Environmental Sustainability and Urban Resilience DPF

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The development objective of the Environmental Sustainability and Urban Resilience Development Policy Financing in Mexico supports: (i) strengthening environmental sustainability and resilience; and (ii) expanding access to resilient urban infrastructure and social housing. The operation’s first pillar strengthens the authorities’ efforts to improve environmental sustainability and resilience. Mexico continues to be extremely vulnerable to increasing climate variability and occurrence of extreme weather events such as recurring cyclones, heat waves, droughts, and floods that can damage infrastructure, including rural and urban housing, disrupting supply lines, commercial operations, and strengthening environmental sustainability and resilience economic activities. In addition to implementing an agenda to reduce this vulnerability, Mexico has important commitments to decarbonize to improve its competitiveness and reduce GHG by 2030 through its Nationally Determined Contribution (NDC). The operation’s second pillar supports the authorities’ reforms geared to expand access to resilient urban infrastructure and social housing. The housing deficit and the susceptibility of the existing housing stock to natural events are important challenges, affecting acutely a large number of vulnerable households. Under the supported new policies, targeting mechanisms are being introduced to ensure that the funds are allocated to poor households, vulnerable populations and those exposed to natural disasters (including those stemming from climate risks). Critically, the policy reforms introduce strict resilience criteria for construction and renovation. Mexico's urban expansion has exacerbated spatial inequalities, increased deficits of social and urban services, and expanded development, often in areas highly exposed to natural disasters.