According to the Bank’s website, the project will have the following outcome: climate resilience of communities and natural ecosystems increased. The draft outputs and components are as follows.

Output 1: Institutional capacity to sustain a long-term and resilient planning process enhanced. This output will address the NAP priorities under Decision Point 1 i.e., measures to build national readiness and capacity to plan for an anticipated 0.5 m-rise in sea level before 2070, including: (i) country-wide discussions to identify and agree on measures to secure land for relocation against the risk of sea level rise, including community agreement for the potential use of traditional lands; (ii) institutional and policy reforms to streamline government roles and responsibilities and scale up climate adaptation measures, focusing especially on the natural resources sector; (iii) capacity building for government agencies to strengthen coordination and adaptive planning, project management and climate financing; (iv) stakeholder mapping and awareness programs about climate changeincluding for communities, CSOs, women, the poor, and vulnerableto build public awareness of projected climate impacts and support community identification of adaptation measures; and (v) scaling up the role of the private sector for adaptation planning, including capacity building for local contractors for compliance with RMI construction codes and to partner with international contractors.

Output 2: Technical solutions for adaptation planning strengthened. This output will: (i) conduct detailed climate change impact modeling and mapping of flooding, erosion, groundwater resources, natural habitats, ecosystems, and land use for selected semi-urban and rural atollsto establish a platform of publicly available updated data and assessments to guide near- and medium-term adaptation planning under the NAP; (ii) identify lessons from ongoing coastal protection activities; (iii) prepare atoll- and sector-specific adaptation plans aligned with NAP priorities and guidelines, focusing especially on community farming and fishing, commercial fisheries, coastal protection, and conservation and restoration of habitats and reefsincluding measures to address existing threats which undermine adaptation efforts; (iv) prepare a national investment roadmap and financing plan, including follow-up projects, costs, financing, and stakeholdersincluding the private sector, CSOs, and development agenciesto catalyze implementation of near- and medium-term priorities of the NAP; and (v) design of monitoring systems (including provision of digital technology) to measure climate impacts to natural resources and water and food security at selected locations.

Output 3: Ecosystem-based and hybrid approaches for coastal protection demonstrated. This output will implement small-scale pilots of NbS and hybrid works for selected atolls and sectors by applying the technical assessments and draft adaptation plans prepared under output 2. Components are anticipated to include: (i) measures to sustain community-led agriculture (crops and agroforestry) and fishing under climate change, through traditional farming and fishing systems integrated with restoration of coastlines and natural habitats; (ii) measures to improve the sustainability of the commercial fisheries sector under projected climate change, linked with reef restoration and marine protected area management; (iii) small-scale hybrid measures, including engineering, to protect groundwater and rural and urban infrastructure from coastal floodingand which can be scaled up to build longer-term adaptation to sea level rise; (iv) piloting the use of local aggregates and construction waste for the project works, to reduce costs and dependence on imported materials; (v) establishing monitoring systems to evaluate the feasibility of solutions and benefits to communities; and (vi) dissemination of project findings and lessons to national and international stakeholders.

ADB value addition. The NAP is prioritized by the government as a national 'survival plan to address climate change, and the project will be the largest to support the NAP. The project emphasis on nature-based as well as structural measures addresses the needhighlighted in the NAPfor holistic solutions to climate change. It complements other development support to the RMI, which has largely focused on urban atolls and sectors and structural solutions (e.g., seawalls) (see Development Coordination). The climate assessments under the project will be informed by best-practice science, local knowledge, consultation, and collaboration with local and international stakeholders; and will serve as a public resource. This will strengthen the project's value as a catalyst for further investment and transformative adaptation to climate change for the RMI. The ADF grant resources will help finance international and national experts for project design and implementation, and cross-learning with other SIDS and atoll countries. Opportunities for co-financing and/or additional expertise will be assessed during project preparation.

The RMI is in the northern Pacific Ocean and is one of four atoll countries in the world. It comprises about 30 atoll groups (comprising over 1,000 islands and islets) and in 2021 had a population of 42,418 people. The atolls are broadly divided into four categories: urban (Majuro and Kwajalein), which support over 70.5% of the population, the most extensive public utilities and infrastructure, and the highest urban densities in the Pacific region; semi-urban (five atolls and some islands of Majuro and Kwajalein atolls) (11.6% of the population), with a blend of urban and rural settlements; rural (19 atolls) (17.9%), with smaller populations, dependent on subsistence agriculture and coastal fisheries; and other (4 atolls; largely unpopulated). In 2021 the RMI's GDP per capita was $4,171. The economy relies heavily on commercial fisheries and development assistance, especially from the USA. Small-scale industries include handicrafts, tuna processing, coconut products, and tourism. The COVID-19 pandemic caused a 0.7% contraction of GDP in FY2022, with the highest impact to the fisheries export sector. The GDP rebounded by 2.5% in FY2023, mainly due to revitalized fisheries and construction sectors. Development challengeslike other SIDSinclude remoteness, small population and island economy vulnerable to external shocks, distance to international markets, high transport costs, poverty, and climate change. Outmigration is high and the RMI's population is declining, while the population of the two urban atolls is increasing due to in-migration from semi-urban and rural atolls.

Extreme and increasing impacts of climate change. Climate change poses an existential threat to the RMI. The RMI is already highly vulnerable to natural hazardsincluding coastal flooding and erosion, wave damage, drought, and heatwavesdue to the small size of atolls (less than 200 m wide), flat topography (maximum elevation 3 m above sea level), and limited land and freshwater resources. Climate change is intensifying these hazards. Since 1980, the RMI's mean air temperature has increased by 0.6

C per year; and between 1993 and 2018, the mean sea level at the RMI's most urbanized atoll (Majuro) increased by 128 mm, higher than the observed global mean sea level rise (81 mm) in the same period. During 20132016, drought and water shortages affected over 50.0% of the population resulting in estimated economic damages of $5.0 million.

Climate projections for the RMI indicate that (i) sea levels may rise by 0.360.47 m by 2070, 0.490.74 m by 2090, and 0.670.9 m by 2100, and (ii) global warming will lead to more severe weather events, including heat waves and cyclones. Impact scenarios for the Pacific and RMI suggest the following: (i) loss of 7090% of reef-building corals above a rise of 1.5

C (compared to pre-industrial baselines) and a loss of 99.0% of corals above 2.0

C of warming, (ii) increasing coastal flooding and erosion, (iii) partial or complete inundation of some atolls due to sea level rise, and (iv) annual economic impacts from coastal flooding equivalent to 818% of the RMI's GDP by 2100.

Long-term national approach to climate change. The RMI is developing a strong institutional framework to address climate change. In 2020, the GoRMI issued the NSP 20202030 as the roadmap for national development. Mainstreaming climate change adaptation frameworks is a key development pillar under the plan. In 2023, the GoRMI adopted the NAP. The NAP has three overarching goals: (i) build adaptive resilience across human and ecological systems, (ii) strengthen the enabling environment to implement the NAP, and (iii) adopt a self-determined approach that honors the country's heritage and benefits future generations. The NAP identifies four decision (D) points to guide the country's future based on current climate science: (i) D1 (20232040): strengthen institutional, policy, and financial mechanisms for adaptation and implement near-term actionsbased on a projected sea level rise of 0.5 meters by 2070to protect urban and semi-urban atolls and enhance the resilience of rural atolls; (ii) D2 (20402050): update climate assessments and begin relocation from unprotected atolls; (iii) D3 (20502070): evaluate whether to continue investing in adaptation (if sea level rise is manageable) or plan larger-scale relocation; and (iv) D4 (2070/20902150): reassess adaptation options under a scenario of 2 m-rise in sea level. Guidance for natural resources planning and community involvement in the NAP is informed by the RMI's Reimaanlok Framework, which aims to effectively manage 50% of coastal resources by 2030 and sustain community and ecosystem resilience to climate change.

The NAP establishes a dynamic and flexible approach for the RMI to respond to climate change, considering updates to climate projections, technical and financial resources and societal consultations. It also includes preliminary action plans for sectors and atolls, at each decision point. Under D1, immediate priorities include: (i) national-level actions, including strengthening of institutional frameworks, detailed climate projections and impact assessments, national consultations, design of NbS, and capacity building for adaptation, and (ii) tailored approaches for different atoll types i.e., a focus on hard infrastructure solutions (urban atolls), hybrid structural and non-structural measures (semi-urban atolls), and nature-based, low-cost solutions (rural atolls). For the semi-urban and rural atolls, strengthening food and water security is a key priority of the NAP.

The GoRMI is seeking support to design and implement the NAP's adaptation priorities, especially under D1. This will require a focus on three key areas, as follows.

Insufficient institutional and societal coordination to establish and sustain long-term adaptation planning. Challenges at the government level include: (i) limited information and understanding of impacts of climate change, (ii) insufficient technical and/or financial capacity to plan for climate change and develop detailed sector-specific adaptation plans, (iii) overlapping and/or unclear jurisdictional roles for climate change and natural resource management, which impedes effective planning, (iv) limited monitoring and reporting of climate change impacts, which hinders information exchange and learning, and (v) small resource pool of experts. At the societal level, challenges include the need to ensure an all-of-society approach based on community support and land tenure. About 99.0% of land in the RMI is privately owned and guided by a complex land tenure system which is deeply rooted in the RMI identity and law. To be successful, virtually all adaptation actions for the RMI will require community engagement and community-led models for adaptation. For the private sector, there has been limited mapping of entry points for adaptation planning; and some firms have limited awareness of domestic and international construction and procurement standards. These issues limit opportunities to integrate climate change in sector plans (e.g., for commercial fisheries) and reinforce dependence on imported construction materials.

Inadequate technical assessments to design near-term adaptation actions and plans. The impacts of climate change are projected to be similar across atolls, yet the timing, extent, and types of impacts may differ reflecting physical and socioeconomic differences. High-resolution data is required to assess climate impacts yet is absent for most atolls, and studies of natural hazards and climate impact assessments have focused on urban atolls. This limits the identification of sites at highest risk from flooding, erosion, and permanent inundation and is a key source of uncertainty for the design of adaptation measures for the RMI. For the natural resources sector, declining food security is the second-most cited impact of climate change (after livelihoods) by RMI communities. Household crop production is declining due to salt spray damage, salinization of soils, water scarcity, and excessive heat. Subsistence and commercial fisheries are a major source of protein and income for the RMI, yet climate change is projected to cause declines of 4474% in subsistence fish catch and 1012% in commercial fisheries by 2050. To develop adaptation measures, detailed baseline assessments combining science and traditional knowledge are required.

Unrealized opportunity to pilot and scale up ecosystem-based adaptation measures. Efforts to strengthen the RMI's resilience to climate change are hindered by (i) existing threats to ecosystems, habitats, and crops, which undermine food and water security and compound the impacts of climate change, and (ii) the RMI's isolation and high costs of imported materials. Invasive alien species including agricultural pests are a key threat to food security and biodiversity in the RMI and are predicted to spread with the warming climate, yet few biosecurity measures are in place to address this. For the RMI's semi-urban and rural atolls the NAP prioritizes the scaling up of traditional farming systems and use of native crop and tree species, linked with the restoration of coastal and marine habitats. Government efforts have been initiated to support this yet are hindered by insufficient technical and financial resources. For fisheries, there is a need to apply harvest quotas and methods linked with management of marine protected areas and restoration of coral reefs, to benefit fish stocks, biodiversity, and climate resilience. To reduce dependence on imported construction materials, there is an opportunity to pilot the use of local-sourced aggregates (e.g., from lagoons) through careful extraction guided by impact assessments and cost-benefit analyses.

Environment: B
Involuntary Resettlement: C
Indigenous Peoples: C

Grant (Asian Development Fund): US$ 14.50 million

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