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This Project Preparatory Technical Assistance (PPTA) is to assist in developing a detailed feasibility study report in accordance with ADB's requirements and international standards for the Cook Island's Infrastructure Development Project (IDP). The PPTA is to also undertake safeguard studies for environmental, social and resettlement considerations; recommend appropriate project financing modalities and identify the required technical assistance to improve the management and efficiency of infrastructure service delivery. The outputs of the PPTA will support preparation of the Report and Recommendation for the President (RRP) for an ensuing loan.

The Government of Cook Islands is assigning a high priority to identifying priority (i) infrastructure rehabilitation and upgrading requirements, ranging from the power to transport and water and sanitation sectors both on the main island and in the outer-islands and (ii) policy and institutional reform recommendations to improve delivery of infrastructure and utility services. Priority projects will include infrastructure upgrading programs that are capable of stimulating growth and diversifying and building a broader base for economic growth and employment.

The Cook Islands comprises 15 isolated atolls with a total land area of 244 square kilometers (km2) and dispersed over an exclusive economic zone of 1.8 million km2 of the Pacific Ocean. The country suffers from extreme climatic events such as tropical cyclones, periods of intense rainfall or drought, and high wind and air temperatures. Climate scenarios, based upon global circulation models predict that extreme events will increase in frequency and intensity have a significant impact upon people and physical infrastructure. There is a need to promote climate proofing measures to reduce the impact of severe events upon infrastructure and the consequent economic impact.

Approximately 70% of the total population of 20,000 lives on Rarotonga, the largest island (67 km2). Cook Island residents have a free access to New Zealand and Australian employment markets. Already more than three times as many Cook Islanders reside overseas as in the Cook Islands, many relying on the social welfare provided by the Government of New Zealand. Migration of the resident population has been a function of economic opportunities in the country. Inadequate infrastructure has been identified as a binding constraint to further economic development, particularly for generating private sector driven growth and employment with a broader objective to retain Cook Islanders in the country

Against an average growth of 3.8% in real GDP for the five years up to the fiscal year (FY) 2006 with FY2006 having seen a growth of only 1.9%, the Government acknowledges that infrastructure constraints limit growth and economic development, particularly in the tourism sector, the primary source of employment. To sustain and grow, this industry requires efficient, reliable, and safe public utilities and transportation facilities. The existing infrastructure requires improvement to achieve these objectives.

The ADB?s Country Strategy and Program Update (CSPU) 2004-2006 included a power generation project in 2005 and a water and sanitation management project in 2006 with the respective project preparatory technical assistance work in the preceding years. However, following the disastrous series of cyclones in 2005, ADB approved Loan 2174-COO: Cyclone Emergency Assistance Project to minimize the effects of damage on economic growth and to help the Government sustain its prudent fiscal management by lowering the cost of the reconstruction. This loan was accompanied by TA4605-COO: Strengthening Disaster Management and Mitigation that prepared a robust emergency response regime and a Masterplan for the development of infrastructure that incorporated the forecast increase in frequency and intensity of extreme climatic events.

The Government assigned a high priority to the Infrastructure Masterplan as it identified priority (i) infrastructure rehabilitation and upgrading requirements, ranging from the power to transport and water and sanitation sectors both on the main island and in the outer-islands and (ii) policy and institutional reform recommendations to improve delivery of infrastructure and utility services. The Masterplan identified infrastructure upgrading programs that are capable of stimulating growth and diversifying and building a broader base for economic growth and employment. Subsequently, the Masterplan has been used by the Government as a key input to its National Sustainable Development Plan.

The Masterplan will be implemented in a highly consultative and participatory manner and the PPTA preparation and implementation is proposed to involve development partners, including New Zealand Agency for International Development and the Australian Agency for International Development, and be carefully coordinated with rural power supply programs of the European Union and development cooperation of the People?s Republic of China. Given the focus on prudent macroeconomic management, financing of the Masterplan is expected to require both grant resources of the development partners and loan resources, blending the maximum availability of grant assistance with ADB?s loans.