Montevideo Urban Resilience Project

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Country Context. Uruguay has enjoyed robust economic growth since 2002. Nevertheless, despite this positive national picture, a keyremaining challenge is to meaningfully impact on the living standards of the chronically poor and marginalized. Uruguay has reducedhousehold poverty from 29.6 percent in 2007 to 7.9 percent in 2017. However, certain social subgroups are systematically missingout on the benefits of prosperity. Female-headed households are twice as likely to be poor than those in male-headed households,and the Afro-descendant population has a poverty rate of 20 percent – more than twice the national average. Montevideo, whichaccounts for two thirds of GDP, has one of the highest poverty rates of the country (13 percent in 2014) and harbors pockets ofsome of the poorest and most vulnerable communities.Climate change will further exacerbate social inequalities and contribute togrowing vulnerability. With projected variations in precipitation, flood risks are expected to increase, exacerbated bydeficiencies in drainage systems. Uruguay has adopted a range of policies in its attempt to promote social inclusion and boostresilience, but institutional capacities to effectively execute them fall short.Sectoral and Institutional Context. Althoughcities in Uruguay are not growing overall, informal settlements are expanding, particularly in peri-urban areas. Under thiscontext, lack of planning, enforcement of regulations and reckless construction in these areas helps perpetuate precarious livingconditions. Poverty and spatial segregation problems are particularly acute in Montevideo. The number of households with UnmetBasic Needs can rise to up to 60% in some neighborhoods. One key example of a spatially segregated and degraded urban area is thePantanoso River Basin (the Basin) that expands across two Municipalities within the City of Montevideo.The Government ofMontevideo (IMM in Spanish) has prioritized the development of the Basin in Montevideo as a flagship effort to impact positively onthe living conditions of poor and marginalized Uruguayans. The Program for the Integral Transformation of the Pantanoso River Basin(PTICP in Spanish) is a wide-reaching urban rehabilitation and regeneration program. The PCTIP seeks to act as an umbrella forwide-ranging interventions that address the following key themes: (i) improving the living standards and ensure equal access toquality public services; (ii) protecting the fragile urban river and wetland ecosystem through increased recreational andeducational use; (iii) generating jobs and other local economic development that attracts new investors; and (iv) connecting theBasin more effectively with the rest of the city and improving local identity and perception.The Project seeks to co-finance thePTICP, and would be structured in five components. This structure enables the Project to address the interlinking dimensions ofphysical, social, and economic resilience that Montevideo's territorial development plan for the Basin seeks to generate, and thekey institutional gaps that must be addressed to handle the complexity of this type of multi-sectoral project. Specific type andlocation of investments under each component will be identified during Project preparation, with extensive stakeholder engagementand in close collaboration with IMM and co-financiers.Component 1 would implement a series of structural investments that willaddress the precarious living conditions of some of the most vulnerable households in the Basin, by providing quality sustainablehousing and improving basic infrastructure. The component would support the ongoing Montevideo's V Urban Sanitation Program and theFive-year Housing Plan.Component 2 would seek to establish critical service delivery improvements and address gaps wherehouseholds are slipping through the social safety net. The strategy would focus on maximizing the impact of existing policies andsectoral strategies and defining an inter-institutional approach to improve effectiveness in reducing social exclusion (withsupport from activities conducted under Component 4). The specific households to be supported would be defined through a socialassessment that will establish prioritization criteria during Project preparation.Component 3 would combine vocational support toinhabitants with generation of local economic activity and investment to improve employment prospects within and outside theimmediate territory. Any public or private investment in local facilities, such as the technology and industrial park, shouldcreate positive social externalities in the form of new jobs and other benefits.Component 4 would support and build the capacityof the institutional arrangements that have been established to implement the PTICP. It would focus on supporting mechanisms forhorizonal integration across policies and interventions, and vertical coordination between the roles of national, city level andmunicipal governments.The Project responds to the World Bank’s criteria for working with upper middle-income countries. Inparticular, it seeks to contribute to regional and global public goods by demonstrating an effective horizontal institutionalstrategy to achieve resilience in a specific territory. It will address critical institutional gaps that have so far limited thecapacity of the Government to implement such a strategy. In addition, the Project would contribute specifically to the threepillars of the Country Partnership Framework (CPF). It would contribute to building resilience to economic and weathervulnerabilities (CPF Pillar One) by supporting IMM to implement a territorial approach to resilience, as part of nationalcommitments to growth and inclusion. The natural assets of the Basin will be integrated as key contributors to resilience withinthe same, further bolstering Uruguay’s reputation as a clean and green economy. Given the demographics of the Project area, withthe poorest population being predominantly young, the Project will also contribute to the refocus on the social compact on theyoung (CFP Pillar Two) by addressing social exclusion of some of the most marginalized young people in Uruguay and breakingbarriers to social mobility. Finally, through its focus on local economic development, the Project will contribute to the overallcompetitiveness of Montevideo (CPF Pillar Three) through supporting local institutional capacity. The Project will supportinstitutional strengthening with emphasis on integral urban development. Specific activities to be financed under the Project areyet to be defined but are expected to include technical assistance, initial clean-up and restoration of the baseline situation andinfrastructure works. The works to be financed will be subject to a closer definition as the Project preparation proceeds, but theyare expected to cover environmental clean-up, sanitation and river basin and wetland restoration on one hand, and basicinfrastructure at the neighborhood level on the other hand. The latter will improve access to water supply, sanitation, drainage,electricity, public lighting, gas, and paved roads, enhancement of public spaces and access to health and education services.