pathway to Resilient Transport. Province-scale road network adaptation costs and benefits Another key contribution of this study is province-scale analysis, which presents the findings for three specific provinces, namely Lao Cai, Binh Dinh, and Thanh Hoa and their road networks only at higher granularity than the national-scale analysis. The road networks analyzed include national, provincial, district, and commune roads and other assets such as bridges and culverts. Such province-scale analysis aims to understand how road failures impact access to key locations within communes and affect economic output generation. Similarly, it was found that a significant number of assets have BCRs > 1. Many of these are bridges and local roads, which are important for accessing locations with economic activities. For all road networks, BCRs increase under future climate-hazards scenarios which strengthen the case for adaptation investment. Table 2.2 summarizes the results of province- scale analysis. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 41 Box 2.2. Collaboration with the Government of Viet Nam to conduct high-level climate and disaster risk and adaptation investment analysis for national and province-scale roads (cont.) Table 2.2. High-level cost-benefit analysis for province-scale road networks Road network assets Lao Cai Binh Dinh Thanh Hoa Percent of assets with BCR > 1 15 2-3 2-3 Number of assets with BCR > 1 190 220-330 530-800 Cumulative adaptation investment cost 12.9 1.6 2.3 over 35 years (USD million)* Cumulative adaptation benefits over 35 16.4-22.5 14.2-31.4 7.8-22.3 years (USD million)* Source: WBG (2019). Addressing Climate Change in Transport, Volume 2, Pathway to Resilient Transport. *Estimated by adding the benefits from the top 20 province-scale road links in that specific province. Conclusion As a result of this study, the government has developed a strong economic case for investing in building the resilience of Viet Nam’s road network. Further, the mapping of high-risk locations and high-level cost-benefit analysis for individual road links can support future analysis and preparation of specific resilient road projects. This study supported the government’s efforts in updating its Nationally Determined Contribution (NDCs) and set out its next medium-term public investment plan for 2021-2025. Viet Nam’s updated National Adaptation Plan (NAP) also highlights the finding of this study, recognizing the importance to enhance the adaptive capacity of transport infrastructure in areas at high risk of landslides, flooding, and sea level rise. • Development of data resources that enable project-level risk analysis. Another key benefit of the high-level risk analysis is to identify, improve, and consolidate various data sources for assessing climate and disaster risks and their impacts on the road network. These resources may include geospatial data and global models which are then downscaled to national levels, which can be used to benchmark and cross-reference project-level risk analysis at a later stage. The example in Box 2.3 presents another major contribution from the collaboration between the World Bank Group and the Government of Viet Nam which involved the development of high- quality data resources for climate and disaster risk analysis. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 42 Box 2.3. Development of data resources for climate and disaster risk analysis As noted in Box 2.2, the World Bank Group and the Government of Viet Nam conducted a study that analyzes critical and vulnerable points of the transport network including the road network. A key contribution of the study is the creation of unique datasets and modeling resources including: • First-of-a-kind representations of topologically connected geospatial roads, railways, inland waterways, and maritime multimodal transport networks with flow assignments. • Detailed agriculture crops and commodity or industry level network flows mapped onto the multimodal transport networks increase understanding of the domestic freight flow patterns. • codebase was developed in Python programming language as an open-source The study’s resource (available at this link). Further, a separate user document on the compilation and creation of underlying data and code is also made public (available at this link). The network models were created from geospatial data that needed post-processing to fill gaps in the underlying raw datasets identified from sources including the Ministry of Transport, international organizations, research institutes, and private data providers. Notably, the study made use of global models to develop national data that can be used in the local context for further analysis on the transport systems including the road networks. This includes deriving flood maps by downscaling global distributed hydrological models to give country scale maps. 2.1.2 Incorporate resilient roads in policies and investment planning The findings of high-level risk analysis can inform governments in incorporating the policy objective of investing in resilient roads into key policies. These may include: • Nationally Determined Contributions (NDCs) • National Adaptation Plans (NAPs) • Long-term Strategies (LTSs) • Climate change legislations and related policies • National transport legislations and related policies • Disaster management legislations and related policies These policies are relevant for mobilizing PSP in delivering resilient transport because strategic and policy alignment is typically a major decision factor for project prioritization and resource mobilization in the PSP process cycle. Similarly, strategic and policy alignment is the key element of an effective public investment management (PIM) framework to ensure public funding is invested in projects that most strongly support national policy objectives. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 43 To ensure the policy objective is translated into investment planning, the government should integrate resilient roads as a target area within programming documents that set out the government’s upcoming investment priorities, whether through public investment or public-private- partnerships (PPP). Such documents may include the medium-term public investment plans and PPP program. Once resilient roads have been recognized in policies and investment planning framework, governments will have a formal basis to systematically identify and prepare resilient road projects. The next section provides guidance on the project-level actions governments can take to prepare specific resilient road projects. 2.1.3 Develop resilience investment case for road projects Developing a pipeline of investment projects is the next key step to deliver the policy objective of investing in the resilience of roads. Governments are recommended to assess climate and disaster risks, identify adaptation solutions, and establish resilience investment cases for specific projects following certain actions.3 The project-level analysis at this stage can take advantage of any high-level risk analysis, which can provide benchmarks and cross-reference for location-specific findings related to hazard, vulnerability, criticality, and economic analysis. In addition, the findings from this project-level analysis should be used to integrate resilience considerations in the PSP projects from design, construction, operation to maintenance. Checklist for policymakers Establish objectives and priorities • Set disaster resilience targets linked to system-level performance indicators. • Define the road network’s role in the local/regional economy and society. • Identify types of users (people and goods) and operations performed. • Assess how climate change may impact these functions and characteristics. • Determine resilience priorities across user safety, mobility, connectivity, quality of service, economic activity, and societal wellbeing. Identify hazards • Characterize all possible hazards affecting the road network. • Include both current and projected future climate-related hazards using reliable climate models. 3  The climate and disaster risk assessment described in this section offers a more in-depth analysis of specific risks identified during the high-level mapping. The findings should aim to allow governments to translate the broader results of high-level mapping into project-specific recommendations for structuring resilience investments. Governments may also “pre-assess” or screen the climate and disaster risks of specific projects as an intermediate action after the high-level mapping and before advancing to the detailed project-specific assessment described below. This pre-assessment can take advantage of readily available project-specific information to help validate project selection and refine the terms of reference for the detailed project-specific assessment. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 44 Assess network vulnerability • Overlay hazard and network maps to identify vulnerable assets and links. • Use a “system of systems” approach to assess interdependencies with society and the economy. • Map the geospatial distribution of users (population data), GDP variations (census data), and locations of hubs, junctions, and key destinations (e.g., industrial zones, shopping centers). • Estimate traffic patterns and demand across the network, as well as vehicle types and proportions (e.g., trucks, private vehicles). • Evaluate the vulnerability of road components to guide adaptation priorities. Appraise infrastructure vulnerability • Conduct preliminary (qualitative) vulnerability assessments during planning. • Reassess vulnerability during the engineering/design phase. • Evaluate asset susceptibility based on age, compliance with modern design standards, and the presence or absence of adaptation measures (e.g., seawalls, dikes). Assess potential impacts • Evaluate direct and indirect impacts per hazard type, including direct losses, reduced mobility and connectivity, cascading socio-economic and social effects, user safety risks, operational losses, and externalities. Develop adaptation strategies • Identify and map high-level adaptation options such as route realignments to reduce hazard exposure and alternative routes to enhance redundancy. • Use Multi-Criteria Analysis to appraise options based on cost-efficiency, implementation timeliness, and flexibility. • Consider abandonment or relocation if risks are unmitigated and impact is high. Conduct cost-benefit analysis • Evaluate direct adaptation costs (e.g., capital works), indirect costs (e.g., temporary road closures), and wider benefits such as risk reduction across the project lifecycle, socio-economic and user safety benefits, and enhancement of residual value. • Use decision metrics such as net present value (NPV), benefit-cost ratio (BCR), and payback period. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 45 Build the resilience investment case • Consolidate findings to make informed investment recommendations. • Prioritize projects with the highest net benefits to communities and authorities. • Weigh trade-offs between brownfield rehabilitation (higher cost but legacy considerations) and greenfield development (greater flexibility and innovation potential). Box 2.4 presents an example of how resilience investment case can be developed for road projects. Box 2.4. Developing climate resilient investment plan for roads in Dominica Overview Caribbean countries are facing increasing climate and natural hazards such as tropical storms, hurricanes, earthquakes, landslides, floods, droughts and wildfires. To identify and evaluate the impacts of climate change on roads, a climate risk and vulnerability assessment (CRVA) has been conducted for Dominica, which aimed to inform the climate resilient investment plan for the road sector in the country. Among other purposes, the CRVA supported the identification of adaptation measures and engineering recommendations to address the effects of climate change in the hotspot locations identified. Key resilience actions Using the findings from the CRVA, the road sections that are vulnerable to climate change impacts are identified and adaptation plans are proposed for each of road section, as summarized below. Table 2.3. Vulnerable road sections and proposed interventions Road section Proposed interventions Bout Sable bay area • Slope stabilization • Retaining structures • Road rehabilitation to include drainage Boetica area Construction of 20 m span bridge Pointe Mulatre Bay area Road rehabilitation including drainage Imperial Road Antrim Sylvania Slope stabilization Soufriere to Scotts Head Seawall reconstruction Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 46 Box 2.4. Developing climate resilient investment plan for roads in Dominica (cont.) Road section Proposed interventions Point Michel to Soufriere road • Slope stabilization • Retaining existing structures • Road rehabilitation including drainage Tarreau (Hillsborough Bridge to Warner) By-pass road construction including drainage Rosalie (Petite Soufriere to Rosalie) • Road construction and rehabilitation including drainage • Reconstruction of 60 m bridge at Rosalie Au Delices • Slope stabilization • Riverbank protection • Retaining wall • Riprap protection • Road reconstruction including drainage Source: CDB (2020). The economic costs and benefits of implementing the adaptation plans were then quantified under a cost-benefit analysis (CBA) framework, covering these main economic benefits: • Avoided costs of repairs and maintenance: This is the cost that would have been incurred if the adaptation plans were not implemented, given the additional physical deterioration due to higher temperature and rainfall. • Increase of operational road days: The impact of extreme events can result in road closure and delays which reduces the days that the roads are operational. • Reduced vehicle maintenance costs: Poor road conditions result in higher operational costs in terms of tire replacements, shock absorbers, and vehicle components. Therefore, making the roads more resilient would improve road condition, leading to saving in vehicle maintenance costs. • User time savings: Road closure, whether full or partial, for maintenance tasks after extreme events result in delays, increasing users’ travel time which represents a cost to them. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 47 Box 2.4. Developing climate resilient investment plan for roads in Dominica (cont.) • Reduced accidents and mortality: Poor road conditions cause traffic accidents for reasons such as bad road surface and the existence of potholes. Implementing the adaptation plans will reduce road deterioration resulting in less accidents and mortality. The analysis allowed the government to prioritize among the viable resilience investments based on the IRR ranking. Conclusion This case study shows how the resilience investment case can be developed for implementing adaptation strategies in various road projects. A robust climate risk and vulnerability assessment is an essential element which forms the basis to develop adaptation strategies. Importantly, extensive assessment of the economic impacts of these plans should be made through cost-benefit analysis that accounted for wider socioeconomic benefits such as user time savings, reduced accidents and mortality, and reduced vehicle maintenance costs. This would allow the demonstration of the resilience investment case to inform investment decisions. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 48 2.1.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions recommended in Table 2.4. Table 2.4. Opportunities for collaboration Potential government stakeholders • Ministry of Transport including the road agency (Lead) • Ministry of Finance • PPP Unit • Ministry of Environment and Climate Change Opportunities for collaboration Expected outcomes Enabling actions Technical assistance: 1. Increased availability and usefulness of climate and disaster data for the 1. Conduct high-level climate and disaster road sector risk analysis for roads (and other sectors through a system-of-systems methodology) 2. Enhanced capacity among government at national and subnational levels, which officials to i) screen climate and disaster may include: risks; and ii) identify preliminary concepts for resilient road projects a. Developing a national road asset register 3. Enhanced climate change and disaster b. Creating climate and disaster datasets management policies that address road- and modeling resources for the road sector specific considerations c. Analyzing criticality and vulnerability of 4. Enhanced investment planning (both PIM road networks and PSP feasibility) and policy alignment for d. Estimating (macro)economic losses from resilient road projects unmitigated climate and disaster risks 2. Integrate resilient roads into climate change and other relevant policies 3. Integrate resilient roads into investment planning Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 49 Project-level actions Technical assistance: 1. Increased number of pipeline road projects, both greenfield and brownfield, that 1. Conduct climate and disaster risk integrate adaptation strategies and strong assessment at the project levels for roads, resilience investment case potentially in a system-of-systems and/or multisectoral approach 2. Increased volume of resilience investment in the road sector a. Integrate the risk assessment findings into the design and structuring of PSP 3. Enhanced capacity among government projects officials in developing resilient road projects 2. Develop and appraise adaptation strategies 4. Enhanced institutional assets (e.g. guidelines for road projects and terms of reference) for implementing and quality control of resilience-focused a. Greenfield projects (e.g. embedding project preparation activities resilience in road design, construction, and operations) b. Brownfield projects (e.g. rehabilitation, upgrades, and enhanced maintenance) 3. Conduct economic cost-benefit analysis that integrates the resilience benefits of resilient road projects 4. Develop guidelines on the methodology of the above actions for the road sector 5. Develop sample terms of reference (ToR) for engaging experts to conduct the above actions for the road sector 2.2. Incorporating resilience considerations into PSP projects 2.2.1 Identify the relevant PSP models for the road sector The range and applicability of PSP models in a jurisdiction will rest on the country-specific legal and regulatory framework for PSP and road infrastructure. While some countries have developed PSP in roads solely through contracts without specific PSP or road sector legislation, other countries adopted extensive laws and regulations. A legal framework is particularly important when user payments are involved as the private partners need legal authorization to collect toll revenue. Generally, the main PSP models for roads include:4’5 4 Except for privatization, all the other PSP models listed in this section are considered as Public-Private Partnerships (PPP) model. 5 PPP is defined as a long-term contract between a private party and a government entity, for providing a public asset or service, in  which the private party bears significant risk and management responsibility, and remuneration is linked to performance. This is based on World Bank Group (2017). PPP Reference Guide 3.0. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 50 • Management and maintenance contracts. Management contracts are an arrangement by which a contracting authority entrusts a private entity with the administration of road maintenance and/or operations management. The role of the private firm is to respond to day-to-day routine maintenance requirements. Management contracts can also focus on operations management, covering tasks such as traffic information provision, traffic counting, stand-by services for accidents, traffic regulation, and toll collection for the contracting authority. – Output- and Performance-based Road Contracts (OPRCs) are similar to management contracts, but the focus shifts from administration to delivering performance requirements valued by the users. Remuneration is linked to performance indicators on key aspects such as usability, road surface conditions, safety, emergency response. Typically, the contracting authorities specify the performance indicators that the contractor is required to meet without prescribing any method or material requirements. • Operation and maintenance (O&M) concessions. O&M concessions are an arrangement where a government grants a private entity the right to operate and maintain existing roads. The private partners may charge user tolls to finance the improved O&M, shifting the financial burden to road users. This would enable the public sector to i) transfer commercial risk to the private sector; ii) create incentives for the private sector to generate traffic and ensure efficiency; and iii) undertake regular maintenance to increase the reliability of facilities. • Build-Operate-Transfer (BOT). The private partner is responsible for the design, construction, finance, operations, and maintenance. This responsibility may also extend to upgrades and major rehabilitation of the infrastructure. At the end of the BOT contract term, the project is transferred to the government. Substantial investment and mobilization of private financing are required from the private partners which would be repaid from the toll revenue collected from road users. Given the substantial private investment required, the contract term must be sufficiently long to repay the debt and earn a return, which is a vital aspect of success in BOT projects. • Privatization. Privatization refers to the all-out sale of a public asset to the private sector. This may occur within the framework of an exclusive right granted by a ministerial or parliamentary act (or sometimes a license). Privatization is a form of PSP although since this is the sale of a public asset this is not considered a PPP. To promote resilient road PSP projects, a good practice is to explicitly identify resilience as a policy objective within the applicable legal and regulatory framework. Box 2.5 shows an example of how a PPP regulation identifies the relevant PSP models, the eligibility of road projects, and resilience objective. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 51 Box 2.5. The PPP Code of the Philippines identifies the PPP models, sectors, and resilience objective The Government of the Philippines has published the Implementing Rules and Regulations (IRR) of Republic Act No. 11966, also known as the Public-Private Partnership (PPP) Code of the Philippines in the Manila Bulletin on March 22, 2024, which came into effect on April 6, 2024. • Establishing legal and regulatory basis of PPP models for the road sector The PPP Code provides that the contracting authorities and private partners may enter into PPPs for infrastructure development and services in highways, including expressways, roads, bridges, interchanges, tunnels, viaducts, and related facilities. In addition, the PPP Code also identifies the relevant PPP models that may be used by contracting authorities including Build-Operate-Transfer (BOT), Rehabilitate-Operate- Transfer (ROT), and operations and maintenance (O&M) contracts. • Integration of climate resilience as a policy objective The PPP Code formally identified climate resilience as a consideration across the relevant sections that govern PPP project definition, preparation, and approval as noted below. Section 2. Declaration of Policy: “The State shall also ensure the integration of climate resilience, sustainability, and gender and development policies and programs in the planning, design, and implementation of PPP Projects.” Section 5. Infrastructure or Development Projects and Services: “The Implementing Agency and the Private Partner may enter into a PPP for, among others: (cc) Climate change adaptation… and disaster risk reduction and management infrastructure” Section 18. Guiding Principles in Developing PPP Projects: “In developing PPP Projects, the following shall be considered, among others: (e) Climate resilience and sustainability As discussed above, governments should review the applicable laws and regulations that govern PSP in the road sector to identify the relevant models. At the end of this review, the governments should have identified which types of PSP models are at their disposal, which would allow them to take the next steps. 2.2.2 Identify general entry points for resilience in the relevant road PSP models PSP projects in the road sector can have a high level of variation in aspects such as project scope, risk allocation, and performance standards. Table 2.6 provides an overview of the potential scope for the main types of PSP models in the road sector. Notwithstanding the variation, it is possible to characterize the general entry points for resilience consideration for each PSP model. This can allow the governments to identify, on a preliminary basis, the potential actions at the project level to structure PSP that maximizes resilience benefits. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 52 Table 2.5. Main types of private sector participation models and their potential scope for private partners Categories Is private sector typically involved? Works and Management Operations and Build-Operate- Privatization services and maintenance maintenance Transfer contracts contracts concessions Concessions PSP spectrum Public Public-private partnerships (PPP) Privatization ownership Contract types Design- • Management Concession Build-Operate- Privatization (Non-exhaustive) Build (DB) contract agreement, Transfer (BOT/ agreement • Output- and leasing, Design-Build- Performance- affermage Finance-Operate based Road (DBFO)/Build- Contract Own-Operate (OPRC) (BOO) Design Yes No No Yes Yes Build Yes No No Yes Yes Operations and No Yes Yes Yes Yes maintenance Finance No No Yes Yes Yes Own No No No Yes, during Yes contract period Note: Under concession/PPP the default assumption is that the key risks are transferred to the private partner, ultimately this will depend on the country and project profile, for example, financing risks can be shared with the public sector given that the asset life typically exceeds the term of the PSP contract. Source: Authors’ adaptation based on World Bank Group. (2009). Toolkit for PPP in Roads and Highways. Table 2.6 provides an illustrative risk allocation in the main PSP models for roads with respect to the following key entry points for resilience consideration. • Site selection. Site or corridor selection for the roads and ancillary facilities such as toll plazas, rest areas, and service stations should seek to avoid climate and disaster hazards to the extent possible based on the best available data and projections. • Design. The design for the roads and ancillary facilities should integrate resilience standards with the necessary measures such as flood risk management, heat and cold resistance, and sustainable materials based on robust risk assessment and resilience planning. • Construction. The roads should be developed according to the pre-determined resilient design, passing the necessary inspection, testing, quality assurance, and safety certification to confirm that all resilient measures are in place and operational. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 53 • Service and operational continuity. The operations of roads should integrate good practices such as early warning and information systems that alert road users against extreme events or blockage and traffic management plans that outline procedures during and after disruptions (e.g. redirect traffic to alternative routes). • Maintenance cost and standards. The maintenance of roads and ancillary facilities should optimize the lifecycle costs (e.g. enhancing maintenance procedures to minimize rehabilitation costs and maximize asset value after project completion) through measures such as preventive maintenance which addresses potential issues and reduces long-term costs, more frequent inspections and maintenance activities, and regular training for maintenance staff on the latest techniques. • Emergency preparedness, response, and recovery. The road operators should institute the necessary planning and soft measures to enhance resilience against emergencies such as conducting training for staff, road clearance operations, deployment of emergency response vehicles, and coordination protocol with local emergency services. • Insurance for extreme events. The road operators and owners should obtain sufficient insurance coverage against the significant climate and disaster risks to provide financial protection and facilitate service recovery after extreme events, where insurance is available and affordable. Please note that these key entry points and their descriptions are indicative and may not be exhaustive. These key entry points may be further considered in developing the performance requirements and KPIs in the PSP contracts. For instance, resilience-focused maintenance standards may be specified in the PSP contracts to ensure their implementation by the private partners. PSP contracts for infrastructure projects often lack specific contractual mechanisms designed to address climate change and its impacts on the parties’ contractual obligations and responsibilities. The integration of these considerations into contract drafting is still an emerging field, but may cover clauses such as Force Majeure, supervening events, change procedures, and economic equilibrium provisions. These contractual mechanisms should be tailored based on thorough and project-specific risk assessment and allocation, transferring risks to the private sector, which it can quantify and therefore can effectively price and manage, while the public sector retains the more extreme, unpredictable and difficult-to-price risks. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 54 Table 2.6. Indicative risk allocation for resilience considerations Indicative risk allocation Key entry Management Operations and Build-Operate- Privatization points and maintenance maintenance Transfer contracts concessions Concessions Site selection Public. Private Public. Private Shared. Both Private. Private partners are partners are contracting partners should typically granted typically granted authority and ensure avoidance operational operational private partners of climate and responsibilities to responsibilities to should ensure disaster hazards to existing roads and existing roads and avoidance of the extent possible have no influence have no influence climate and (if the PSP involves over site selection over site selection disaster hazards to greenfield projects) the extent possible (if the PSP involves greenfield projects) Design Public. Unless it Public. Unless the Private. Private Private. Private involves an OPRC concession involves partners should partners should that includes rehabilitation, ensure the road ensure the road rehabilitation; in for which private design is resilient design is resilient such cases, private partners should to identified to identified partners should ensure resilient hazards hazards ensure resilient design design Construction Public. Unless it Public. Unless the Private. Private Private. Private involves an OPRC concession involves partners should partners should that includes rehabilitation, ensure the civil ensure the civil rehabilitation; in for which private works deliver works deliver such cases, Private partners should road and related road and related partners should ensure any civil infrastructure as infrastructure as ensure any civil works comply with per resilient design per resilient design works comply with the resilient design the resilient design Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 55 Service and Shared. Private Shared. Private Shared. Private Private. Private operational partners should partners should partners should partners should continuity ensure service ensure service ensure service ensure service continuity up continuity up continuity up continuity and be to pre-defined to pre-defined to pre-defined fully responsible to performance performance performance restore availability standards standards standards (e.g. specified (e.g. specified (e.g. specified intensities of intensities of intensities of extreme events) extreme events) extreme events) Maintenance Private. Private Private. Private Private. Private Private. Private cost and partners should partners should partners should partners should standards implement implement implement implement maintenance maintenance maintenance maintenance protocols that protocols that protocols that protocols that ensure adequate ensure adequate ensure adequate ensure adequate performance, asset performance, asset performance, asset performance, asset quality, and cost- quality, and cost- quality, and cost- quality, and cost- effectiveness effectiveness effectiveness effectiveness Emergency Private. Private Private. Private Private. Private Private. Private preparedness, partners should partners should partners should partners should response, and ensure emergency ensure emergency ensure emergency ensure emergency recovery preparedness preparedness preparedness preparedness and activate any and activate any and activate any and activate any contingency plans contingency plans contingency plans contingency plans Insurance Private. Insurance Private. Insurance Private. Insurance Private. Insurance for extreme coverage should coverage should coverage should coverage should events be required where be required where be required where be required where available and cost- available and cost- available and cost- available and cost- effective.* effective effective effective Note: This risk allocation is indicative; Specific projects require allocation based on project context and negotiations with the private sector. * Private partners in these contracts typically have limited responsibility and liability. As such, if contracting authorities intend to require the private partners to purchase insurance, efforts may be necessary to build awareness and potentially provide commensurate financial incentives through payment scheme or support for insurance coverage. Value for money (VfM) of providing any financial support should assessed. If not optimal in VfM standpoint, public asset owners may seek insurance coverage or self-insure. Private Public Shared Source: World Bank Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 56 In developing countries, the shift towards PSP and a performance-based approach for road projects can often benefit from a gradual process of capacity development among contracting authorities and the private partners. In this regard, OPRCs may be a good starting point, where governments can gain experience using shorter term contracts before eventually engaging in more sophisticated and longer-term PSP contracts. Explore the use of output- and performance-based road contracts (OPRCs) OPRCs, as a performance-based contracting method, have the potential to generate significant cost efficiency and service quality improvement in road maintenance and management, especially when the impacts of climate change are incorporated in the contracts. There are wide-ranging terminologies used to describe OPRC in different countries, which may also include variations in the scope of the work, method of payments, duration of the contract, and management arrangements. For example, performance contract (Western Australia); asset management contract (United States); performance-specified maintenance contract (Australia, New Zealand); contract for rehabilitation and maintenance (Argentina, Brazil); area maintenance contract (Finland; Ontario, Canada); and managing agent contract (United Kingdom). The potential benefits of OPRCs over traditional procurement of maintenance works may be attributable to factors such as: • OPRCs incentivize private partners to improve efficiency and minimize waste because their payments are based on a set service or performance level, instead of the amounts of inputs (e.g. materials, labor hours, and equipment used). Given that climate change may necessitate more frequent and robust maintenance work, OPRCs can result in significant time savings and more effective execution of maintenance tasks. This contrasts with traditional procurement methods, where contracting authorities might encounter delays and capacity challenges in defining the scope of work and issuing separate public procurement contracts in response to incidences of road damage or closure due to climate events. • OPRCs also encourage the private partners to implement innovative solutions and better technologies to deliver performance standards, while minimizing inputs, leading to their better financial performance. Thus, to deal with the impacts of climate change, the private partners can be motivated through properly structured performance standards to use more durable materials and innovative techniques in maintenance. This minimizes the future costs of repair and improves their profitability. This can increase the quality of roads and provide cost savings. • OPRCs are typically longer-term than traditional maintenance contracts, which incentivize holistic measures by private partners to maintain the quality of roads over the contract period rather than ad-hoc repairs and maintenance works. This is particularly beneficial for dealing with the impacts of climate change which necessitates a more long-term planning and implementation approach to how roads are maintained. • OPRCs also provide funding stability for maintenance, as the contracts require governments to commit funds for the contract period, encouraging regular maintenance works which helps reduce long-term costs for rehabilitation and reconstruction. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 57 Box 2.6 provides an example of a successfully implemented OPRC which integrated resilience considerations. Box 2.6. OPRCs in Mozambique that integrated resilience considerations Background Mozambique experiences continuous and increasing vulnerability to the impacts of climate change, including long dry spells, severe floods and frequent coastal storms. Climate scenarios project that the levels of climatic variability affecting the country will further increase further, necessitating a proactive approach to manage climate and disaster risks. In 2013, sudden and extreme floods occurred in Lower Limpopo valley and other areas of southern Mozambique, which were the worst disaster to affect the country since the floods in 2000. The Government of Mozambique and the World Bank collaborated through the Roads and Bridges Management and Maintenance Project (Phase I and II), with the objective of improving access of the population to all-season roads through maintenance, rehabilitation, and upgrading of classified roads. Implementation of OPRC and resilience considerations As part of the works in the Limpopo River Basin, substantive medium- and long-term technical solutions for rehabilitation were undertaken under the Design-Build-Transfer (DBT) methodology using OPRC for 198.1km of the road network. The implementation of the project provided several lessons. • Incorporating resilience consideration may increase cost efficiency. The World Bank team supported the government in adjusting the project design to consider resilience and implement the new emergency repairs under OPRC methodology that resulted in higher efficiency arising from lower than budgeted costs and timely construction. • Supporting effective learning and capacity building is important to facilitate the introduction of new methodologies and approaches. The introduction of OPRC under DBT was a new approach in Mozambique. Its successful implementation was supported by the steps taken to ensure focus and effective learning, including the establishment of a flood response team, the availability of a transport support group to provide technical assistance, additional supervision support and oversight in the field. • Implementing OPRCs under DBT methodology had its own advantages and disadvantages. The approach provides flexibility for private partners to innovate and resolve problems more efficiently for implementing emergency response measures. However, the private partners had to quickly enhance their capacity and methodology to adapt to the approach. This may require extra supervision effort to ensure successful implementation. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 58 As a prerequisite, governments must ensure that the general good practices for implementing OPRCs are incorporated, which include competitive selection of the successful bidder, proper disclosure of relevant information to the public, adequate supervision protocol by a competent government entity (which may be aided by consultants), and an appropriate legal framework. On top of that, governments should incorporate the good practices to address climate risks in OPRCs: a) Conduct climate risk and vulnerability assessments (CRVA). The findings can be used to calibrate the performance metrics of OPRCs. This is important to determine the extent of climate risks that can be reasonably shared with private partners. Further, the criticality of roads should be determined based on the economic and social impacts if access is lost due to extreme events. b) Incorporate climate risk on a sliding scale, relative to the criticality of roads. For critical roadways, projected climate impacts from the high emissions scenario (e.g., RCP 8.5) should be adopted, assuming greater severity and frequency of extreme events; In contrast, a less critical roadway may be designed using the climate projections of a lower emissions scenario (e.g., RCP 4.5 or 6.0). c) Identify the technical expertise required. Key project personnel should include subject matter experts with expertise in contingency planning, climate risk and resilience. d) Incorporate resilience requirements in procurement. For instance: – Include resilience requirements in design (e.g. larger capacity culverts, minimum asphalt concrete overlay thickness) in the conceptual design to be made available to all bidders in the tender. – Indicate that the private partners will be responsible for preparing, and submitting for approval, the final engineering design based on the conceptual design as the minimum requirement. – Require that the private partners assume the design risks which will help avoid variation orders, when the private partners are responsible for design. – Include all relevant resilience requirements in the terms of reference (ToR) used to hire consultants to prepare the conceptual design. e) Require the use of climate data as required inputs into the design, rehabilitation and maintenance considerations and using that data to propose unit cost. For instance, bidders may be required to develop maintenance plans that would allow for a continuous level of service or accessibility with maximum acceptable levels of disruption during what will become 1-in 50-year flooding events under climate change within an agreed horizon. f) Determine KPIs that integrate climate change projections. Based on the planning horizon and climate risk assessment, the key performance indicators (KPIs) the private partners are expected to meet should be calibrated. This process may involve expert consultants in climate projections and the road sector. g) Require bidders to incorporate and clearly disclose cost increase due to climate change. The bidders should be required to identify how O&M costs may increase from climate change due to factors such as i) more regular maintenance and repairs due to increased wear and tear; ii) increase in operational staff hours; and iii) extra equipment for purposes such as preventive maintenance, emergency response, and road clearance. While OPRCs are performance-based, understanding cost assumptions behind pricing can allow more robust evaluation of financial bids. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 59 h) Confirm the appropriate risk sharing approach. It is important to strike a balance. On one hand, if there is no sharing of climate risks (e.g. all extreme events are covered under Force Majeure), the private partners are less likely to address the risks. On the other hand, the sharing of risk should be reasonable, otherwise, bidders may be deterred from participating. Governments may decide to take on the residual risks from climate change that cannot reasonably be expected to be managed by private partners. For instance, such risks can arise from various factors including external issues (e.g. uncontrolled deforestation in nearby areas which worsen flooding) and legacy issues (e.g. road site selection and construction material choices). To alleviate private sector concerns, the governments may provide certain support such as additional contingency funds for emergency works (to be agreed upfront) and/or subsidies for insurance coverage (only if such insurance is available and determined to provide better value- for-money than contingency funds). i) Conduct stakeholder consultation. Engaging the users of the roads can help to gather feedback on their experience and needs and how this may evolve due to the increasing intensity and frequency of extreme events. This feedback can inform the design of KPIs and other requirements. Importantly, governments must ensure the relevant information above is clearly disclosed in the initial terms of reference (ToR) in the procurement package. This can provide a basis to engage the private sector through market sounding and negotiations to confirm the reasonableness of the ToR and revise accordingly, so that the tender will receive sufficient responses and competition. The private partners should be fully informed of the climate risks so they can properly price in such risks in their bid. Otherwise, uncertainty around climate risk could discourage the private sector from bidding on PBC and/or lead to excessive pricing premium as buffer. Similarly, if any private partner enters into an OPRC without adequately pricing in climate risks, the higher maintenance costs induced by climate change or disaster recovery costs may render an OPRC to be financially unviable, increasing the risks of contract renegotiation and even termination. Recommended resources Incorporating Climate Risks in Performance Based Contracting (2018) by the World Bank Group provides detailed guidance specific on addressing climate risks in output and performance-based road contracts (OPRCs). A Guide to Delivering Good Asset Management in the Road Sector through Performance Based Contracting (2014) by the World Bank Group provides comprehensive guidance on the issues and challenges associated with successful implementation of a performance-based contract including OPRCs. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 60 2.2.3 Assess the suitability of PSP model for specific projects The decision on the optimal project delivery approach for a resilient road project – whether through traditional procurement or a PPP project – may be determined based on key factors such as value for money (VfM), financial feasibility, and the alignment with policy objectives for the specific projects. Climate and disaster resilience consideration should be viewed as a relevant concern in PSP suitability assessment for the road sector, with the caveat that a complete PSP suitability assessment must holistically consider other key factors as previously noted. In this regard, a VfM assessment represents an essential tool to assess whether the PSP delivery model will achieve greater value to the public compared to a traditional public sector delivery model. VfM compares the estimated total project costs of delivering public infrastructure using PSP relative to the traditional delivery model. Quantitative VfM analysis requires access to reliable data for the risk analysis and benchmark data for the public sector comparator and traditional procurement. The public authorities may also lack the resources or experience in undertaking this analysis. Depending on the policy and legal framework, the requirement for conducting a VfM exercise may be exempted and/or a qualitative VfM exercise is allowed. This should be coupled with a robust economic analysis to demonstrate the business case of the project, along with the expected technical, commercial, financial, legal, and fiscal feasibility assessments. As part of the public investment management (PIM) process, all projects generally should be subject to the same upstream processes up to and including the project appraisal, during which the VfM assessment should take place to determine the procurement modality (whether a project is viable as a PPP or should be delivered under a traditional procurement model). Depending on the jurisdiction’s legal framework, the VfM assessment can be undertaken again once the preferred bidder is selected to confirm the value for money derived from the transaction. It is important to recognize that integrating climate and disaster consideration in PSP projects represents a relatively nascent field of practice globally. As such, the lack of data benchmarks and reference transactions is a major barrier in conducting a detailed quantitative analysis of VfM in aspects such as costs, delay, and user benefits. There are two approaches to address this barrier. • First, the governments should at least conduct qualitative VfM assessment, addressing the key questions as illustrated in Box 2.7. • Second, the governments should review its PSP projects in the road sector to collect sufficient data to undertake a quantitative VfM assessment in the future. For instance: – Comparison of bid submissions and awarded contracts for PSP versus traditional public procurement on the prices for comparable resilience specifications. – Review of the track record of projects procured under a PSP model versus those under traditional public procurement; key comparatives measures include probability and cost of overruns, probability and cost of delays, project delivery timeliness, and outcomes in managing climate and disaster risks. – This will provide valuable quantitative benchmarks to help the governments refine their assumptions and estimates in future quantitative VfM assessments. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 61 Box 2.7. Key questions and illustrative consideration for qualitative VfM assessment Is the private partner better able to manage any climate or disaster risks? • Whenever possible, the private partner should be required to manage the climate or disaster risks by: i) proactively incorporating resilience measures through design, construction, operations and management approaches; and/or ii) purchasing insurance for financial protection. • If such actions are not possible or too costly, there may be limited or no scope to share climate and disaster risks with the private partners. • This challenge is even more pronounced in operations and maintenance contracts where the road operator has no role in the design and construction of the roads. Although the road operator can implement enhanced maintenance protocols and emergency response plans, they may not be able to influence the resilience outcomes related to road design and construction (e.g. improper route selection and material choice in initial design). • For illustration, consider a brownfield road project, for which the Ministry of Transport is exploring to tender an Output- and Performance-based Road Contract (OPRC) for road maintenance and management. – The road section was built in the 1980s and has been maintained through civil work contracts under traditional procurement methods. Part of the road section is located within an area that has become flood-prone in recent years, with climate risk assessments showing increased severity and frequency of flooding in the future. – In this case, it may be appropriate for the Ministry of Transport to impose resilience-focused performance requirements such as preventive maintenance for the roads and emergency response plans including having ready stand-by emergency vehicles and road clearance equipment. – The Ministry must exercise caution to not transfer excessive climate risks to the private partner under the OPRC. Otherwise, there may be limited interest from the private sector in bidding for the OPRC tender. It may be necessary to provide additional contingency funding for emergency works so that the private partner can tap into this resource for recovering the roads after extreme events. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 62 Box 2.7. Key questions and illustrative consideration for qualitative VfM assessment (cont.) Is a long-term contract viable and favorable to both parties in view of climate change- induced uncertainties? • Climate change can introduce significant uncertainties to the costs of operation, maintenance, and adaptive capital works in road projects. This may necessitate flexibility to initiate changes to the PSP contracts, otherwise the contractual rigidity may hinder effective resilience actions. • If it is too challenging to build in PSP contract clauses that allow flexibility and/or there is limited capacity to implement them, entering into a long-term PSP contract may not be suitable. • For illustration, consider a greenfield road project. – The Ministry of Transport is considering tendering the country’s first Build- Operate-Transfer (BOT) concession for developing, operating, and maintaining a highway between two growing cities. – A climate risk assessment indicates significant flooding risks, but these risks can be addressed through gradual adaptive capital works at regular intervals and potential adjustments to performance requirements over the concession’s period. – The Ministry of Transport has no prior experience in implementing a BOT concession, likewise with regards to designing and implementing complex contractual requirements. In this case, instead of following the initial plan to tender a BOT concession, the Ministry of Transport may consider constructing the highway and procuring the gradual adaptive capital works through traditional procurement and only use PSP on a more limited basis, for instance a management contract for maintaining and managing the highway. – This can allow the Ministry to gain more experience in working with private partners before undertaking more sophisticated and long-term road PSP contracts which require strong capacities in contract structuring and management approach to deal with any climate-related uncertainties. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 63 Box 2.7. Key questions and illustrative consideration for qualitative VfM assessment (cont.) Is it possible to define clear resilience-focused performance requirements in contracts and monitor them during project implementation? • To add resilience-focused performance requirements in PSP contracts, a major determinant is whether the private sector has the risk appetite and capacity to accept and implement those requirements. This can be ascertained by conducting market sounding at early stages of preparing the road projects. • Where there is low risk appetite and/or capacity in the private sector in this regard, the potential in using the performance-based mechanism of PSP contracts to deliver resilience investments would be more limited. Incorporate resilience-focused performance requirements and KPIs In PSP projects, private partners may be concerned that additional resilience measures can increase costs and make their bids less competitive. To address such concerns and mainstream resilience approach, contractual elements such as performance requirements and KPIs are crucial, besides risk allocation through clauses such as Force Majeure and supervening events. Performance requirements are highly specific to a road project and their development should consider the project design, feedback from market sounding, and experience in the country with similar contracts. To integrate resilience consideration into PSP contracts, the governments are recommended to address the specific aspects when developing performance requirements for a road project. The Disaster and Climate Resilient Transport Guidance Note provides examples specific to this sector. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 64 2.2.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions as presented in Table 2.7. Table 2.7. Opportunities for collaboration Potential government stakeholders • Ministry of Transport including the road agency (Lead) • Ministry of Finance • PPP Unit Opportunities for collaboration Expected outcomes Enabling actions Technical assistance: 1. Enhanced capacity among government officials to assess PSP suitability in general 1. Develop a strategic action plan outlining the and with respect to resilience consideration relevant PSP models and their respective for roads entry points for climate and disaster resilience in the road sector 2. Enhanced PSP project preparation approach among government officials which 2. Develop guidelines on addressing resilience addresses the key entry points for resilience consideration in the PSP suitability consideration for roads assessment for the road sector 3. Capacity building on PSP suitability assessment and integrating resilience consideration for the road agency and the PSP approving authorities Project-level actions Technical assistance: 1. Increased number of pipeline road projects, 1. Develop sample terms of reference (ToR) for both greenfield and brownfield, that go engaging transaction advisors to conduct through robust PSP suitability assessment feasibility study which includes a robust PSP including for resilience considerations suitability assessment including addressing 2. Increased volume of investment in resilient resilience consideration for roads road projects delivered through PSP 2. Develop guidelines on how to structure 3. Enhanced capacity among government resilience-focused performance officials in developing resilience-focused requirements and KPIs for roads based on performance requirements and KPIs for PSP risk assessments projects for roads 3. Implement pilot resilient road projects 4. Enhanced institutional assets (e.g. involving PSP which include PSP suitability guidelines and terms of reference) for assessment that covers resilience implementing and quality control of consideration, resilience-focused resilience-focused project preparation performance requirements and KPIs activities Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 65 2.3. Funding and financing for resilient road projects 2.3.1 Address funding need through project-level resources A funding gap arises when the revenue that can be generated by a specific road project involving PSP falls short of the total investment, operational and maintenance costs of the project. Investing in the resilience of a road project would in many cases increase upfront costs and maintenance costs, thereby widening the funding gap, even though the investment can lead to lower total lifecycle costs compared to a baseline scenario without resilience measures. The governments should assess the possibility of recovering the additional costs of resilience investments by incorporating a tariff component within the user tariffs, noting that users’ willingness and ability to pay should be carefully studied and considered. The tariff components can be split into: • Base facility charge: Covers capital costs, operating costs, debt repayment and returns to equity. • Resilience investment charge: Covers the additional costs associated with resilience investments. Resilience investment charge can be levied when the willingness and ability to pay of users are higher than the regulated prices (if any) set by the governments, whereby such prices can be adjusted upward, without breaching the estimated willingness and ability to pay. It is important to note that the implementation of resilience investment charges in the road sector may require the governments to address the potential challenges such as political sensitivity, difficulty in quantifying and communicating resilience benefits, equity and affordability concern, and the lack of legal and regulatory frameworks. When such tariffs can only recover part of the costs, governments may provide viability gap funding (e.g. operational grants) to close the remaining funding gap. This, however, needs to be applied with caution and be reserved for cases where all other funding instruments have been proven inadequate, otherwise there is a risk that private partners may implicitly pass a large portion of resilience investment cost to the contracting authorities through the viability gap funding. Hence, it is advisable that in case the economic analysis demonstrates an actual benefit of resilience investments (in the form of reduced operational losses for repairs and maintenance), this benefit is factored in first, and that the funding support is provided in the form of a loan that the private partner will have to repay, where possible. 2.3.2 Deploy public funding support to address project-level funding gaps For brownfield PSP road projects, public funding support (or out-of-the-project funding) is typically required to implement additional adaptation measures beyond the scope of the existing PSP contracts. Once adaptation priorities have been identified, the government should identify a dedicated funding allocation to fund adaptation measures in these networks. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 66 For greenfield PSP road projects, while the adaptation measures can potentially be privately funded, public funding support is important to address any un-funded resilience investment needs so that PSP can be mobilized. In this regard, the governments should develop a funding strategy to cover the additional funding needs of resilient road projects for: • Project preparation. This concerns the additional costs for climate-related project preparation activities, including climate risk and vulnerability assessment, feasibility studies including adaptation solutions, and integrating resilience considerations in procurement and contracting. • Project investment. Resilient road projects often need additional investments upfront and during the operational period, which would increase the project investment costs. • Dealing with contingencies. Contingency funding is important for addressing residual climate and disaster emergencies. In practice, it is neither feasible nor cost-effective to over-specify and over-invest in resilience measures that aim to prevent all identified climate and disaster risks. Therefore, making available contingency funding is key to enabling timely recovery from the unmitigated impacts of any extreme events. In the road sector, road funds are commonly established for funding public road maintenance and rehabilitation in many countries, which may draw upon various sources such as vehicle and fuel taxes to replenish the road funds. Road funds in developing countries have gone through a long history of reforms to deal with challenges such as poor financial management, absence of independent audits, extensive use of funds for unauthorized expenditures, fund diversion, and insufficient oversight. The improvement process has resulted in the so-called “second-generation road funds” that have been characterized by the creation of a specific legal and institutional framework aimed at ensuring proper management of the funds and public accountability. In essence, the key characteristics include sound legal basis with separate road fund administration; agency which acts as purchaser and not a provider of road maintenance services; strong oversight through a board involving private and public representatives; revenues that are incremental to the budget from road use charges channeled directly to the road fund account; sound financial management systems; and regular technical and financial audits. Road funds may potentially provide funding resources for road agencies in developing countries to implement OPRCs, subject to a country’s specific legal and public financial management practices for roads. This is in line with the objective of second-generation road funds to develop professional processes for maintenance, which may focus on outsourcing work in a commercial environment through performance-based, longer-term maintenance contracts. Technical assistance with development partners such as the World Bank Group can play crucial roles by addressing the extensive capacity needs to integrate resilience consideration through such processes. Recommended resources Financing of road maintenance in Sub-Saharan Africa: Reforms and progress towards second generation road funds (2006) by the World Bank Group provides guidance on the best practice in setting up or restructuring road funds. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 67 2.3.3 Access international concessional climate finance Governments should explore collaboration with development partners to access concessional finance for promoting PSP in resilient road projects. Particularly, blended finance instruments such as concessional loans and guarantees can help improve the risk-return profile of resilient road projects to mobilize additional private investment. MDBs, such as the World Bank Group, can play key roles through their own provision of financing and technical assistance, as well as potentially acting as the accredited or implementing entities to access additional climate finance from concessional climate funds. Examples include Green Climate Fund, Global Environment Facility, and Adaptation Fund. 2.3.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions as presented in Table 2.8. Table 2.8. Opportunities for collaboration Potential government stakeholders • Ministry of Transport including the road agency (Lead) • Ministry of Finance including PPP Center Opportunities for collaboration Expected outcomes Technical assistance: 1. Increased number of pipeline resilient road projects that have developed sustainable 1. Conduct funding and financial structuring funding and financing structure for resilient road projects to mobilize PSP 2. Increased volume of concessional financing 2. Conduct feasibility studies that include to resilient road projects and private analysis on willingness and ability to pay for partners involved in such projects road projects 3. Increased volume of private investment 3. Build capacities for implementing mobilized for resilient road projects performance-based road maintenance and management contracts (e.g. OPRCs) Financial support: 1. Provide concessional financing to governments to invest in resilient road projects, including for implementation OPRCs 2. Provide concessional financing to private partners involved in PSP for resilience investments 3 Roadmap for Private Sector Participation in Urban Transport Resilience Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 69 Urban transport systems are at the heart of sustainable, inclusive, and efficient cities. However, they are increasingly vulnerable to climate change, natural disasters, and operational stresses. To address these growing challenges and meet rising mobility demands, cities must develop resilient transport networks that can withstand and adapt to evolving risks. Private sector participation (PSP) can play a transformative role by bringing in innovation, capital, and operational expertise. For PSP to contribute effectively, it is essential that resilience is integrated into both the enabling environment and project-level planning. This includes conducting city-level climate and disaster risk assessments, and embedding resilient urban transport priorities into overarching policies and investment plans. Creating the right conditions for PSP in resilient urban transport also involves identifying suitable models for private engagement and pinpointing where resilience can be embedded into these frameworks. Project-level actions should focus on tailoring PSP models to specific initiatives while incorporating resilience-oriented performance indicators and KPIs. Addressing funding gaps through public support and project-level resources is crucial to making these projects bankable, especially when paired with innovative financial instruments and access to international concessional finance. This chapter outlines the necessary roadmap to integrate resilience into urban transport planning and unlock effective private sector participation. 3.1. Risk assessment and project pipeline development Urban transport infrastructure and services are exposed to wide-ranging climate and disaster risks throughout their lifetime, which may vary significantly depending on the transport modes and the urban areas where the transport services operate. For instance, bus operations may be disrupted by flash flood when sudden and heavy rainfall occurs in areas with inadequate drainage systems. Damage of roads, railway tracks, and vehicle fleets due to extreme climate events may pose greater safety and economic concerns where the transport systems serve high traffic volume at densely populated areas. Passengers may be stranded and unable to return home or go to work as a result of discontinued public transport services caused by extreme events. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 70 Figure 3.1. Examples of climate and natural hazards for urban transport Floodin L ndslid s nd rockf lls Exc ssiv h t • T mpor r loss of • D m to ro dw s, brid • D form tion of tr cks nd s rvic bilit du to l m nts, nd r ilw tr cks bucklin du to xtr m inund tion • Imp ct f ilur s of prim r t mp r tur • Disruption of public tr nsport nd uxili r structur s • Pow r suppl probl ms du s rvic s du to block s • Tr ffic disruptions du to to f ilur of ov rh t d lon th ir rout s or floodin block s b f ll n d bris quipm nt of th d pot st tions • H lth risks for p ss n rs in bs nc of v ntil tion/ ir conditionin R sili nc inv stm nts str n th n infr structur ss ts nd s rvic s inst clim t nd n tur l h rds Drou ht E rthqu k s Riv r/Co st l Erosion • Risk multipli r for rosion • Pot nti l d m to brid s, • D t rior tion of ro dw s, nd fir risk tunn ls, r t inin structur s cr cks/hol s, imp ctin th • Risk multipli r for fl sh flood nd tr cks l din to comfort of us rs, tr ffic flow du to limin t d v t tion op r tion l disruptions sp d, priv t nd public cov r • D m to und r round v hicl s • Asph lt d t rior tion in st tions nd t rmin ls • Loss of tr ck support l din ro ds nd quipm nt • Pow r out s ff ctin to diff r nti l mov m nt d t rior tion in trucks/tr ins communic tion s st ms nd follow d b bucklin , nd public tr nsport fl ts s rvic s w rpin , nd mis li nm nt Note: The examples are illustrative and non-exhaustive. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 71 3.1.1 Conduct city-level climate and disaster risk analysis for urban transport To better understand the climate and disaster risks stressors affecting their transport systems, governments should conduct a high-level risk analysis to map the exposure of urban transport networks (e.g. roads, trains, bus routes, underground, and waterways as applicable) to the relevant . The analysis can include i) vulnerability assessment which identifies the potential impact of different hazards on urban transport (as illustrated in Figure 3.1); and ii) criticality assessment which addresses which routes and locations are the most critical for ensuring transport service continuity. Such analysis may help in: • Developing the economic case for resilience investments for urban transport in cities. This includes estimates of economic losses from disruptions, asset damage, and other causes if the climate and disaster risks are not addressed at the systemic level. • Supporting policy and investment planning. Governments including city officials can use the findings to inform policies on climate change and the urban transport sector and incorporate resilient urban transport as a priority in investment planning, including supporting the identification and design of specific projects. Box 3.1 shows how city-level climate and disaster risk analysis can support governments in strengthening the resilience of urban transport. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 72 Box 3.1. Douala Urban Mobility Project’s flood risk study Background Douala, the largest city and economic capital of Cameroon, is highly vulnerable to extreme hydrometeorological events given its location at the estuary of the Wouri River. Climate projections indicate that the Littoral region, where Douala is located, is expected to experience increased rainfall levels and intensity in the coming decades. Particularly, severe rainstorms are likely to increase in intensity and frequency, with severe events of high precipitations (205 mm per hour) potentially occurring every two years. In addition, continued uncontrolled urban development in flood-prone zones will further increase the exposure of Douala’s population and economic development to climate risks. Further, sea level rise due to climate change will also worsen flood risks in Douala. Key resilience actions To address the climate risks, the Government of Cameroon and the World Bank collaborated through the Cameroon Douala Urban Mobility Project (US$ 420.00 million), which among other objectives, aims to implement actions that increase the resilience of the urban transport infrastructure. As part of the initial activities, the project conducted a flood modeling Figure 3.2. Flood danger map for Douala study for Douala in 2021. The model was prepared by using i) hydrological and hydraulic modeling software; ii) land occupation data from OpenStreetMaps; and iii) rainfall data for 10-, 20-,50- and 100-year return period from the Douala Sanitation Master Plan study. Flood simulations were conducted to create flood danger maps for the city and its catchment basins, as shown in Figure 3.2. The flood danger maps are used to support the integration of resilience consideration into urban transport planning with key benefits that include: Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 73 Box 3.1. Douala Urban Mobility Project’s flood risk study (cont.) • Risk identification. The maps help the governments and stakeholders to identify flood- prone areas, allowing them to pinpoint critical vulnerability points in the city’s transport network. • Infrastructure project planning. By highlighting at-risk areas, the maps can be used to guide the design and corridor selection of transport infrastructure to allow the avoidance of climate hazards and more robust design that withstands flooding. These maps informed the project design of the Bus Rapid Transit project component under the Cameroon Douala Urban Mobility Project. A second study is being conducted to further assess flood risks associated with the project’s activities (this is discussed in Box 3.3). Conclusion This example shows how high-level climate and disaster risk assessment for a city can be conducted to understand the relevant hazards the city is facing. In this specific case, flood risk was noted to be the main challenge which became the focus of the assessment, resulting in a city-level mapping that can strengthen risk identification and infrastructure project planning of government officials for urban transport. Initiatives that support the Government of Cameroon’s policies include: • National Adaptation Plan, which identifies the integration of climate change consideration into road and transport infrastructure development projects as a strategic priority in urban development. • Updated Nationally Determined Contributions (NDC), which identifies ensuring the resilience of urban and rural transport systems as well as regional transport corridors as a priority. 3.1.2 Incorporate resilient urban transport in policies and investment planning As noted in Box 3.1, robust risk assessment can be an important tool to support governments’ policy priorities to strengthen the resilience of urban transport systems. In addition, the findings of city- level risk analysis can also inform governments in incorporating the objective of investing in resilient urban transport into key policies and continuously improving these policies. The relevant policies may include: • Nationally Determined Contributions (NDCs) • National Adaptation Plans (NAPs) • Long-term Strategies (LTSs) • Climate change policies and related legislations • National transport policies and related legislations policies • Disaster management policies, legislations and/or guidelines • City master plans Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 74 These policies are relevant for mobilizing PSP in delivering resilient urban transport because strategic and policy alignment is typically a major decision factor for project prioritization and resource mobilization. Similarly, strategic and policy alignment is the key element of an effective public investment management (PIM) framework to ensure public funding is invested in projects that support national policy objectives. To ensure the policy objective is translated into investment planning, the government should integrate resilient urban transport as a target area within programming documents that set out the government’s upcoming investment priorities, whether through public investment or public-private- partnerships (PPP). Such documents may include the medium-term public investment plans, PPP program, and city-level investment plans. Governments and PPP units are encouraged to include in their policy planning the adoption of appropriate national standards as well as international ones (e.g. ISO, building codes) that promote resilient design, for example by indicating specific maintenance protocols. Recognizing resilient urban transport in policies and investment planning framework would provide a formal basis for government officials to systematically identify and prepare resilient urban transport projects. Section 3.1.3 provides guidance on the project-level actions governments can take to prepare specific projects. 3.1.3 Develop resilience investment case for urban transport projects Developing a pipeline of investment projects is the next step to deliver the policy objective of investing in the resilience of urban transport. Governments should assess climate and disaster risks, identify adaptation strategies, and establish resilience investment cases for specific projects. These actions are indicative and may be adjusted based on actual project context in practice. The project-level analysis at this stage can take advantage of any city-level risk analysis as previously discussed, which can provide benchmark and cross-reference for location-specific findings related to hazard, vulnerability, criticality, and economic analysis. In addition, the findings from this project-level analysis should be used to integrate resilience considerations in the PSP projects from design, construction, operation to maintenance. Checklist for policymakers Set resilience objectives • Set disaster resilience targets and measurable objectives linked to system-level performance indicators. • Assess the transport network’s role in preserving urban resilience. • Identify dependent urban functions and set resilience targets, including: – User safety – Connectivity (including first-and-last-mile) – Equitable access to essential services – Reduced exposure of critical components Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 75 – Reliable mobility and redundancy – Sustainability of infrastructure and services • Define minimum performance thresholds (e.g., maximum tolerable disruption time) to guide resilience indicators. Identify hazards • Characterize current and future hazards affecting the urban transport network. • Use climate change projection models and incorporate projected land-use and demographic changes. • Differentiate between mid-term (e.g., 2050) and long-term (e.g., 2080) scenarios, aligning with infrastructure life spans. Assess network vulnerability • Create a comprehensive inventory of urban transport assets and their interdependencies (e.g., roads, terminals, public transport, energy grid). • Overlay hazard and network maps to determine exposure under low and high impact scenarios. • Adopt a ‘system of systems’ approach to map interdependencies with society and economy, considering: – Urban population distribution – Public transport usage and its spatial distribution – Key economic areas and services – Interconnected systems (e.g., ports, utilities) • Estimate modal split and traffic demand using current data. • Calculate the criticality of network nodes and links (e.g., access to essential services). • Estimate the severity and implications of different disaster scenarios to prioritize adaptation actions. Appraise physical infrastructure vulnerability • Perform qualitative vulnerability assessments during planning; revisit in design phase. • Assess asset sensitivity based on: – Residual age – Construction materials (e.g., pavement porosity) – Absence of adaptation measures (e.g., drainage) – Operational thresholds (e.g., temperature limits) – Historical failures due to hazards • Estimate expected damage under various hazard intensities for both infrastructure and rolling stock (e.g., subway flooding, heat damage to buses). Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 76 Assess potential impacts and losses • Based on hazard exposure, asset vulnerability, and network criticality, evaluate impacts: – Direct infrastructure losses and repair costs – Operational disruptions (delays, detours) – Connectivity losses affecting access to services and markets – Socio-economic losses (e.g., supply chain disruption) – Shifts in user behavior (e.g., mode choice changes) – Social effects (e.g., increased isolation, inequality) – User safety (e.g., bridge failure) – Revenue losses in concession contracts – External system failures (e.g., power outages affecting signals) Develop adaptation strategies • Identify adaptation and risk reduction strategies such as: – Risk zoning and land-use changes – Physical infrastructure upgrades (e.g., flood-proofing) – Operational strategies (e.g., repositioning rolling stock) – Modal shifts supporting compact, low-carbon development – Synergies between adaptation and climate mitigation (e.g., green infrastructure) • Compare plans using Multi-Criteria Analysis considering: – Cost-efficiency – Timeliness – Flexibility – Support for climate risk reduction • Manage externalities through collaboration and risk-transfer mechanisms. • Engage local stakeholders (public authorities, service providers, planners, NGOs) to align with community priorities. Conduct cost-benefit analysis • Estimate total costs including: – Hazard impacts – Adaptation and mitigation measures – Indirect costs (e.g., business disruption) Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 77 • Estimate benefits such as: – Risk reduction across lifecycle – Socio-environmental co-benefits (e.g., ecosystem protection) – Socio-economic outcomes (health, equity, biodiversity) – Increased residual project value • Define investment thresholds to evaluate whether benefits outweigh resilience costs. Build the resilience investment case • Consolidate findings into actionable recommendations for decision-makers. • Determine whether resilience investments deliver net community and institutional benefits. • Support project prioritization, especially in resource-constrained environments. Box 3.2 presents an example of how resilience investment case can be developed for urban transport projects. Box 3.2. Resilience actions for BRT project component of Douala Urban Mobility Project Background As discussed in Box 3.1, Douala, the largest city and economic capital of Cameroon, is highly vulnerable to extreme climate events given its location at the estuary of the Wouri River. The Government of Cameroon and the World Bank collaborated through the Cameroon Douala Urban Mobility Project (US$ 420.00 million), which among other objectives, aims to implement actions that increase the resilience of the urban transport infrastructure. As part of the initial activities, the project conducted a flood modeling study for Douala in 2021 which produced flood danger maps for the whole city, which helped inform the preliminary project design of the BRT project component comprising BRT infrastructure facilities, systems, and rolling stock. Key resilience actions The collaboration includes a second study to further address flood risks associated with the BRT project component in greater level of detail, including identifying priority investments and measures to strengthen the resilience of the urban transport infrastructure and operations. This study aims to inform climate adaptation plans and measures at three levels: • The study will analyze the exposure of the BRT infrastructure and selected feeder roads to extreme hydrometeorological events. The findings will inform their technical design to adapt to extreme events, including prioritizing suitable technical solutions to mitigate flood risks for the mass transit system and its feeder roads. These technical solutions will be aligned with the Transit-oriented Development (TOD) approach, by combining structural and ecosystems-based approaches. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 78 Box 3.2. Resilience actions for BRT project component of Douala Urban Mobility Project (cont.) • To integrate resilience consideration in operations, the study will support the preparation of resilient Operation and Maintenance (O&M) protocols for the BRT system, as well as emergency response and contingency plans for BRT and other transportation services in case of extreme hydrometeorological events. As a general illustration, resilient O&M protocols may include features such as real-time monitoring and data gathering, rapid response plan for damage assessments and repair; higher frequency of inspections after the occurrence of extreme events; and preventive maintenance schedules based on climate forecasts. • To support capacity building, the study will strengthen the capacity of municipal and national institutions to systematically consider climate-related hazards in urban transport planning and management. The actions will include a review of transport infrastructure construction codes and standards, a roadmap on designing an adaptation strategy for urban networks, and related training. Economic analysis The feasibility study for the BRT project includes an economic analysis for the BRT project (civil works, BRT facilities, and fleet) based on a cost-benefit evaluation approach. Importantly, this economic analysis covers the implementation of project design which integrates targeted adaptation measures along the BRT corridor, which could include re-sizing drainage systems, bioswales, stormwater retention vegetation, identifying traffic diversion routes. The analysis indicates a positive Net Present Value (NPV) of US$301.0 million and an Economic Internal Rate of Return (EIRR) of 13 percent, assuming the adoption of Euro V diesel-based fleet. To ensure robustness, the analysis provides sensitivity tests which consider: i) a 20 percent of capital cost overrun of the BRT fleet; ii) a 10 percent BRT operational cost increase; iii) a 10 percent reduction in demand; iv) a 20 percent increase in infrastructure cost; and v) the combination of the four above mentioned scenarios. The project is found to have at least 7 percent minimum EIRR, and the NPV calculated with a 7 percent discount rate remains positive in all scenarios. Conclusion This example demonstrates the good practices to integrate resilience consideration into preparing specific urban transport project as well as developing an economic case for the project which includes robust resilience measures. Notably, the preparation of the BRT project leveraged a prior city-level climate and disaster risk analysis to inform preliminary design and corridor selection. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 79 3.1.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement actions as presented in Table 3.1. Table 3.1. Opportunities for collaboration Potential government stakeholders • City governments (Lead) • Ministry of Transport including public transport authority • Ministry of Finance • PPP Unit • Ministry of Environment and Climate Change Opportunities for collaboration Expected outcomes Enabling actions Technical assistance: 1. Increased availability and usefulness of climate and disaster data for the urban 1. Conduct city-level climate and disaster risk transport sector analysis for urban transport systems, which may include the following actions. 2. Enhanced capacity among government officials to i) screen climate and disaster a) Create climate and disaster datasets risks; and ii) identify preliminary concepts and mapping resources for various urban for resilient urban transport projects transport modes 3. Enhanced climate change and disaster b) Analyze criticality and vulnerability of management policies that address urban urban transport networks transport-specific considerations 4. Enhanced investment planning (both PIM c) Estimate (macro)economic losses from and PSP feasibility) and policy alignment for unmitigated climate and disaster risks resilient urban transport projects 2. Integrate resilient urban transport into climate change and other relevant policies 3. Integrate resilient urban transport into investment planning Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 80 Project-level actions Technical assistance: 1. Increased number of pipeline urban transport projects, both greenfield and 1. Conduct climate and disaster risk brownfield, that integrate adaptation assessment at the project levels for urban strategies and strong resilience transport projects investment case a. Integrate the risk assessment findings 2. Increased volume of resilience investment in into the design and structuring of PSP the urban transport sector projects 3. Enhanced capacity among government 2. Develop and appraise adaptation strategies officials in developing resilient urban for urban transport projects transport projects a. Greenfield projects (e.g. embedding 4. Enhanced institutional assets (e.g. resilience in project design, construction, guidelines and terms of reference) for and operations) implementing and quality control of b. Brownfield projects (e.g. rehabilitation, resilience-focused project preparation upgrades, and enhanced maintenance) activities 3. Conduct economic cost-benefit analysis that 5. Increased awareness and support for integrates the resilience benefits of resilient investing in resilient urban transport urban transport projects 4. Develop guidelines on the methodology of the above actions for the urban transport sector 5. Develop sample terms of reference (ToR) for engaging experts to conduct the above actions for the urban transport sector 3.2. Incorporating resilience consideration in PSP projects 3.2.1 Identify the relevant PSP models for the urban transport sector The range and applicability of PSP models for urban transport in a jurisdiction will rest on the country-specific legal and regulatory framework for PSP and the transport sector. PSP in urban transport can be structured in a variety of forms for different purposes. For instance: • City bus operations, where the private partner provides the bus service within the city in accordance with a fleet deployment plan on specified routes and frequency. • Supporting infrastructure, such as bus terminals, charging points for electric vehicles, space for public bike sharing, busways (including those for bus rapid transit ), segregated corridors for trams, and the construction of footpaths and pavements. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 81 The Subsector Roadmaps for PSP in Transport Resilience for the railway sector and the road sector provide additional examples that may apply to urban rails (e.g. light rail transit) and urban roads. City bus operation The net and gross cost models represent two opposite approaches in risk allocation between the contracting authorities and private partners for city bus operation. In practice, there can be various hybrid options which should be determined based on local contexts. • Cost Contract (GCC). The farebox revenue flows to the contracting authority which assumes full revenue risk and pays the private partner a fixed periodic payment to provide bus services under set quality standards for specified areas or routes. The public authority is responsible for activities from bus network management, service planning, revenue collection, contracting the operators, customer service and service quality management. The private partner assumes operational risks related to service frequency, availability, and compliance with quality and safety standards. The hybrid GCC is a variation which involves greater risk sharing and payment incentives for the private partner to maximize ridership. • Net Cost Contract (NCC). The contracting authority grants a private partner the exclusive right to i) provide bus services for specified areas or routes; and ii) retain the farebox revenue. Depending on the profitability of the contracted services, the authority may pay a grant, charge a monthly fee, or share part of the revenue collected by the private partner. As the private partner retains the passenger revenue, there is a strong economic incentive to increase bus ridership. The hybrid NCC is a variation under which the contracting authority financially supports commercially unviable routes as a public service obligation. Bus terminals Municipalities may use PSP models to expand and improve bus terminals, thereby providing a clean and safe place for passengers to wait for and change buses. This can also potentially generate revenue streams for municipalities through concession fees and lease fees. The private partners can recoup their investments through advertising, commercial real estate development alongside the terminal, parking fees and charges payable by the buses. • Build-Operate-Transfer (BOT). The private partner is responsible for design, construction, finance, and operation before handing back the bus terminal infrastructure to the contracting authority. The private partner would recover its investment through user charges over the concession period (typically 20-30 years) and the land would usually be publicly owned. The BOT model may be used to i) develop new bus terminals in greenfield projects or ii) rehabilitate and modernize existing terminals in brownfield projects. • Operations and Maintenance (O&M). For brownfield bus terminals, the contracting authority may contract private partner(s) either under a single contract or separately to carry out specific activities during operations. The contracting authority collects the revenues and pays the private partners a fixed periodic fee over the term of the contract. For illustration, examples of PSP models for city bus operations and bus terminals are summarized in Table 3.2. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 82 Table 3.2. Overview of PSP models and the potential roles of private sector General Operations and Acquisition, Build-Operate- characterization maintenance operations, and Transfer maintenance of public transport vehicles Potential applications • Supporting • City bus operations • Supporting infrastructure infrastructure PSP roles Is the private sector typically involved in this aspect? Design No Yes, in that vehicles Yes, but may vary by should be fit for contract purpose Build No No, only acquisition of Yes vehicles Finance No Yes, but may vary by Yes contract Operations and Yes Yes Yes maintenance Note: For urban infrastructure, this table provides a general characterization, while the nomenclature and scope for PSP may vary by project and infrastructure types which are wide-ranging. Under PSP, the default assumption is that the key risks are transferred to the private partner, ultimately this will depend on the country and project profile, for example, financing risks can be shared with the public sector given that the asset life typically exceeds the term of the PSP contract. To initiate the preparation of PSP for resilient urban transport projects, governments should review the applicable laws and regulations that govern PSP in the urban transport sector to identify the relevant models. At the end of this review, the governments should have identified which types of PSP models are at their disposal, which would allow them to identify resilience consideration. To promote resilient urban transport PSP projects, a good practice is to explicitly identify resilience as a policy objective within the applicable legal and regulatory framework. Box 3.3 shows an example of how a PPP regulation identifies the relevant PSP models, the eligibility of transport projects, and resilience objective. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 83 Box 3.3. The PPP Code of the Philippines identifies the PPP models, sectors, and resilience objective The Government of the Philippines has published the Implementing Rules and Regulations (IRR) of Republic Act No. 11966, also known as the Public-Private Partnership (PPP) Code of the Philippines in the Manila Bulletin on March 22, 2024, which came into effect on April 6, 2024. Establishing legal and regulatory basis of PPP models for the urban transport sector The PPP Code provides that the contracting authorities and private partners may enter into PPPs for infrastructure development and services including: • Land transport systems, including railways, bus rapid transit, public utility vehicle systems, active transportation systems, transit-oriented development, intermodal terminals, park and ride and related facilities. • Transport and traffic management projects, including transport databases, automated fare and toll collection systems, traffic signaling, traffic monitoring systems, and related facilities. In addition, the PPP Code also identifies the relevant PPP models that may be used by contracting authorities including Build-Operate-Transfer (BOT), Rehabilitate-Operate- Transfer (ROT), and operations and maintenance (O&M) contracts. Integration of climate resilience as a policy objective The PPP Code formally identified climate resilience as a consideration across the relevant sections that govern PPP project definition, preparation, and approval as noted below. Section 2. Declaration of Policy: “The State shall also ensure the integration of climate resilience, sustainability, and gender and development policies and programs in the planning, design, and implementation of PPP Projects.” Section 5. Infrastructure or Development Projects and Services: “The Implementing Agency and the Private Partner may enter into a PPP for, among others: (cc) Climate change adaptation… and disaster risk reduction and management infrastructure.” Section 18. Guiding Principles in Developing PPP Projects: “In developing PPP Projects, the following shall be considered, among others: (e) Climate resilience and sustainability.” 3.2.2 Identify the general entry points for resilience in the relevant PSP models PSP projects in the urban transport sector can have a high level of variation in aspects such as project scope, risk allocation, and performance standards. Notwithstanding the variation, it is possible to characterize the general entry points for resilience consideration for each PSP model. This can allow the governments to identify, on a preliminary basis, the potential actions at the project level to structure PSP that maximizes resilience benefits. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 84 Table 3.3 provides an illustrative risk allocation between the contracting authority and private partners in the PSP models for urban transport with respect to the following potential entry points for resilience consideration. • Site or route selection. Site selection for bus terminals and other types of urban transport infrastructure such as charging points for electric vehicles, space for public bike sharing; or route selection for bus or other urban transport services should seek to avoid climate and disaster hazards to the extent possible based on the best available data and projections. • Design. The design for urban transport infrastructure should integrate resilience standards with the necessary measures such as flood risk management, heat and cold resistance, and sustainable materials based on robust risk assessment and resilience planning. Where any public transport vehicles are procured, their specifications should be fit for purpose including climate resilience, for instance, proper ventilation and air-conditioning to address extreme temperatures and a reasonable degree of flood resistance. In case of electric vehicles, the technical readiness of the serviced areas for electric technology and the vehicle performance during extreme events should be carefully assessed including battery safety during flooding, stability of electric supply, and sufficient range of operations. • Construction. The urban transport infrastructure should be developed according to the pre-determined resilient design, passing the necessary inspection, testing, quality assurance, and safety certification to confirm that all resilient measures are in place and operational. • Service and operational continuity. The operations of urban transport infrastructure and related services should integrate good practices such as early warning and information systems that alert users and drivers against extreme events or blockage and traffic management plans that outline procedures during and after disruptions (e.g. redirecting bus services to alternative routes). • Maintenance cost and standards. The maintenance of urban transport infrastructure should optimize the lifecycle costs (e.g. enhancing maintenance procedures to minimize rehabilitation costs and maximize asset value after project completion) through measures such as preventive maintenance which addresses potential issues and reduces long-term costs, more frequent inspections and maintenance activities, and regular training for maintenance staff on the latest techniques. • Emergency preparedness and recovery. The urban transport operators should institute the necessary planning and soft measures to enhance resilience against emergencies such as conducting training for staff, implementation of emergency protocols, deployment of emergency response vehicles, and coordination with local emergency services. • Insurance for extreme events. The urban transport operators and owners should obtain sufficient insurance coverage against the significant climate and disaster risks to provide financial protection and facilitate service recovery after extreme events, where insurance is available and affordable. Please note that these key entry points and their descriptions are indicative and may not be exhaustive. These key entry points may be further considered in developing the performance requirements and KPIs in the PSP contracts. For instance, resilience-focused maintenance standards may be specified in the PSP contracts to ensure their implementation by the private partners. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 85 PSP contracts for infrastructure projects often lack specific contractual mechanisms designed to address climate change and its impacts on the parties’ contractual obligations and responsibilities. The integration of these considerations into contract drafting is still an emerging field, but may cover clauses such as Force Majeure, supervening events, change procedures, and economic equilibrium provisions. These contractual mechanisms should be tailored based on thorough and project-specific risk assessment and allocation, transferring risks to the private sector, which it can quantify and therefore can effectively price and manage, while the public sector retains the more extreme, unpredictable and difficult-to-price risks. Table 3.3 provides an illustrative risk allocation between the contracting authority and private partners in the PSP models for urban transport with respect to the potential entry points for resilience consideration. This risk allocation would be reflected in the contract. Table 3.3. Indicative risk allocation for resilience considerations General Operations and Acquisition, operations, Build-Operate-Transfer characterization maintenance and maintenance of public transport vehicles Potential • Supporting • City bus operations • Supporting applications infrastructure infrastructure Site or route Public. Private Shared. Both contracting Shared. Both selection partners are typically authority and private contracting authority granted operational partners should ensure and private partners responsibilities and avoidance of climate and should ensure avoidance have no influence over disaster hazards in the of climate and disaster site selection routes of services where hazards to the extent possible possible Design Public. Private Private. Private partners Private. Private partners are typically should ensure the public partners should ensure granted operational vehicle fleets are fit the infrastructure responsibilities and for purpose, including design is resilient to have no influence over resilience, based identified hazards up to design on requirements or pre-defined standards performance criteria set by or performance criteria the contracting authority set by the contracting authority Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 86 Construction Public. Private Not applicable. Private Private. Private partners are typically partners provide bus partners should ensure granted operational operations using roads, the civil works deliver responsibilities after bridges, busways, infrastructure as per infrastructure is and urban transport resilient design constructed network provided by the government Service and Shared. Private Shared. Private partners Shared. Private operational partners should should ensure service partners should ensure continuity ensure service continuity up to pre- service continuity continuity up to pre- defined performance up to pre-defined defined performance standards (e.g. specified performance standards standards (e.g. intensities of extreme (e.g. specified intensities specified intensities events, targets of service of extreme events, of extreme events, availability, and maximum targets of service targets of service recovery time for services) availability, and availability, and maximum recovery time maximum recovery for services) time for service following disruption) Maintenance cost Private. Private Private. Private partners Private. Private and standards partners should should implement partners should implement maintenance protocols implement maintenance maintenance protocols that ensure adequate protocols that ensure that ensure adequate performance, asset adequate performance, performance, asset quality, and cost- asset quality, and quality, and cost- effectiveness in line with cost-effectiveness in effectiveness in line pre-defined standards set line with pre-defined with pre-defined by contracting authority standards set by standards set by contracting authority contracting authority Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 87 Emergency Shared. Private Shared. Private partners Shared. Private preparedness, partners should should develop emergency partners should response, and develop emergency preparedness and develop emergency recovery preparedness and recovery plan to ensure preparedness and recovery plan to appropriate, timely and recovery plan to ensure ensure appropriate, effective response to appropriate, timely and timely and emergencies. Such plan effective response to effective response and implementation shall emergencies. Such plan to emergencies. include a coordinated and implementation Such plan and approach to emergencies shall include a implementation shall between subcontractors, coordinated approach include a coordinated suppliers, contracting to emergencies between approach to authorities and other subcontractors, emergencies between governmental authorities suppliers, contracting subcontractors, to ensure the strategic authorities and suppliers, contracting and timely provision of other governmental authorities and resources and assistance authorities to ensure other governmental for post-disaster recovery the strategic and timely authorities to ensure provision of resources the strategic and and assistance for post- timely provision disaster recovery of resources and assistance for post- disaster recovery Insurance for Private. Insurance Private. Insurance Private. Insurance extreme events coverage should be coverage should be coverage should be required if available required if available and required if available and and cost-effective cost-effective cost-effective Note: This risk allocation is indicative; Specific projects require allocation based on project context and negotiations with the private sector. Private Public Shared Source: World Bank Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 88 3.2.3 Assess the suitability of PSP model for specific projects The decision on the optimal delivery approach for a resilient urban transport project – whether as a public investment project or PPP project – should be determined based on key factors such as value for money (VfM), financial feasibility, and the alignment with policy objectives for the specific projects. Climate and disaster resilience consideration should be viewed as a relevant concern in PSP suitability assessment given that the private partners may also benefit from developing and operating infrastructure in a resilient manner, provided the PSP contracts allocate risks and incentives appropriately. In this regard, a VfM assessment represents an essential tool to assess whether the PSP delivery model will achieve greater value to the public compared to a traditional public sector delivery model. VfM compares the estimated total risk adjusted project costs of delivering public infrastructure using PSP relative to the traditional delivery model. As part of the public investment management (PIM) process, all projects generally should be subject to the same upstream processes up to and including the project appraisal. The VfM assessment should take place to determine the procurement modality (whether a project should proceed as a PSP or traditionally procured project). Depending on the jurisdiction’s legal framework, the VfM assessment can be undertaken again once the preferred bidder is selected to confirm the value for money derived from the transaction. It is important to recognize that integrating climate and disaster consideration in PSP projects represents a relatively nascent field of practice globally. As such, the lack of data benchmarks and reference transactions is a major barrier in conducting a detailed quantitative analysis of VfM in aspects such as costs, delay, and user benefits. There are two approaches to address this barrier. • First, the governments should at least conduct qualitative VfM assessment, addressing the key questions as illustrated in Box 3.4. • Second, the government should review its PSP projects in the urban transport sector to collect data that can enable quantitative VfM assessment in the future. For instance: – Comparison of bid submissions and awarded contracts for PSP versus traditional public procurement on the prices for comparable resilience specifications. – Review of the track record of projects procured under a PSP model versus those under traditional public procurement; key comparatives measures include probability and cost of overruns, probability and cost of delays, project delivery timeliness, and outcomes in managing climate and disaster risks. This will provide valuable quantitative benchmarks to help the governments refine their assumptions and estimates in future quantitative VfM assessments. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 89 Box 3.4. Key questions and illustrative consideration for qualitative VfM assessment Is the private partner better able to manage any climate or disaster risks? Whenever possible, the private partner should be required to manage the climate or disaster risks by: i) proactively incorporating resilience measures through design, construction, operations and management approaches; and/or ii) purchasing insurance for financial protection. If such actions are not possible or too costly, there may be limited or no scope to share climate and disaster risks with the private partners. This challenge is even more pronounced in PSP contracts where the private partner has no role in the design and construction of the underlying infrastructure assets. Although the private partner can implement enhanced maintenance protocols and emergency response plans, they may not be able to influence the resilience outcomes related to infrastructure design and construction (e.g. transport corridor through high-risk locations and material choice in initial design). For illustration, consider a brownfield bus terminal project, for which the city council is exploring to tender a PSP contract for O&M. • The bus terminals were built in the 1980s. Further, some of the terminals are located within an area that has become flood-prone in recent years, with climate risk assessments showing increased severity and frequency of flooding in the future. • In this case, it is important for the city council to proactively address the climate risks by considering both implementing resilience investments (e.g. enhanced drainage system) as well as ensuring any new operators adopt resilient O&M plans. • The city council may consider two options: – Expand the PSP contract to a longer-term concession that involves rehabilitation work that boosts resilience coupled with O&M performance standards that address the identified climate risks; or – Implement resilience investments through public procurement, and after the necessary resilience-enhancing civil works are completed, tender an O&M contract for PSP. • The choice between the two options above may be decided by further considering factors such as financial viability, private sector interest, and strategic alignment with the city council’s objectives. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 90 Box 3.4. Key questions and illustrative consideration for qualitative VfM assessment (cont.) • It may not be appropriate for the city council to tender an O&M contract without having addressed the increased vulnerabilities of the bus terminals to flooding due to initial design and site selection that did not anticipate climate risks. Without such measures, even if the city council imposes climate resilient O&M performance standards, the private partner may overprice the bid to account for unmitigated risks and/or struggle in meeting the standards. Is a long-term contract viable and favorable to both parties in view of climate change- induced uncertainties? • Climate change can introduce significant uncertainties to the costs of operation, maintenance, and adaptive capital works in urban transport projects. This may necessitate flexibility to initiate changes to the PSP contracts, otherwise the contractual rigidity may hinder effective resilience actions. • If it is too challenging to build in PSP contract clauses that allow flexibility and/or there is limited capacity to implement them, entering into a long-term PSP contract may not be suitable. • For illustration, consider a greenfield bus terminal project. – The city council is considering to tender the country’s first PSP contract for bus terminals and in the process of determining the appropriate contract scope and term. – A climate risk assessment indicates significant flooding risks, but these risks can be addressed through gradual adaptive capital works at regular intervals and potential adjustments to performance requirements over the concession’s period. – The city council has no prior experience in implementing a PSP model for bus terminals, likewise with regards to designing and implementing complex contractual requirements. – In this case, instead of tendering a long-term and extensive concession such as Build-Operate-Transfer (BOT), the city council may consider constructing the bus terminals through traditional public procurement, including for the gradual adaptive capital works, and only use PSP on a more limited basis to provide operation and maintenance services. – This can allow the city council to gain more experience in working with private partners before undertaking more sophisticated and long-term PSP contracts which require strong capacities in contract structuring and management approach to deal with any climate-related uncertainties. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 91 Box 3.4. Key questions and illustrative consideration for qualitative VfM assessment (cont.) Is it possible to define clear resilience-focused performance requirements in contracts and monitor them during project implementation? • To add resilience-focused performance requirements in PSP contracts, a major determinant is whether the private sector has the risk appetite and capacity to accept and implement those requirements. This can be ascertained by conducting market sounding at early stages of preparing the urban transport projects. • Where there is low risk appetite and/or capacity in the private sector in this regard, the potential in using the performance-based mechanism of PSP contracts to deliver resilience investments would be more limited. Incorporate resilience-focused performance requirements and KPIs Performance requirements are highly specific to a project and their development should consider the project design, feedback from market sounding, and experience in the country with similar contracts. To integrate resilience consideration into PSP contracts, the governments are recommended to address the specific aspects when developing performance requirements for an urban transport project. The Disaster and Climate Resilient Transport Guidance Note provides examples specific to this sector. Climate and disaster hazards can be hierarchized based on their likelihood and recurrence period in this order: 1. Mobility 2. Connectivity 3. User safety It is important to note that depending on the intensity of the hazards, the priority of these categories and their associated Key Performance Indicators (KPIs) may change. For instance, during a severe weather event, user safety might temporarily become the top priority. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 92 3.2.4 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions presented in Table 3.4. Table 3.4. Opportunities for collaboration Potential government stakeholders • City governments (Lead) • Ministry of Transport including public transport authority • Ministry of Finance • PPP Unit Opportunities for collaboration Expected outcomes Enabling actions Technical assistance: 1. Enhanced capacity among government officials to assess PSP suitability in general 1. Develop a strategic action plan outlining the and with respect to resilience consideration relevant PSP models and their respective for urban transport entry points for climate and disaster resilience in the urban transport sector 2. Enhanced PSP project preparation approach among government officials which 2. Develop guidelines on addressing resilience addresses the key entry points for resilience consideration in the PSP suitability consideration for urban transport assessment for the urban transport sector, including how climate related risk can be shared between the public and private party, and if supported by the private party, at what conditions 3. Capacity building on PSP suitability assessment and integrating resilience consideration for the city council and the PSP approving authorities Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 93 Project-level actions Technical assistance: 1. Increased number of pipeline urban transport projects, both greenfield and 1. Develop sample terms of reference (ToR) for brownfield, that go through robust PSP engaging transaction advisors to conduct suitability assessment including for feasibility study which includes a robust PSP resilience considerations suitability assessment including addressing resilience consideration for urban transport 2. Increased volume of investment in resilient urban transport projects delivered 2. Develop guidelines on how to structure through PSP resilience-focused performance requirements and KPIs for urban transport 3. Enhanced capacity among government based on risk assessments officials in developing resilience-focused performance requirements and KPIs for PSP 3. Implement pilot resilient urban transport projects for urban transport projects involving PSP which include PSP suitability assessment that covers 4. Enhanced institutional assets (e.g. resilience consideration, resilience-focused guidelines and terms of reference) for performance requirements and KPIs implementing and quality control of resilience-focused project preparation activities 3.3. Funding and financing for resilient urban transport projects 3.3.1 Address funding need through project-level resources A funding gap arises when the revenue that can be generated by a specific urban transport project involving PSP falls short of the total investment, operational and maintenance costs of the project. Investing in the resilience of an urban transport project would in many cases increase upfront costs and maintenance costs, thereby widening the funding gap, even though the investment can lead to lower total lifecycle costs compared to a baseline scenario without resilience measures. The government should assess the possibility of recovering the additional costs of resilience investments by incorporating a tariff component within the user tariffs, noting that users’ willingness and ability to pay should be carefully studied and considered. The tariff components can be split into: • Base facility charge: Covers capital costs, operating costs, debt repayment and returns to equity. • Resilience investment charge: Covers the additional costs associated with resilience investments. Resilience investment charge can be levied when the willingness and ability to pay of users are higher than the regulated prices (if any) set by the governments, whereby such prices can be adjusted upward, without breaching the estimated willingness and ability to pay. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 94 It is important to note that the implementation of resilience investment charges in the urban transport sector may require the governments to address the potential challenges such as political sensitivity, difficulty in quantifying and communicating resilience benefits, equity and affordability concern, and the lack of legal and regulatory frameworks. When such tariffs can only recover part of the costs, governments may provide viability gap funding to close the remaining funding gap. This, however, needs to be applied with caution and be reserved for cases where all other funding instruments have been proven inadequate, otherwise there is a risk that private partners may implicitly pass a large portion of resilience investment cost to the contracting authorities through the viability gap funding. Hence, it is advisable that in case the economic analysis demonstrates an actual benefit of resilience investments (in the form of reduced operational losses for repairs and maintenance), this benefit is factored in first, and that the government support is provided in the form of a loan that the private partner will have to repay, whenever possible. 3.3.2 Deploy public funding support to address project-level funding gaps Beyond seeking to generate funding through user charges, governments would need to deploy public funding support such as viability gap funding to increase the bankability of resilient urban transport projects with un-funded investment needs so that PSP can be mobilized. In this regard, the governments should develop a funding strategy to cover the additional funding needs of resilient urban transport projects for purposes that include. • Project preparation. This concerns the additional costs for climate-related project preparation activities, including climate risk and vulnerability assessment, feasibility studies including adaptation solutions, and integrating resilience considerations in procurement and contracting. • Project investment. Resilient urban transport projects often need additional investments upfront and during the operational period, which would increase the project investment costs. • Dealing with contingencies. Contingency funding is important for addressing residual climate and disaster emergencies. In practice, it is neither feasible nor cost-effective to over-specify and over-invest in resilience measures that aim to prevent all identified climate and disaster risks. Therefore, making available contingency funding is key to enabling timely recovery from the unmitigated impacts of any extreme events. 3.3.3 Explore using innovative financial instruments Innovative financial instruments can facilitate and improve the financing outcomes of resilient urban transport projects that have been properly prepared to ensure commercial and financial feasibility. Use-of-proceed bonds, such as green and sustainability bonds, can be used to raise financing for urban transport projects that contribute to climate change mitigation and adaptation. These instruments can help the issuers (e.g. government entities and project companies) to demonstrate their commitment to climate actions. This may potentially enable the issuers to reach a broader investor base and achieve more favorable costs of capital in some cases. For instance, sovereign and municipal governments may issue sovereign or sub-sovereign green bonds to raise public debts, and then use the proceeds in a blended finance approach to support the project companies of resilient urban transport projects. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 95 In green bonds, the sovereign and municipal governments would have to ensure the proceeds are only used for the green investment projects (e.g. low-carbon and resilient investments for BRT). The feasibility of doing so may depend on a country’s public financial management framework that governs which entities have the legal ability to borrow, and meet the technical requirements for green bond issuance (e.g. ring-fencing of proceeds). Box 3.5 provides an example of green issuances by a city government where the use of proceeds supported public investment in urban transport projects. While the project delivery approach may be different under a PSP, there is similarly significant potential for governments to use green issuances to finance resilient urban transport projects involving PSP. Box 3.5. Green bond issuance by Mexico City Mexico City’s Climate Action Program is designed to strengthen the city’s efforts in achieving low-carbon development and increase resilience against future climatic shocks. In 2016, Mexico City became the first city in Latin America to issue a green bond through its MXN 1 billion (USD 50 million) municipal green bond that helped finance the Climate Action Plan. The green bond targeted infrastructure investment in three major strategic themes. • Sustainable transport, which included Bus Rapid Transit to substitute high-emission microbuses for low-emission buses, light rail, and betterment of the Mexico City Metro. • Water and wastewater management, which focused on the modernization of the City’s water distribution network including the construction, replacement, and maintenance of water collection and drainage facilities. • Energy efficiency, which included installing and maintaining LED streetlights and lights in municipal buildings. The implementation of the Climate Action Plan using financing by the green bonds was expected to generate the following benefits. • Climate and environmental benefits, including the maintenance of more than 200,000 m2 of green areas, collection of 376 tons of used batteries, and the protection of 925,000 m2 of conservation land. • Social benefits, including a gender perspective in the infrastructure investments to ensure greater equality as climate change impacts affect women and men differently. • Financial benefits, for instance, the green bond issuances were oversubscribed two-and- a-half times, indicating how novel financing instruments can be used to facilitate the access of cities to climate financing. Private companies represent another major group of potential issuers which may use green or sustainability bonds to raise financing for supporting resilient urban transport projects. These can include companies tasked to undertake responsibilities such as the development and management of urban transport infrastructure, procurement of rolling stock or public transport vehicles, and the operation of urban transport systems. Box 3.6 provides an example of issuance by a private rail company. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 96 Box 3.6. Green bond issuance by a private rail company BTS Group Holdings PCL (BTSG) is the mass transit service provider in Thailand and a privately-owned conglomerate. Its subsidiary, Bangkok Mass Transit System PCL (BTSC), acts as the concessionaire and operator of the BTS Sky Train Core Network (Green line), its extensions and the Bus Rapid Transit system as well as the Pink and Yellow monorail line concessions. In November 2021, BTSC issued green bonds to raise THB 10.2 billion (about USD300 million), which have been fully allocated in the category Clean Transportation across projects in Thailand. These issuances supported the projects of Green Line North Extension and South Extension, which enabled a more sustainable and resilient extension of Bangkok’s railway system. While most issuances in the current market focus more on climate change mitigation (emissions reduction), resilient urban transport projects which also deliver significant climate resilience benefits may likewise benefit from the issuance of green or sustainability bonds. As the efforts to integrate resilience investments in urban transport projects increase, the development of a more robust project pipeline can facilitate the growth of green bond market segments that support both climate change mitigation and adaptation in urban transport. 3.3.4 Access international concessional climate finance Governments should explore collaboration with development partners to access concessional finance for promoting PSP in resilient urban transport projects. Further, blended finance instruments such as concessional loans and guarantees can help improve the risk-return profile of resilient urban transport projects to mobilize additional private investment. In particular, multilateral development banks (MDBs), such as the World Bank Group, can play key roles through their own provision of financing and technical assistance, as well as potentially acting as the implementing entities to access additional climate finance from concessional climate funds. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 97 Box 3.7. Climate-resilient light rail transit in Costa Rica Background Costa Rica has one of the highest vehicle share per 1,000 inhabitants in Latin America. To promote sustainable transport, the Light Rail Transit (LRT) for the Greater Metropolitan Area is conceived to deliver efficient, sustainable, and resilient electric LRT along the central East-West axle of the larger urban zone of San José with 85 km of double tracks on fice lines, which are projected to potentially serve 63 million passengers yearly. Key resilience actions The LRT also aims to strengthen the resilience of the city’s transport system to impacts of climate change, which include heat waves, hailstorms, downpours, floods, and changes in temperature and precipitation. To understand the risk profile, a climate risk and vulnerability assessment was conducted which found that significant climate risks in the LRT project area, some of which may give rise to potentially severe damage if the effects of future climate change are more significant than anticipated. Therefore, the construction and operation of the LRT will integrate comprehensive resilience measures to ensure the protection of users and infrastructure such as usage of heat- resistant materials, protection against flooding of depots, and the design of urban drainage systems that guarantee a storage and retention capacity of water in the rain peaks. The project is committed to implementing the high-quality resilience measures. For instance, the sizing of bridge structures will be based on a design return period of 500 years instead of the standard 100-200 years, with the objective of reducing the flood risk from 39 percent (200- year period) to 18 percent (500-year period). An independent assessment showed that the LRT design is climate resilient and incorporates holistic best practices for a climate resilient infrastructure. This included non-motorized transport and connectivity interventions such as an increase in green areas, which can further contribute to improved resilience of urban infrastructure. Financing The total cost of the project is US$ 1.554 billion, of which the Central American Bank for Economic Integration (CABEI) is financing US$ 550 million. To improve the financial feasibility of the project, CABEI, as a direct access entity of the Green Climate Fund (GCF), successfully secured an approval from GCF for a concessional financing package, which comprises i) a concessional loan with an annual interest rate of close to 0%, a term of up to 40 years and a grace period of up to 10 years; and ii) a grant of US$ 21.3 million. The remaining amount is intended to be mobilized from additional development partners, and the private sector through a concession to be awarded via a competitive bidding process. Sub-sectoral Roadmaps to Promote Private Sector Participation in Transport Resilience: Roads, Railways, and Urban Transport 98 3.3.5 Opportunities for collaboration with development partners Governments may collaborate with development partners to implement the actions presented in Table 3.5. Table 3.5. Opportunities for collaboration Potential government stakeholders • City governments (Lead) • Ministry of Transport including public transport authority • Ministry of Finance including PPP Center Opportunities for collaboration Expected outcomes Technical assistance: 1. Increased number of pipeline resilient urban transport projects that have developed 1. Conduct funding and financial structuring sustainable funding and financing structure for resilient urban transport projects to mobilize PSP 2. Increased volume of green bond issuance by government entities and transport 2. Conduct feasibility studies that include service companies involved in resilient urban analysis on willingness and ability to pay for transport projects urban transport projects 3. Increased volume of concessional financing 3. Advise on the issuance of green bonds by to government entities and transport entities such as government entities and service companies involved in resilient urban transport service providers to support transport projects resilient urban transport projects 4. Increased volume of private investment mobilized for resilient 4. Provide training to government officials on urban transport projects prioritizing and preparing urban transport projects for climate finance Financial support: 1. Provide concessional financing to governments to invest in resilient urban transport projects 2. 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