USAID CBJ FY 2002: El Salvador

Summary: Two major earthquakes rocked El Salvador in January and February 2001, killing 1,159 and injuring another 8,122. Landslides, now numbering 645, contributed importantly to the deaths, including more than 500 alone from one landslide in Santa Tecla. According to the Economic Commission for Latin America (CEPAL), losses from the first earthquake are placed at around $1.3 billion; and combined with the second earthquake losses could well exceed $2.0 billion. The earthquakes have affected more than 1.5 million Salvadorans. Social infrastructure has been especially hard hit, with significant losses of homes, schools, health units, and municipal infrastructure. Potable water supplies were disrupted extensively in many municipalities. While productive sector damage was less severe, losses of agricultural revenue could reach $150 million, and damages to private facilities such as coffee plantations and mills and poultry facilities are estimated at around $50 million.

Key Results: Four key intermediate results will contribute to the achievement of this special objective, including (1) Community Infrastructure Restored for the Rural Poor, (2) Economic Activity Reactivated, (3) Adverse Effects of Future Natural Disasters Mitigated, and (4) Municipal Government Infrastructure Refurbished.

Performance and Prospects: This objective will respond to the earthquake-related needs of the rural poor in those geographical areas of the country where damages from the earthquakes were the greatest. It will address needs that are not covered by other donors. In its development, wide consultations with USAID's developmental partners, including the Government of El Salvador (GOES), municipal authorities, U.S. PVOs, local NGOs, the country's private sector, and other members of the international donor community, were undertaken to ensure that activities generate the greatest benefits for the affected population. The program will enlist the support of all implementing partners to ensure that activities are carried out with transparency and reach intended beneficiaries-the earthquake-affected rural poor in El Salvador. In that regard, the country's Court of Accounts, which has received certification from USAID's Regional Inspector General's Office in San Salvador to perform audits on our behalf, has a key role to play.

1. USAID will restore community infrastructure in the rural areas through investments in (a) housing and shelter, (b) schools, (c) public health facilities, and (d) potable water.

(a) Housing reconstruction. Repairing and rebuilding housing is most critical; of all the country's subsectors, housing suffered the greatest earthquake-related damage in dollar value terms. The total housing damage reported by the municipal mayors through the Vice Ministry of Housing and Urban Development is 334,866 units, including 149,528 units destroyed and 185,338 units damaged. CEPAL's replacement cost estimate is almost $800 million. USAID proposes a $59 million housing reconstruction assistance program to benefit up to 18,000 low-income families or close to 15% of the poor with earthquake housing damage. The assistance will not only replace pre-existing housing but also substantially improve its structural and environmental quality. In turn, this will serve to mitigate future loss of both life and property caused by natural disasters. The housing program will be implemented through the Government of El Salvador and USPVOs such as the Cooperative Housing Foundation (CHF), CARE and Samaritan's Purse. These PVOs participated importantly in our temporary housing programs and have a proven track record for doing good work.

(b) Repair and reconstruction of earthquake-affected rural schools. Over 2,200 schools were damaged in the first earthquake, including 106 totally and another 359 severely. Another 111 schools were affected by the second quake. The subsequent closure of these damaged schools has precluded over 600,000 children from continuing their basic education. If not addressed rapidly, the lack of school facilities will substantially increase drop out rates. USAID will invest $10 million for the reconstruction of 25 destroyed rural schools (about 23% of the total), repair and restoration of 1,250 classrooms (6% of total), and replacement of school equipment and materials damaged or lost in 250 rural schools. In all, 125,000 school age children would regain access to basic education.

(c) Health reconstruction program. According to the Ministry of Health (MOH), damages to the public health sector facilities are estimated at over $40 million, including facilities and medical equipment. USAID plans to provide $6 million to address earthquake-related needs in the public health area. Of the more than 100 damaged facilities, this program would provide for the reconstruction of eight and would cover the operating expenses of the mobile hospital that the DOD is donating in Santa Tecla. More specifically, the USPVO Americares will be working to improve the delivery of health care in the Department of Usulutan, putting in a new community health facility in Santiago de Maria. The health reconstruction program would also provide funds to replace equipment lost by community health providers, including both health promoters and midwives. These individuals are the front line providers of primary health care for the country's most vulnerable populations. Full restoration of health services is needed urgently to deal with possible recurrences of dengue fever and gastroenteritis outbreaks that are sure to occur when the rainy season commences.

(d) Potable Water program. Damage to water systems was most severe along the coastal plains where subsurface water movements affected wells and pump equipment, reduced water levels and left behind a thick layer of silt. Salt-water intrusion has also been widely reported, and there was extensive structural damage to houses that sheltered pumps and other equipment. In the central region, the earthquakes caused many springs to go dry, and landslides damaged pumping, piping and storage facilities. Total water-related damages likely exceed $25 million. USAID will invest $8 million to address potable water needs in rural areas not served by the GOES water authority (ANDA). The intent is to provide access to clean water, sanitation systems, and latrines for 50,000 poor Salvadoran households. USAID will also undertake landslide mitigation training and assessments that will be used to prepare risk maps that show local NGOs the means to mitigate landslide hazards that threaten water and sanitation systems, small towns, and rural roads.

2. USAID will reactivate economic activity, stalled by earthquake devastation. The earthquakes disrupted the income generating capacity of the micro and small enterprise sector in El Salvador and reduced family savings. According to preliminary estimates, approximately 43,000 of the 473,163 micro and small entrepreneurs (MSEs) nationally suffered severe damage to their homes and/or businesses. In addition, the country's agricultural sector, which provides for 30% of total employment within the country, also incurred heavy losses. In all, 40,000 small farmers have been affected, including the loss of 5,000 permanent jobs.

USAID will assist MSEs and small farmers to generate the income they need to get back on their feet. To assist earthquake-affected MSEs, it will provide $5 million to help approximately 2,500 MSE families rebuild or acquire the productive assets they need to re-establish home-based businesses. The focus will be on families in the hardest hit areas. Moreover, these monies also will be utilized to rebuild local market facilities that will benefit another 2,500 MSEs. USAID will also establish a fund to meet MSE financial needs. For small farmers, it will allocate $10 million in local currency generated by PL 480 commodity sales to support the reconstruction and repair of approximately 200 essential small agricultural infrastructure activities that are expected to benefit as many as 20,000 small farmers. Such infrastructure could include small silos, small irrigation systems, small animal sheds, local farm markets, and rural roads, amongst others.

3. USAID will mitigate the adverse effects of future natural disasters through a four million dollar program. While earthquake-induced landslides were the principal cause for the human fatalities in these two disasters, critics claim that the losses of human lives could have been reduced if proper land-use plans had been in effect. The country also is at risk for further landslide destruction owing to the fact that seismic activity has created slope failures that with the advent of the rainy season could become devastating landslides. The reconstruction program will put in place land-use ordinances in 75 communities. The earthquakes also demonstrated the lack of effective disaster mitigation planning at municipal and community levels. Such planning would have enabled the municipalities to respond more effectively to emergency needs in the aftermath of the earthquake. Consequently, USAID will assist 100 municipalities in the preparation of disaster mitigation plans. USAID will continue to work with the national disaster agency (COEN) to enhance its capacity to manage future disasters, and it will strengthen the country's seismic, landslide, flood, and volcanic monitoring capacity, building on the technical assistance already provided by the USGS.

4. USAID will allocate five million dollars to refurbish municipal government infrastructure. USAID has been working successfully for seven years in the area of municipal development on decentralization, transparency, and greater citizen participation and does not want to see these investments compromised due to the destruction of key municipal infrastructure by the earthquakes. This program will refurbish 91 of the 182 rural justice-of-the-peace/judicial centers that were destroyed or damaged and 90 of the 178 municipal offices affected by the earthquakes. Absent the reconstruction of these facilities, the municipalities, which play a key role in local development, will not be able to attend to the needs of their constituents; they also will not be able to take a seat as a key player in the reconstruction effort.

5. USAID is also seeking three million dollars for program management. This will help fund the unit within USAID/El Salvador that will be responsible for program implementation, as well as provide funds for audits, analyses, assessments, and evaluations.

In FY 2001, USAID will obligate $31.9 million which includes carryover funds ($15.3 million DA, $3.7 million CSD and $12.9 ESF). Funds from other sources will complement these allocations to provide for a total reconstruction assistance package of $52.0 million for FY 2001. These sources consist of $10 million in 416b monetized food assistance; $3 million in International Disaster Assistance; $2 million in Office of Transition Initiatives funds; and $5.1 million in Prior Years DA and CSD funds redirected from ongoing activities managed by USAID/El Salvador.

In FY 2002, USAID will obligate $26.3 million ($2.9 million DA, $3.9 million CSD, and $19.5 million ESF). Funds from other sources (yet to be identified) will complement these allocations to provide for a total reconstruction assistance package of at least $58.0 million for FY 2002. Some of these sources consist of $1.6 million in Prior Years DA and CSD and $1.8 million in Deobs/Reobs.

For both years, the funds will (a) support the reconstruction of community infrastructure, including housing, schools, health units, potable water systems, and justice-of-the-peace and municipal offices; (b) provide for economic reactivation, working with micro and small entrepreneurs; (c) prepare the country for future disasters coordinating closely with municipalities and the country's disaster management and seismic monitoring agencies; and (d) finance audits, evaluation, and management costs.

Possible Adjustments to Plans: As USAID moves to the design stage for each of the elements of the earthquake reconstruction program, it may need to make adjustments in both the nature of the proposed interventions as well as the dollar allocations to them. It will need flexibility initially to ensure priority needs are being met and that there is no overlap with other donors. If USAID discovers that support for an activity is oversubscribed, it will seek to reallocate line items within the budget.

Other Donor Programs: At the Consultative Group meeting in Madrid on March 7, 2001, donors pledged roughly $1.15 billion to meet Salvador's reconstruction needs, including reprogrammed funds in the amount of $300 million, fresh monies of $850 million, and $700 million on loan terms. The GOES will allocate $150 million of its own monies for reconstruction. In sum, in light of reconstruction needs of at least $2.0 billion and more, these data suggest that El Salvador's unmet needs will be considerable, leaving a funding gap of over $600 million.

The greatest sources of funding available to El Salvador for reconstruction are the multilateral development banks (the Inter-American Development Bank--IDB, the World Bank, and Central American Bank for Economic Integration (BCIE)). To date, the IDB has provided a $50,000 grant, a $70 million balance-of-payments/budget support program, and a $20 million emergency reconstruction loan ($15 million allocated for emergency housing and $5 million for slope stabilization to prevent the recurrence of landslides). An additional $20 emergency reconstruction loan also is under consideration. In addition, the IDB will re-program $110 million in previously approved programs for the refurbishment of schools, reconstruction of public works, roads, reconstruction of health facilities and related equipment, and temporary housing. For its part, the World Bank has proposed a $200 million emergency loan, with a significant housing component of about $100 million. It is considering reprogramming between $30 and 50 million, primarily for the reconstruction of schools. The Central American Bank for economic Integration (CABEI) will provide $75 million in fresh loans as well as reprogram $125 million in old loans. In sum, the three entities together will be allocating between $650 and $670 million for reconstruction. In addition, the World Food Program (WFP), United Nations Development Program (UNDP), Japan, and bilateral governments within the European Community are providing assistance for earthquake reconstruction.

Principal Contractors, Grantees, or Agencies: To be determined. U.S. PVOS and local NGOs will likely play a major role, as well as selected GOES entities such as FONAVIPO, the national housing fund.

El Salvador: 519-008

* This objective was approved on March 22, 2001, and details such as source of data will be determined in the coming months.

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	0	DA	0	DA	0	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Fiscal Year 2000	0	DA	0	DA
	0	CSD	0	CSD
	0	ESF	0	ESF
	0	SEED	0	SEED
	0	FSA	0	FSA
	0	DFA	0	DFA
Through September 30, 2000	0	DA	0	DA	0	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Prior Year Unobligated Funds*	9,095	DA
	0	CSD
	9,371	ESF
	0	SEED
	0	FSA
	0	DFA
Planned Fiscal Year 2001 NOA	6,150	DA
	3,743	CSD
	3,500	ESF
	0	SEED
	0	FSA
	0	DFA
Total Planned Fiscal Year 2001	15,245	DA
	3,743	CSD
	12,871	ESF
	0	SEED
	0	FSA
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	2,850	DA	0	DA	18,095	DA
	3,928	CSD	0	CSD	7,671	CSD
	19,500	ESF	0	ESF	32,371	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA

El Salvador

Activity Data Sheet

El Salvador: 519-008

U.S. Financing