The Water Challenge and the role of the World Bank Group

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The Water Challengeand the role of the World
Bank Group
Guang Z. CHEN Sector Manager - Urban, Water and
Disaster Risk Management Latin America and
Caribbean Region of the World Bank November 16,
2009, Mexico City
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The challenge in Latin America and the Caribbean
The World Bank response
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3. Water resources management and services are
central to growth, development and poverty
reduction.
Competing and expanding demands for water
services are stretching this finite resource
Development Objectives
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4. Climate change adds to the complexity of
managing resources in a sustainable way
Climate change adds to the complexity of managing
resources in a sustainable way

• Climate change will intensify and accelerate the
  dynamics of this hydrological cycle (increased
  storm activity, sea level rise, saltwater
  intrusion and coastal inundation).
• Poorest nations are exposed to greater risks and
  will pay the highest price as water becomes
  scarcer and less reliable.

Climate change will impact water availability
with depressed effects on agriculture yields by
2050 ()
() the figure models the mean of three
emission scenarios on national and sub-national
yields for an average of 2046-55 relative to an
average of 1996-2005.
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4. Climate change adds to the complexity of
managing resources in a sustainable way
Resource mobilization and innovative financing
mechanisms are needed, combining public and
private funding

• Public sector has a key role, but public
  investment in infrastructure is decreasing
• Private investment in infrastructure is
  increasing, but not in water
• However the private sector has a growing role
• Projected water scarcity creates increasing
  business and economic risks
• Private sector wishes to engage with public
  authorities in findingsustainable solutions to
  the issue
• Strong incentives for industry to accelerate
  development and improve efficiencies of
  technologies to augment supply (desalination,
  reuse, recycling) and reduce demand (efficiency
  in domestic use, irrigation and energy)

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4. Climate change adds to the complexity of
managing resources in a sustainable way
The effects of the crisis on water could be
severe, but will be measureable only with some
time lag

• Potential effects at the household level
• higher fuel and food prices
• worse economic condition and job losses
• reduced remittances
• reduced capacity to pay bills
• Potential effects at the utilities level
• increased OM costs due to fuel crisis
• reduced private sector flows
• reduced access to infrastructure spending
• Potential effects on water sector overall
• More water stress and potential eco-degradation
• Possible negative effects on supply response
• Water extraction and conveyance more costly
• A decade of reforming services providers to
  foster long term financial sustainability might
  be lost
• Increased water insecurity

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The challenge in Latin America and the Caribbean
The World Bank response
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3. Water resources management and services are
central to growth, development and poverty
reduction.
Latin America and the Caribbean has progressed,
but important gaps remain

• More than 15 years of WSS sector reforms to
• Create and strengthen institutions
• New legal frameworks
• Introduction of regulatory frameworks and
  institutions
• Unprecedented decentralization
• However, the region still lags
• 89 of the regions population has access to
  water supply leaving 75ML unattended
• 116 ML people (one in four) mostly in rural or
  peri-urban areas lack access to sanitation
• Large financing needs to expand access. Efforts
  to reach the poor need to be scaled up
• The MDG of halving by 2015, the proportion of
  people without access to the services from a base
  year of 1990 is achievable for some countries in
  LAC, but will be a difficult task for others

• Advanced
• In progress
• Incipient

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3. Water resources management and services are
central to growth, development and poverty
reduction.
such as modest improvements in service coverage
and financial sustainability issues
Average water tariffs worldwide
EU
North America
East Asia And Pacific
Middle East and North Africa
Sub-Saharan Africa
Eastern Europe and Central Asia
Latin America and the Caribbean
Source IBNET, 2009
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3. Water resources management and services are
central to growth, development and poverty
reduction.
Inadequate quality of service is a concern, as
the Mexico case illustrates
Not daily
Intermittent
Continuous
Poor
Poor
Non poor
Non poor
Urban
Rural
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The challenge in Latin America and the Caribbean
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The World Bank response
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3. Water resources management and services are
central to growth, development and poverty
reduction.
The WBG is the largest sector financier worldwide
with a portfolio of US20 billion in
water-related projects under implementation

• Water projects in 82 countries FY06-08
• Growing portfolio with expandend lending in FY09
• Projects with Water Services systems dominate
  over Water Resources

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3. Water resources management and services are
central to growth, development and poverty
reduction.
In Latin America the WBG has a strong presence in
urban water supply and sanitation

• Net commitments of US 2.5 BN. New lending in the
  water pipeline amounts to US1.2 BN
• Projects in 15 countries including 5 IDA
  countries
• Portfolio covers all water-related subsectors,
  with the largest portion focused on urban water
  supply and sanitation
• Lending is combined with country dialogue,
  analytical work, and real-time policy advice
• Knowledge work in the region focuses on climate
  change impacts on water management benchmarking
  performance of utilities economic impacts of
  water degradation and reporting on good
  practices from across the region
• Large, world-class team of specialized
  professionals working in the region

• Integrated water management in
• Mega-Cities
• -- Buenos Aires
• -- Sao Paulo
• -- Bogota

• Improving water utility performance
• Mexico Water Utility Improvement Program (PATME)
• Uruguay Water Utility Modernization Program

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3. Water resources management and services are
central to growth, development and poverty
reduction.
Argentina, Matanza Riachuelo addressing
shortcoming in waste water management and
environmental clean up in its river basin

• Supporting the Water Utility, the Environmental
  Agency and the Water Basin Agency
• Activities include
• Primary and secondary sewer network, collectors
  and pumping stations
• Primary treatment plant construction with
  sub-aquatic outfall
• River quality monitoring and modeling program
• Industrial discharges abatement program
• Communication campaign
• Strategic basin planning (urban planning, flood
  control)
• Phase 1 840M USD loan (total cost 1,500M USD)
• Phase 2 A follow-up 1,160M USD loan might follow
  once triggers are met to complete the clean-up

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Brazil, Sao Paulo State Integrated urban water
management to the most urbanized areas
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Colombia, Rio Bogota Transforming an Urban River
into an Environmental Asset
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Improving water utility performance PATME
project in Mexico

• On going technical assistance program focusing
  on
• Improving the institutional and regulatory
  framework for the water supply and sanitation
  sector
• Supporting the development of replicable models
  for an efficient and sustainable provision of
  water supply and sanitation services (success
  cases)
• Designing a national information system aimed at
  improving the decision-making and regulation in
  the sector
• Contributing to the existing efforts to promote
  the training at managerial and operational levels
  of the personnel of the sector
• Improving financial sustainability and efficiency
  of water supply and sanitation service provision
  in their jurisdiction
• Shift toward "performance based allocation of
  public (federal and state) transfers and
  concessional lending
• Key criteria for performance is improvements in
  cost recovery and poverty targeting

Other projects focusing on water utility
performance in Colombia, Uruguay, Nicaragua,
Paraguay, Peru among others
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Strategic priorities for the World Bank Group