2010 Water Financing Partnership Facility: Annual Report (January-December)

8/3/2019 2010 Water Financing Partnership Facility: Annual Report (January-December)

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ABBREVIATIONS

ADB – Asian Development BankDMC – developing member countryDMF – design and monitoring frameworkFPF – financing partnership facilityIED – Independent Evaluation DepartmentIWRM – integrated water resources managementMFF – multitranche financing facilityPDA – pilot and demonstration activityPES – payment for ecological servicesPPTA – project preparatory technical assistancePRC – People's Republic of ChinaRETA – regional technical assistanceTA – technical assistanceTALL – technical assistance attached to loanWFP – Water Financing ProgramWFPF – Water Financing Partnership Facility

NOTES

(i) In preparing any country program or strategy, financing any project, or by making any

designation of, or reference to, a particular territory or geographic area in this document,the Asian Development Bank does not intend to make any judgment as to the legal orother status of any territory or area.

(ii) In this report, "$" refers to US dollars.



WFPFSteeringCommittee Chair

Xianbin Yao, Director General, Regional and Sustainable Development Department (RSDD)

WFPF SteeringCommitteeMembers

Juan Miranda, Director General, Central and West Asia Department (CWRD)Klaus Gerhaeusser, Director General, East Asia Department (EARD)

Robert Wihtol, Director General, Pacific Department (PARD)Philip Erquiaga, Director General, Private Sector Operations Department (PSOD)Sultan Rahman, Director General, South Asia Department (SARD)Kunio Senga, Director General, Southeast Asia Department (SERD)

Water CommitteeChair and Co-Chair

Amy Leung, Director, Social Sectors Division, EARDMichael Peter Barrow, Director, Infrastructure Finance Division 1, PSOD

Water CommitteeMembers

In-Ho Keum, Lead Urban Development Specialist, CWRDMaria Theresa Villareal, Unit Head, Portfolio Management, EARD-PRC Resident Mission

Qingfeng Zhang, Principal Water Resources Specialist, EARDSteven Blaik, Senior Urban Development Specialist, PARDSiddharta Shah, Senior Investment Specialist, PSODSherwin Pu, Unit Head, Project Administration, PSODKatsuji Matsunami, Senior Advisor, concurrent Practice Leader (Agriculture,

Food Security, and Rural Development), RSDDWouter Lincklaen Arriens, Lead Water Resources Specialist, RSDDAnand Chiplunkar, Principal Water Supply and Sanitation Specialist, RSDDAlan Baird, Water Supply and Sanitation Specialist, RSDDKenichi Yokoyama, Principal Water Resources Specialist, SARDKyongAe Choe, Lead Urban Development Specialist, SARD

Rudolf Frauendorfer, Principal Urban Development Specialist, SERDIan Makin, Senior Water Resources Specialist, SERDHubert Jenny, Principal Urban Development Specialist, SERD-Viet Nam Resident MissionThomas Panella, Principal Water Resources Specialist, SERD-Indonesia Resident Mission

WFPF FacilityManager

Gil-Hong Kim, Director, Sustainable Infrastructure Division, RSDD

WFPF Secretariat Maria Victoria P. dela Cruz, Assistant Sector Analyst, RSDDEllen Pascua, Consultant, RSDD

Office ofCofinancingOperations (OCO)

Tadashi Kondo, HeadHua Du, DirectorKaren Decker, Principal Financing Partnerships SpecialistToshimasa Dojima, Principal Financing Partnerships SpecialistHeeyoung Hong, Financing Partnerships SpecialistLucila S. Chan, Financing Partnerships Officer



CONTENTS

Page

I. INTRODUCTION

II. HIGHLIGHTS AND KEY ACHIEVEMENTS

1

1

III. RESULTS FRAMEWORKA. Progress Towards Impact and Outcomes 5B. Output Performance 7C. Crosscutting Issues in WFPF Portfolio 12

III. FINANCIAL STATUS

A. Partner Contributions 12B. Resource Utilization 13C. Resource Allocation 14

IV. MANAGEMENT OF THE FACILITY

A. Water Committee Evaluation of Applications 16B. Procedural Matters 16

V. RELATIONSHIP WITH FINANCING PARTNERS 18 VI. LESSONS LEARNED, EXPERIENCES GAINED, AND KEY

CONSTRAINTS18

VII. EXTERNAL FACTORS RELEVANT TO THE FACILITY 19

VIII. OVERVIEW OF 2011 ANNUAL WORK PROGRAM 19 APPENDIXES1. Overview and Governance Structure of WFPF2. WFPF Design and Monitoring Framework3. January-December 2010 Approved Allocations4. Multidonor Trust Fund Disbursement Projections5. Netherlands Trust Fund Disbursement Projections6. Status of Grant for the Multi-Donor Trust Fund7. Status of Grant for the Netherlands Trust Fund8. Approved Allocations by Modality9. Approved Allocations by Sector

10. Approved Allocations by Region



I. INTRODUCTION

1. Established on 29 November 2006, the Water Financing Partnership Facility (WFPF)aims to provide additional financial and knowledge resources from development partners tosupport the implementation of Asian Development Bank's (ADB) Water Financing Program andhelp achieve the Program’s targeted outcomes as follows:

200 million people with sustainable access to safe drinking water and improvedsanitation

100 million people with reduced risks to floods 40 million people with more productive and efficient irrigation and drainage services integrated water resources management (IWRM) introduced in 25 river basins improved water governance through national water reforms and capacity

development

2. Details on the Facility are provided in Appendix 1 (WFPF Overview and GovernanceStructure).

3. This Annual R e port covers the period January to December 2010 and presents theperformance for the year against the annual work program and the cumulative performance asof 31 December 2010 measured against its Design and Monitoring Framework (DMF) presentedin Appendix 2.

II. HIGHLIGHTS AND KEY ACHIEVEMENTS

4. Water Financing Program to continue beyond 2010 . Launched in March 2006, theWater Financing Program was intended to be implemented during the period 2006-2010. Theestablishment of WFPF in November of that same year was aimed at supporting the Programimplementation. As water remains a priority for ADB under Strategy 2020, the Program willcontinue during the period 2011-2020, guided by the following additional thrusts presented inthe draft Water Operational Framework (2011-2020)

Increased water use efficiencies across the range of usersExpanded wastewater management and reuseFlood and drought managementEmbedded IWRMExpanded knowledge developmentEnhanced partnerships with the private sector

5. The Facility is expected to remain in operation during the period 2011-2020 to continuesupporting the Program implementation. Among the priority actions being taken parallel to thefinalization of the Framework is the mobilization of additional support from partners to replenishWFPF resources. Other partnership modalities envisioned under the financing partnershipfacility (FPF) framework is also being explored such as knowledge partnership which isconsistent with the recommendations from the independent review of FPF recently carried outby ADB’s Independent Evaluation Department (IED). Already, as the IED report hasacknowledged, WFPF has made advances in such knowledge partnerships.

6. The succeeding presentations in paras 6 to 10 below provide a summary of what theWater Financing Program has achieved after the initial five years of implementation and how theWFPF has contributed to those achievements.



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7. Target increase in water investment level met . The Water Financing Program set atarget of catalyzing over $10 billion in water investments during the period 2006-2010. ADB hasbeen successful in encouraging governments to increase their investments and investmentcommitments for the water sector as evidenced by the $11.44 billion investments approved from2006 to 2010, including approved projects and programs using the multi-tranche financingfacility (MFF), as detailed in Table 1 below. However, much more work is needed to ensure thatthe investment commitments are sustained and materialize into economically, socially, andenvironmentally sustainable projects. WFPF partners’ continued support will be critical tomaking this happen.

Table 1: Approved Water Investments in 2006-2010(in US$ Billion)

Investments 2006 2007 2008 2009 2010 Total

Water Supply, Sanitation and WastewaterManagement

1.09 0.86 1.14 1.62 1.85 6.56

Irrigation and Drainage 1.01 0.05 0.39 0.06 0.07 1.57

Flood Management 0.20 0.12 0.01 0.00 0.37 0.71Water Resources Management, Wetlands,and Watershed Protection

0.00 0.00 0.68 0.15 0.03 0.86

Hydropower Generation 0.44 0.00 1.04 0.26 0.00 1.74Total 2.74 1.03 3.26 2.09 2.32 11.44

8. WFPF contributing $3.4 billion in approved water investments . Increasedinvestment level is the same target output indicated in the Facility’s DMF. By way of directproject support through project preparatory technical assistance (PPTA), grant component ofinvestments, TAs attached to loans, and direct charges related to project development, theFacility has leveraged to date a total of $4.0 billion in water investments. Of this, $3.42 billionhas been approved as of 31 December 2010, representing 30% of the $11.44 billion totalapproved water investments from 2006 to 2010. Table 2 below details the Facility’s leveragedinvestments and how it contributes to the overall Water Financing Program achievement.

Table 2: Approved Water Lending for 2006-2010 and WFPF Contributions(in US$ Billion)

Investment Areas

2006-2010 TotalApproved ADB

Investment Projects

2006-2010 ApprovedADB Investment

Projects with WFPFFunding

Water Supply, Sanitation and WastewaterManagement

6.56 2.21

Irrigation and Drainage 1.57 0.26

Flood Management 0.71 0.32Water Resources Management, Wetlands andWatershed Protection

0.86 0.63

Hydropower Generation 1.74 0.00Total 11.44 3.42

9. Substantial progress made to meet Water Financing Program targeted outcomes .The Water Financing Program has set a target of 340 million people being benefited by waterinvestments as described in para 1 above. The number of people expected to benefit from 2006to 2010 approved projects and programs reached a total of 223 million (as shown in Table 3below). Additional investments are programmed and expected to meet the remainder. In the



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case of water supply and sanitation, the target is already expected to be met by 2012. ADB hasalso helped its clients to introduce the IWRM process in 25 river basins as per target. However,much more work is needed in the coming years to ensure that the IWRM process is embeddedin institutions in these basins, and that it will result in the desired water security outcomes.Furthermore, in recent years it has become clear that the impact of climate change is makingthis work more challenging than before.

Table 3: Water Financing Program Achievement Against Targeted Outcomes

Measurement Water FinancingProgram Target

Expected No. ofBeneficiaries of

2006-2010 ApprovedWater Projects

Number of people with access to safe drinkingwater and improved sanitation

200 million 162 million

Number of people with reduced risk to floods 100 million 43 millionNumber of people with improved and efficientirrigation and drainage services

40 million 18 million

Total 340 million 223 millionIntroduction of IWRM in river basins 25 river basins 25 river basins

10. WFPF leveraging benefits for 40 million people from 2006-2010 approved projects .The Facility’s DMF has set a target of at least 50 million people out of the 340 million targetedunder the Water Financing Program attributable to WFPF resources. As of end-December2010, the Facility has leveraged benefits for a total of 49 million people. Of this, 40 million willbe realized from the investment projects already approved as of end-2010. Table 4 belowshows how the Facility’s leveraged benefits are contributing to the overall expected outcomeachievement of the Water Financing Program from approved investment projects to date.

Table 4: Expected Outcomes from Approved Water Investments as of December 2010

Measurement

WaterFinancingProgram

Target


2006-2010 Total ADBApproved Water

Projects

Benefits leveragedfrom WFPF-

Supported 2006-2010Approved Projects

Number of people with access tosafe drinking water and improvedsanitation

200 million 162 million 24 million

Number of people with improvedand efficient irrigation and drainageservices


Number of people with reduced riskto floods


Total 340 million 223 million 40 million

11. The succeeding presentations in paras 12-17 below provide an overview of the Facility’sactivities and accomplishments during the reporting period.

12. Partners and clients consulted on ADB’s draft Water Operational Framework 2011-2020 . Following initial external consultations, a wider consultation with clients and partners onthe draft Water Operational Framework (2011-2020) took place during the ADB and PartnersConference: Water Crisis and Choices, held in October 2010 and attended by more than 600



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participants from government, private sector, development partners, and NGOs. Finalization ofthe draft is now in progress and approval by management is targeted within 2011.

13. Activities set out in the 2010 Annual Work Program scaled down . The Facility wasable to carry out the planned activities for 2010, however, when expected remittances remaineduncertain, the Water Committee decided to scale down the resources being allocated toapproved projects and came out with the following guidelines which governed the fundingallocations during the second half of 2010:

Allocation for grant component of investments and cofinancing of TAs to be deferreduntil resources are replenished. Project support to be limited to smaller activities thatcan be financed through direct charges but can help the Facility leverage biggerresults, and

More resources allocated to activities that: (i) support demonstration of innovations toaddress priority issues, and (ii) facilitate compilation, sharing and dissemination ofknowledge, particularly those that advocate new thinking, promote good practices,provide guidance to government decision makers, planners and implementers, andsupport capacity development within ADB and in developing member countries(DMCs).

14. With respect to the second guideline, the approach taken by the Committee was toreplenish the resources of WFPF-funded RETA 6498 (Knowledge and Innovation Support forADB’s Water Financing Program) whose components are pilot and demonstration activities andknowledge development and dissemination.

15. Table 5 below summarizes actual accomplishments against what was planned for theyear with respect to allocation of funding – one of the Facility’s major activities. The progress onother activities pertaining to the management of the Facility is presented in Section IV.

Table 5: WFPF Progress Against 2010 Annual Work Program

Activity Output OutcomePlanned Actual Planned Actual Planned Actual

Finance up to$3.1 million inprojectsupport

About $1.0millionallocated

Up to 7 PPTAs

Up to 3 TAsattached toloans

Up to 15 direct

charges

1 PPTA

2 TALLs

6 direct

charges

About 6 millionadditionalpeople areleveraged fromWFPF-supportedinvestment

projects

Around 5millionadditionalpeople

Finance up to$1.5 million inprogramquality

A total of $3.0millionallocated

1 to 2 TAs

Up to 4 directcharges

2 RETAs

7 directcharges

Policy andinstitutionalreformmeasures setin motion

Improvedcapacity ofsectororganizations

Achieved(PRC,Mongolia)

Achieved(India, MekongRegion,Central Asia)



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16. How the approved allocations during the reporting period contribute to the Facility’starget outputs and outcomes is illustrated in Figure 1 below.

Figure 1: WFPF Progress Towards Outputs and Outcomes

January-December 2010 Total as of December 2010

17. Support to sanitation sustained . The Water Committee’s commitment to allocate 20%of the Facility’s resources to sanitation has been sustained. Although the share from 2010allocation was only 6%, its cumulative share as of end-December 2010 stood at 23%, stillexceeding the 20% target, although slightly lower than the 2009 level which was at 26%.

III. RESULTS FRAMEWORK

18. The succeeding subsections on progress towards impacts, outcomes, and outputperformance discuss the WFPF’s performance in 2010 and the cumulative performance to dateagainst the targets set in the Facility’s DMF. This supplements the information provided in

Section II above (Highlights and Key Achievements).19. As has been explained in previous reports, the Facility’s DMF is targeted at the sameimpact, outcomes, and outputs as that of the Water Financing Program.

A. Progress Towards Impact and Outcome

20. The Facility’s performance in 2010 and cumulatively as of end-December of that yearwith respect to the target impact and outcome is summarized in Table 6 below. Theachievement towards output is presented in a separate table.

$4.0 billionin water

investments

32 millionpeople

with accessto safewater

supply andimprovedsanitation

4 million

peoplewith accessto moreefficientirrigationservices

13 millionpeople

withreduced risk

to floods

PPTAs

$10.49 M

GrantComponentof Loans /

TAsAttached to

Loans

$9.66 M

Other

Project Dev.Activities

$1.95 M

Activities(Project

Development)

Output(IncreasedInvestment

Level)

Outcomes(No. of

People toBenefit)

$ 1.0 billionin water

investments

3 millionpeople

with accessto safewater

supply andimprovedsanitation

718,000

peoplewith accessto moreefficientirrigationservices

1 millionpeople

withreduced risk

to floods

PPTAs

$0.30 M

GrantComponentof Loans/

TAsAttached to

Loans

$0.40 M

OtherProject Dev.

Activities

$0.30 M

Activities(Project

Development)

Output(IncreasedInvestment

Level )

Outcomes(No. of

People toBenefit)



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Table 6: WFPF Progress Towards Impact and Outcome

WFPF and WFP DesignSummary

Performance Indicators WFPF DirectContributions from

2010 Allocations

WFPF CumulativeDirect Contributions

as of December2010

Impact

Healthy people andenvironment

MDG goals on water andsanitation 3 million peopleexpected beneficiariesof WFPF-supportedwater supply andsanitation projects

32 million people

Reduction in theincidence of water relatedfatalities and diseases

Increase in the number ofcountries implementingIWRM

1 country whereIWRM implementationis being supported byWFPF

9 countries

Outcome

Improved coverage,

quality and continuity ofwater service deliverywithin a framework ofsustainablemanagement of naturalresources

200 million people withincreased access to safewater supply and

improved sanitation

3 million people 32 million people

100 million people withreduced risk to floods

1 million people 13 million people

40 million people withmore efficient andeffective irrigation anddrainage services

718,000 people 4 million people

IWRM introduced into 25river basins

9 river basins 22 rivers basins

21. The Facility’s outcome achievement vis-à-vis Water Financing Program’s overall targetis further summarized in Table 7 below for ease of comparison.

Table 7: Contribution to Water Financing Program Targeted Outcomesof WFPF-Leveraged Benefits

Measurement

Water Financing Program Benefits leveraged by WFPF

Target


2006-2010ApprovedProjects

From AllInvestment

ProjectsProvided WFPF

Funding

FromInvestment

ProjectsAlready

Approved as ofDec 2010

Number of people withaccess to safe drinking

water and improvedsanitation

200 million 162 million 32 million 24 million

Number of people withreduced risk to floods


Number of people withimproved and efficientirrigation and drainageservices


Total 340 million 223 million 49 million 40 millionIntroduction of IWRM in riverbasins

25 river basins 25 river basins 22 river basins 22 river basins



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22. The benefits leveraged by the Facility for 40 million people from approved investmentsto date constitutes 18% of the number of expected beneficiaries of total approved waterinvestments under the Water Financing Program covering the period 2006-2010.

B. Output Performance

Output 1: Increased Levels of Water Investment

23. In 2010, the Facility leveraged over $1.0 billion in water investments through its fundingsupport for a PPTA to prepare a $1 billion MFF loan for Viet Nam’s water sector developmentprogram and for TAs attached to irrigation and water resources management loans, both inPRC. Cumulatively up to end-December 2010, the Facility has leveraged approximately $4.0billion in water investments. Table 8 below summarizes the leveraged investments in 2010 andthe cumulative total to date.

Table 8: WFPF Leveraged Water Investments(in US$ Billion)

Sub-Sector Jan-Dec 2010 As of Dec. 2010Water Supply, Sanitation and Wastewater Management 1.00 2.56Irrigation and Drainage 0.06 0.36Flood Management 0.00 0.40Water Resources Management 0.03 0.63

1.09 3.95

24. Out of the approximately $4.0 billion investments leveraged to date, $3.4 billion hasalready been approved as of December 2010 and the balance of about $0.6 billion is scheduledfor approval in 2011 as detailed in Table 9 below.

Table 9: Approved Water Lending for 2006-2010 and WFPF Contributions

(in US$ Billion)

Investment Areas

2006-2010Approved ADB

InvestmentProjects

Investment Projects with WFPF FundingInvestment

ProjectsApproved as of

Dec. 2010

ProjectsScheduled for2011 Approval

Total

Water Supply, Sanitation andWastewater Management

6.56 2.21 0.35 2.56

Irrigation and Drainage 1.57 0.26 0.10 0.36Flood Management 0.71 0.32 0.08 0.40Water Resources Management,Wetlands and Watershed

Protection

0.86 0.63 0.00 0.63

Hydropower Generation 1.74 0.00 0.00 0.00Total 11.44 3.42 0.53 3.95

Output 2: Policy and Institutional Reforms Accelerated

25. During the reporting period, only one activity supporting policy and institutional reformswas funded by the Facility, using the direct charge modality. This was for enhancing the policyenvironment for increased private sector participation in Mongolia. Cumulatively to date, the



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Facility has supported a total of seven TAs and five direct charges that support the achievementof this output as summarized in Table 10 below.

Table 10: WFPF-Supported Policy and Institutional Reform Activities

Modality Country Scope of TAs/ActivitiesTA Central Asia Improving regulation and institutional arrangements for

transboundary water resources management in Central Asia PRC Developing and implementing a flood management strategy

Formulating urban wastewater reuse and sludge utilizationDeveloping river basin water resources allocation andmanagementPreparing national guidelines for ecological compensation inriver basinsDeveloping drought management strategy

Viet Nam Developing benefits sharing mechanism for people adverselyaffected by hydropower generation projects

DirectCharges

Indonesia Formulating water supply and sanitation strategy for theNational Medium-Term Plan (2010-2014)

Mongolia Sector policy review and assessment for improved urbanwater supply and sanitation service deliveryEnhancing enabling environment for private sectorparticipation in urban water supply and sanitation

PRC Initiating policy study on the use of renewable energy forirrigationDeveloping sustainable water monitoring and payment forecological services

26. The table above shows that the Facility’s support for accelerating policy and institutionalreforms has covered rural, urban, and basin water, and spread out across regions. The draftWater Operational Framework (2011-2020) recognizes the need for ADB to continuesupporting the reform process and such support will vary from country to country in terms oftheir nature and range. The Facility expects to continue contributing resources in advancingsuch reforms within the limited resources available.

27. The Facility is also closely monitoring theoutcomes of the support it has provided so far towardsachieving this output. In PRC, for example, the ADBinitiative on developing the national policy framework forpayment for ecological services (PES) and eco-compensation has gained the support of government.In March 2010, the State Council included eco-compensation regulation in its legislation plan. WFPF is

supporting an on-going advisory technical assistance(ADTA) and has completed a short study specifically foreco-compensation in river basins. Results of these initiatives will contribute towards thedevelopment of the national PES policy framework being spearheaded by the NationalDevelopment and Reform Commission (NDRC). The Government has also decided that PRCwill organize an annual international PES conference, following two successful conferences in2009 and 2010 which were both supported by the Facility.

Payment for Ecological Services(PES) is a payment and incentivesystem that supports sustainableecosystems, and provides stablefinancing for conservation. PESschemes generally refer tocontractual arrangements involvingdirect payments between those who

provide and those who benefit fromecos stem services.



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Output 3: Institutional Capacity Strengthened and Knowledge Base Expanded

28. Allocations were made during the reporting period for six activities supporting capacitydevelopment and knowledge dissemination. All were funded though the direct charge modality.In terms of capacity building, those allocated funding were targeted at key sector organizationson the following priority topics: (i) flood management and mitigation in the Mekong Region, (ii)IWRM for improved climate change adaptation in Sutlej River Basin in Himachal Pradesh inIndia, (iii) integrated urban water management in Nanning, PRC, and (iv) economics ofsanitation in Central Asia. To date, the Facility has funded a total of eleven (11) activitiessupporting capacity development as summarized in Table 11 below.

Table 11: WFPF-Supported Capacity Development Interventions

Modality Country Scope of TAs/ActivitiesTA India Empowerment of water users associations for improved

irrigation managementRegional Supporting investments in water and climate change

Direct

Charges

Cambodia Capacity development support on rural water supply and

sanitationCentral Asia andSouth Caucasus

Economics of sanitation initiative

Indonesia Performance benchmarking of river basin organizationsIndia Scoping study for capacity development on IWRM

Improving capacity for climate change adaptationMekong Region Strengthening capacity for flood management and mitigation

Nepal Capacity building support to Kathmandu Valley water utilityStrengthening capacity for managing climate change

PRC Training program on integrated urban water management

29. In terms of knowledge product development and dissemination, the following majorknowledge products were completed during the reporting period:

The Issues and Challenges of Reducing Non-Revenue Water . This publicationprovides an up-to-date introduction to the issue of non-revenue water (NRW),highlights the complexity of managing NRW, offers guidance on NRW assessment,and recommends appropriate performance indicators.

Every Drop Counts . This publication provides a synthesis of case studies on goodpractices in urban water management in 8 cities in Asia: (a) Phnom Penh; (b) Manila;(c) Singapore; (d) Colombo; (e) Jamshedpur; (f) Bangkok; (g) Kuala Lumpur; and (h)Shenzhen.

Expert-Based Sanitation Decision Support System . This knowledge productprovides a tool to enhance capabilities of DMCs in evaluating different sanitationoptions, to enable the assessment of “what-if scenarios”, examine differenttechnology options and financing arrangements, compare the costs and benefits ofeach option, and make a sanitation roadmap.

30. In addition, the WFPF-supported International PES Conference held in PRC in 2010(referred to in para 22 above) resulted in a twin publication as follows:





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33. The Facility’s DMF has also included performance indicators on the “added value ofWFPF”. The achievement to date with respect to such added value is summarized in Table 13below.

Table 13: Achievement on the Added Value of WFPF

Added Value of WFPF Performance Indicators Achievement to DateFaster decision making bymeans of WFPF governanceand approval process and theintroduction of direct chargemodality

Applications for TAs and GCIsare approved within 5 weeks

Applications for direct chargesare approved within one week

Achieved. Average duration ofapproval process was 4.5weeks

Achieved. Average duration ofapproval process was 5 days

Greater assurance of outcomesby increasing countrycommitments throughinvestment dialogues and useof knowledge products

Dialogues conducted in each ofsix priority countries that produceupdated water priorities

Partially achieved. In-countrydialogues on Water FinancingProgram done in 2 out of 6target countries. In-countrysanitation dialogues done for 2out of 6 originally targeted.However, a regional sanitationconference was convenedcovering countries in CentralAsia and South Caucasus

Greater reach to underservedthrough more PPTAs, moreknowledge products and morepartners

At least 50 million population ofWFP targeted outcomes directlytraceable to WFPF funding

98% achieved. Benefitsleveraged for 49 million peopleas of end-2010.

Boosting innovation pilot anddemonstration activities,knowledge products, and

knowledge events

Post evaluation confirms newideas, methods, technology andapproaches taken up and applied

Achieved. Replication andscaling up occurring in at least40% of completed pilot and

demonstration projectsBeing strategic by fundinginitiatives on:

Climate change

Sanitation

Environment

Gender

Partnership with civil society

At least 15 projectsdemonstrating climate changeadaptation measures

At least 15 projectsdemonstrating increasedinvestment in sanitation

At least 15 projects

demonstrating environmentalprotection and preservation

At least 10 projectsdemonstrating gendermainstreaming

At least 10 projectsdemonstrating greaterinvolvement of civil society bothat policy and project levels

60% achieved. 9 projectsfunded

Achieved. 19 projects funded

Achieved. 24 projects funded

10% achieved. Only 1 projectfunded

60% achieved. 6 projectsfunded



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D. Crosscutting Issues in WFPF Portfolio

34. All ADB projects receiving WFPF allocations follow ADB’s policy on social safeguardsand environment policy. Overall, the projects that WFPF has supported to date will directly andindirectly benefit the poor, women and the environment as demonstrated in the sample projectin para 27 below for which the TA attached to the loan was cofinanced by WFPF.

35. PRC: Risk Mitigation and Strengthening of Endangered Reservoirs in ShandongProvince Project . Approved in November 2010, this Project is designed to (i) decrease thethreat of reservoir failure and mitigate flood damage for a population of 1 million people,including 55,000 poor people; and (ii) increase irrigation water supply from 143.1 million m³ peryear to 183.5 million m³ per year, and irrigation areas from 27,300 ha to 38,000 ha for 587,000persons, including 33,000 poor people. The project will also improve water supply conditions for180,000 persons, including 2,000 poor persons. During project implementation, 13,500 jobs willbe created for local unskilled persons, including poor persons, with at least 5 months oftemporary employment. No significant gender issues are associated with any of the projectcomponents but planned developments in irrigation and water supply would increase women’sincome.

IV. FINANCIAL STATUS

A. Partner Contributions

36. As of end-2010, the total committed contributions remained at $48.11 million or less than50% of the initial target of $100 million - $28.36 million under the Multi-Donor Trust Fund and$19.7 million under the Netherlands Trust Fund. Of the $48.11 million, $37.0 million have beenremitted to ADB. This represents 100% remittance of the total committed contributions to themultidonor trust fund and 44% for the Netherlands Trust Fund. Details are shown in Table 14below.

PRC: Risk Mitigation and Strengthening of Endangered Reservoirs inShandong Province Project

The PRC has 87,085 reservoirs, of which 90% were built during the Great Leap Forward and theCultural Revolution (1968-1976), using outdated and low technical standards and inadequate plans,surveys, designs, and construction. Most of these reservoirs have been used for 30-50 years, andmany of the water-retaining dams and equipment are damaged and need to be repaired andstrengthened. Many of these reservoirs do not meet modern safety standards.

At present, these endangered reservoirs are not able to store water up to the design level because ofleakage, instability of water retaining dams, and inadequate spillway capacity for emergencydischarges of rapidly rising floodwaters. As a result, these endangered reservoirs cannot controlfloods, supply irrigation water, generate hydropower, or provide household water year-round to users.

Strengthening these reservoirs will increase water supply at a lower cost and with less adverseimpact on the environment and people than building new reservoirs. Strengthened reservoirs will alsohave potentially positive benefits downstream, especially on the environment by increasing reservoirreleases for environmental flow.



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Table 14: Committed Partner Contributions as of 31 December 2010 (in US$ million)

Financing Partners AmountCommitted

Received by ADBas of end-2010

Receivable

Multi-Donor Trust Fund

Australia Norway Austria Spain

28.36

8.694.675.00

10.00 a

28.36

8.694.675.00

10.00

0.00

0.000.000.000.00

Netherlands Trust Fund 19.75 8.64 11.11

Total 48.11 37.00 11.11a Including the $0.5 million earmarked for the engagement of water expert

B. Resource Utilization

37. For the Facility’s 2010 operation, it had $4.58 million available for allocation, out ofwhich, $4.49 million was allocated (including for service fees) to a total of eighteen (18) projectsand activities (please refer to Appendix 3 for the list of 2010 approved allocations). Thus, as ofend-2010, a total of $35.07 million has been allocated out of the $37.0 million contributionsreceived by ADB to date.

38. An overview of the status of contributions received by ADB is presented in Table 15below, with respect to allocations, commitments, and disbursements as of 31 December 2010.

Table 15: Status of Remitted Contributions as of 31 December 2010(in US$ million)

FinancingPartners

Resources

Availablefor

Allocationto Projects

Allocated b (WFPF

FundingApproved)

Committedc

(ProjectApproved)

AgreementSigned d Contracted e Disbursed f

Multi-DonorAustraliaNorwayAustriaSpain

Netherlands

27.868.694.675.009.50 a

8.64

26.60

8.47

25.06

8.47

24.63

8.43

23.03

7.63

13.95

4.53Total 36.50 35.07 33.53 33.06 30.66 18.48

a Net of $0.5 million earmarked for water expert. Only $4.5 million is available for allocation to projectsb Projects approved by Steering Committee for WFPF allocation (net of service fees)c Projects approved by Steering Committee for WFPF allocation and by ADB management for implementation,

including those approved but not yet effective.d Agreement signed with Governmente Contracts awarded to third partiesf Inclusive of financial expense/bank charges

39. The above table shows a 60% disbursement rate for the entire facility against contractsawarded to date. Using allocated amount as basis, disbursement rate stands at 53%. Efforts to



14

accelerate disbursements are continuing, i.e. frontloading disbursement of WFPF funds incofinanced TAs, close monitoring of payments and fund releases, and others.

40. The disbursement projections in 2011 for each of the two trust funds are shown inAppendixes 4 and 5. The projections indicate that by the end of 2011, based on allocationscommitted as of end-2010, disbursements are expected at 88% and 91% under the MultidonorTrust Fund and Netherlands Trust Fund, respectively, or a combined disbursement rate of 90%.

C. Resource Allocation

41. As per Board Paper establishing the WFPF, about 70% of the resources should beallocated to project support window and about 30% to program quality support window. As of31 December 2010, the actual ratio based on cumulative allocations stood at 64%-36% ascompared to 69%-31% in December 2009. The higher share of program quality support islargely due to the Water Committee decision to replenish the budget for WFPF-funded RETA6498 (Knowledge and Innovation Support for ADB’s Water Financing Program) which isdesigned to support program quality related activities. As ADB works towards becoming aknowledge bank and with the additional trusts that the Water Operational Framework 2011-2010is seeking to achieve, more and more resources are needed to support program quality. TheFacility therefore expects to keep this allocation ratio as flexible as possible to allow it to bemore responsive to emerging priorities. Table 16 below summarizes the use of funds bywindow while Table 17 presents the detailed status of funds.

Table 16: Summary of Use of Funds by Window(in $ Million)

Use of Funds TargetRatio Allocations Actual Ratio

Project Support Window 70% 22.27 64%

Program Quality WindowKnowledge, Capacity and Innovation ServicesEngaging Civil SocietyRegional Cooperation

30% 12.80 36%

Total 100% 35.07 100%

Table 17 – Detailed Status of Funds as of 31 December 2010(in US Million)

Item Available Resources Allocations BalanceAvailable

forAllocationto Projects

InterestEarnings

Total Projects ServiceFees a

OtherFees/

Charges b

Total

MultidonorTrust Fund

NetherlandsTrust Fund

27.86

8.64

0.53

0.19

28.39

8.83

26.60

8.47

1.10

0.28

0.03

0.0002

27.73

8.75

0.66

0.08

Total 36.50 0.72 37.22 35.07 1.38 0.0302 36.48 0.74a Service fees prior to October 2009 were computed at: 5% for TA and 2% for grant component of investment. For

contributions received after October 2009, the service fee for grant component of investment was increased to 5%b Other fees and charges include audit fees and bank charges



15

42. The unaudited Status of Grants as of 31 December 2010 for both the Multi-Donor TrustFund and the Netherlands Trust Fund are presented in Appendixes 6 and 7, respectively.

43. The distribution of allocated resources by modality is shown in Figure 3 below anddetails are provided in Appendix 8. Technical assistance still registered the highest cumulativeshare and even increased to 61% from 58% in 2010. Of the 61% share, more than halfconstitutes PPTAs.

Figure 2: Distribution of Approved Allocations by Modality

TechnicalAssistance

77%(3.3M)

Grant Componentof In vestment

0%

TA Attached toLoan9%

(0.4M)

Direct Charges14%

(0.6 M)

2010 Allocations

TechnicalAssistance

61%(21.4M)

Grant Componentof Investment

19%(6.7M)

TA Attached toLoan9%

(3.1M)

Direct Charges11%

(3.8M)

Cumulative Allocations as of 2010

44. The distribution of allocated resources by sector is shown in Figure 3 below and detailsare provided in Appendix 9. The cumulative share of urban water which currently stands at 50%dropped by 5% from last year but still got the highest share. Rural water remained at 7%, whilebasin water decreased from 26% in 2009 to 24% as of 2010. Multisector registered a 7%increase largely due to the approval of two regional TAs whose scope cuts across various

subsectors.

Figure 3: Distribution of Approved Allocations by Sector

Rural Water6%

(0.2M)

Urban Water15%

(0.6M)

Basin Water9%

(0.4M)

Multisector70%

(3.0M)

2010 Allocations

Rural Water7%

(2.3M)

Urban Water50%

(17.5M)

Basin Water24%

(8.5M)

Multisector19%

(6.6M)


45. The distribution of allocated resources by region is shown in Figure 4 below and detailsare provided in Appendix 10. Although Southeast Asia received the highest share in 2010, itscumulative share dropped to 34% from 37% in 2009. Except for East Asia whose overall share



16

has remained at 13%, the share of all regions slightly decreased between 1% to 2%. Projectsand activities that cut across various regions (inter-regional) increased to 22% from 16% in2009. Again, this is mainly on account of the two regional TAs approved during the reportingperiod which have multiregional coverage.

Figure 5: Distribution of Approved Allocations by Region

Central and WestAsia1%

(0.025M)

East Asia11%

(0.4M)

Pacific2%

(0.07M)

South Asia5%

(0.2M)

SoutheastAsia 11%

(0.4M)

Inter-regional70%(3.0M)

2010 Allocations Central andWest Asia

14%(4.8M)

East Asia13%

(4.4M)

Pacific.0038%(0.001M)

South Asia17%

(0.5M)

Southeast Asia34%

(11.8M)

Inter-regional22%

(7.8M)


IV. MANAGEMENT OF THE FACILITY

A. Water Committee Evaluation of Applications

46. The evaluation of applications in 2010 by the Water Committee continued to be carriedout by circulation, with interactive deliberation on comments via email.

47. As explained in para 13 above, the non-receipt of expected remittances during thereporting period prompted the Water Committee to agree on a set of additional guidelines forscreening and prioritization of applications. The same guidelines will govern the allocation offunds in 2011 considering that the available resources are even much lesser than what wasavailable last year.

48. Proactive management of demand and expectations of user departments was alsosustained by engaging more closely as early as during application preparation stage.

B. Procedural Matters

49. The Secretariat continued to implement the spring cleaning exercise and maintained

close collaboration with user departments and Controllers in facilitating prompt financial closureof completed activities, particularly those financed through direct charges. This exerciseallowed the Facility to realize some $464,033 in savings from closed accounts and from scaleddown allocations to approved projects.

50. Reporting by user departments on outcomes and results of activities funded throughdirect charge modality was complied with during the reporting period. Copies of these reportswere made available to IED in connection with the recently concluded independent review ofFPFs.



17

51. Summarized in Table 18 below is the Facility’s performance on facility managementbased on activities outlined in the 2010 Annual Work Program.

Table 18: Performance on Facility Management

Targets Set Under the 2010 Work Program AchievementFacility Activity Output Outcome

Approval of eligibleapplications

Applications for TAsapproved by WFPFSteering Committee withina maximum period of 5weeks

Application for directcharges approved by theFacility Manager within oneweek

Timely approval ofWFPF allocationsthat meet the overallproject processingtimetable

Achieved. Averageduration of SteeringCommittee approvalwas 4.5 weeks

Achieved. Averageduration of FacilityManager approvalwas 5 days

Implementation andMonitoring

Notice of approval releasedto proponents within 2 days

after Steering Committee orFacility Manager approval

Disbursements monitoredand disbursement scheduleupdated regularly incoordination with projectofficers

Compliance with 70%-30%ratio between projectsupport and programquality support monitored

Closure of accounts fordirect charges facilitatedafter release of finalpayments

Review of progress ofprojects and activitiesfinanced from the Facility

Reports on the Facilitysubmitted based on agreedtimetable

WFPF efficientlymanaged and

responsive to clientneeds

Achieved. Notice ofapproval released

within set time

Achieved.Disbursement reportupdated regularly

Partly achieved.Ratio as of end-2010stood at 64%-36%

Achieved. 19 directcharges werefinancially closedduring the reportingperiod

Done

Achieved

Continuing knowledgesharing andinformationdissemination onWFPF results

WFPF webpage andmarketing brochureupdated regularly

Good practice papersprepared to disseminateWFPF results

WFPF results sharedand disseminated

Webpage updatedregularly. Lastupdate of marketingbrochure was in 2009

Information on theFacility continued tobe disseminatedthrough the WaterCommunity ofPractice Catchment



18

Targets Set Under the 2010 Work Program AchievementFacility Activity Output Outcome

e-Newsletter(internal) and Waterfor All e-Newsletter(external)

Done. Marketingbrochure for theFacility includedproject examples. Aknowledge product onPDA is being finalizedas of this writing todisseminate the useof PDA as a goodpractice model.

V. RELATIONSHIP WITH FINANCING PARTNERS

52. Coordinating on Schedule of Remittances . Through the Office of CofinancingOperations (OCO), the Facility Secretariat coordinated closely with the Government ofNetherlands to discuss options and provide documents needed to facilitate remittance of theirremaining committed contributions.

53. Coordinating on Report Submission . All scheduled reports to financing partners duein 2010 were delivered. These included the following: (i) 2009 Annual Report, (ii) 2009 auditedfinancial statements, (iii) 2010 Annual Work Program, and (iv) January–June 2010 SemiannualProgress Report. Comments were received on the January-June 2010 Semiannual ProgressReport and have been incorporated in this Annual Report.

54. Independent Review of the Facility . The conduct of an independent review of FPFswas completed by IED in 2010 and the report is included in the agenda for the 2011 AnnualConsultation Meeting scheduled on 23-24 March 2011. The WFPF Secretariat worked closelywith IED throughout the review process, particularly in providing all required information anddocuments.

VI. LESSONS LEARNED, EXPERIENCES GAINED, AND KEY CONSTRAINTS

55. Evaluation and Approval of Applications . The proactive management of userdepartments’ demand for resources allowed the Water Committee and the Facility Secretariat tocontinue allocating resources during the reporting period, albeit at a much scaled down level,but with good results, particularly in terms of leveraged investments and expected benefits.

Furthermore, the formulation by the Water Committee of additional guidelines for prioritizingapplications enabled the Facility to spread out the resources to several projects and activities.

56. Use of Direct Charge Modality for Accessing WFPF Resources . The use of directcharge modality was key to allowing the Facility to continue to be responsive to demands fromuser departments, particularly when the Water Committee decided to defer allocations for grantcomponent of loans, TAs attached to loans, and PPTAs.



19

VII. EXTERNAL FACTORS RELEVANT TO THE FACILITY

57. Global financial crisis . The impact of the global financial crisis on the financingpartners capacity to support the Facility’s resource requirements continued to be felt. Noadditional or new commitments have been confirmed as of this writing although strong interesthas been expressed by some.

58. Decline in annual per capita water endowments . The Facility is expected to continueto play an important role in supporting further improvement in the governance of waterresources in the region, particularly in light of the declining annual per capita waterendowments. In India, for example, endowment dropped from 13,570 cubic meters in 1951 to1,620 cubic meters in 2009 and is forecast to drop further (large parts of the country are alreadybelow 1,000 cubic meters per capita per year). In the Philippines, the endowment has fallen toless than 1,700 cubic meters currently. Demand and supply gap is widening and it is forecastthat at an aggregate level, it will reach 40 percent across Asia in 2030 1.

59. Water and climate change . In the face of declining annual per capita waterendowments, there have been cases, in recent months, of severe flooding in many countries inthe region, including in Australia, which shows how serious the unpredictability of weatherpatterns has become. The Facility’s support to sector work will have to continue looking intohow climate change will be accorded priority. Flood management is certainly an area for whichthere is increasing support within ADB and the Facility can play a major role in pushing moreinvestments.

60. Water and food security . The economic growth in Asia has also led to shift in dietsgenerally toward food elements that require more water to produce and while food productionhas increased manifold, irrigation efficiencies have not increased as much. Withoutcorresponding increase in the rate of water use efficiency in agriculture, the pressure on rapidlydwindling accessible freshwater resources continues to increase. The need for increasedattention on the relationship between water and food security is an area that ADB’s support to

irrigation investment will try to address and in which WFPF support will play an important role.

VIII. OVERVIEW OF THE 2011 ANNUAL WORK PROGRAM

61. While discussion is in progress for the remittance of Netherlands remainingcontributions, the Facility’s operation in 2011 will rely initially on very limited resources carriedover from 2010 operation. Given the limited resources available against projected demand,applications for funding will continue to be strategically prioritized and selected based on thetargets set under the Facility’s DMF and guided by the additional thrusts indicated in the draftWater Operational Framework (2011-2020) briefly discussed in para 4 above.

62. Climate change will continue to be a cross-cutting issue that the Facility will sustain

focus on as it did in previous years.

The allocation ratio of about 70% for project support and 30% for program quality will also serveas an overarching guideline. Based on approved allocations to date, the share of project supportstands at 64% and program quality is at 36%. Considering this current ratio and sinceadditional allocation was made in 2010 to replenish the budget for RETA 6498 (Knowledge andInnovation Support for ADB’s Water Financing Program), it is intended that most, if not all, of thecurrently available resources will be earmarked for project support while requirements for

1 Water Resources Group 2030: Charting our Water Future, November 2009



20

program quality that are eligible under RETA 6498 will be funded from that RETA. Moreover,as mentioned in the Annual Work Program, as ADB moves towards becoming a knowledgebank and with the additional trusts that the Water Operational Framework 2011-2010 is seekingto achieve, more and more resources are needed to support program quality. Thus, the Facilityexpects to keep the 70%-30% allocation ratio as flexible as possible to allow it to be moreresponsive to emerging priorities.

64. The major activities in 2011 will include the following:

Fine tuning of Facility’s operation . In light of the findings and recommendations ofthe independent review of FPFs and considering the uncertainty of additional cashcontributions into the Facility, included in the priority activities of the WaterCommittee and the Facility Secretariat in 2011 are as follows:

(i) review and updating of the DMF to reflect the recommendations of the FPFindependent review and the emerging focus of the Water Financing Program in2011-2020;

(ii) discussion with relevant units within ADB and with financing partners ofarrangements by which flow of contributions into the Facility could be furtherfacilitated; and

(iii) refinement of Water Committee guidelines in allocating very limited resourcesleft based on updated DMF and additional options that may be adopted tosmoothen the way for financing partners to participate (in the case of newpartners) or to continue participating (in the case of existing partners).

Finalization and approval of the Water Operational Framework (2011-2020) .Following consultations with clients and partners, finalization of the WaterOperational Framework (2011-2020) is now underway and approval is scheduledwithin 2011.

Second ADB-DMC Dialogue on Sanitation and Wastewater Management . ADBhas decided to hold a Sanitation Dialogue every two years, alternately with ADBWater Week. Having a separate event on sanitation is aimed at keeping its profilehigh enough in governments’ priorities. The first dialogue was convened in March2009 which had over 100 high-level delegates from 18 DMCs. It was aimed atdiscussing the strategy for advancing sanitation action and for pushing the budgetenvelope to increase sanitation investments. The second dialogue planned for May2011 will be more broadly based and will include substantial private sectorparticipation and in-depth technical discussions.

Around second quarter of 2011, ADB expects to start implementing a RETA onPromoting an Asia-Pacific Wastewater Management Revolution. This TA willsupport wastewater investment projects through knowledge management, packagingof technology options, incentives and financing mechanisms, and conduct ofknowledge exchange and capacity development activities to change mindsets andexpand the range and scale of the wastewater revolution in Asia. DMCs will beengaged in regional and in-country environmental sanitation dialogues. Although theRETA is not funded from WFPF, upcoming projects and activities to be funded by theFacility for advancing sanitation and wastewater management should find synergies



21

with this RETA and areas that present opportunities for convergence of resourcesshould be maximized.

Mobilization of Resources . As mentioned in para. 5 above, one of the priorityactions identified in the Water Operational Framework is to carry out resourcemobilization campaign to replenish WFPF resources. In addition to keeping closecontact with existing partners for any additional contributions, continuing marketingwill also be carried out to attract new partners, including non-traditional sources suchas foundations and private sector. Increased promotion of knowledge partnershipswill also be a major activity in 2011. Through secondment of experts, existingpartners can contribute additional resources to the Facility and new partners can usethis as a modality for joining the Facility.

Annual Consultation Meeting . The 4th Annual Consultation Meeting is scheduledin ADB Headquarters on 23-25 March 2011. A more detailed presentation on theWater Operational Framework (2011-2020) is expected to form part of ADB’sstrategic approach to Asia’s water sector. Also included in the proposed agenda fordiscussion is the report on the independent review of FPFs.



22 Appendix 1

WATER FINANCING PARTNERSHIP FACILITY (WFPF)OVERVIEW AND GOVERNANCE STRUCTURE

I. OVERVIEW

1. In December 2006, the Board of Directors of the Asian Development Bank (ADB)established the Water Financing Partnership Facility (WFPF) to provide additional financial andknowledge resources from development partners for the implementation of ADB’s WaterFinancing Program (WFP) to help achieve the targeted outcomes 1.

2. The WFPF includes:

a. A multidonor trust fund;b. Single-donor trust funds ;c. Framework agreements with partners for:

(i) Cofinancing, i.e., parallel or joint financing of lending and non-lending assistanceto ADB’s developing member countries (DMCs);

(i) Knowledge sharing, i.e., secondments, networks, etc.

(ii) Risk sharing, i.e., credit enhancement, performance guarantees, etc.d. Other forms of assistance.

3. The WFPF has two windows: (i) project support for which about 70% of the WFPFresources are to be allocated, and (ii) program quality support for which the balance of about30% is to be utilized.

4. The WFPF's project support is provided for demonstration projects in the following threekey areas of the WFP and which take place through in-country work on project preparation, andimplementation:

a. Rural Water Service Projects aim to improve health and livelihoods in rural

communities. Projects may include investments in water supply and sanitation,irrigation and drainage, and multiple uses of water in rural communities.

b. Urban Water Service Projects support sustained economic growth in cities, andmay include investments in water supply, sanitation, and wastewatermanagement, and environmental improvement.

c. Basin Water Management Projects in River Basins promote integrated waterresources management (IWRM) and healthy rivers. They may includeinvestments in the infrastructure and management of multifunctional waterregulation and hydropower facilities developed in a basin context, floodmanagement, and the conservation and improvement of watersheds, wetlands,

and ecosystems.

5. WFPF resources for program quality support are provided for facilitating reforms andstrengthening capacity. They are aimed at helping ensure quality, synergy, and innovation in theimplementation of the WFP, with priority given to reducing poverty, improving governance, andconserving the environment. The scope is outlined below:

1 200 million people provided safe drinking water supply and improved sanitation; 40 million people provided moreefficient and productive irrigation and drainage services, and 100 million people with reduced risk to floods



Appendix 1 23

a. Knowledge, Capacity, and Innovation Services. WFPF supports investment in(a) knowledge and policy services for ADB's operations departments and itsclients, (b) expert services through a pool of contracted and seconded specialiststo supplement ADB's own staff resources, (c) pilot and demonstration activitiesbuilding on a similar program under the Cooperation Fund for the Water Sector,and (d) innovative approaches to empower water organizations.

b. Engaging Civil Society. Engaging civil society organizations in water reformsand investment is an important part of the Agenda for Change adopted at ADB'sWater Week in 2004. WFPF supports three ways for civil society organizationsengagement in ADB-financed water projects in consultation with ADB's regionaldepartments: (a) project preparation support, (b) independent monitoring ofproject progress and results by civil society organizations where appropriate, and(c) capacity development to improve collaboration between ADB and civil societyorganizations.

c. Regional Cooperation. WFPF supports regional cooperation activities thatincrease water financing, catalyze reforms, share knowledge and experience,

and build capacity in critical water sector organizations, including the introductionof performance benchmarking services and peer review processes. In supportingregional cooperation, ADB is partnering with the Asia-Pacific Water Forum(APWF), the Global Water Partnership, the United Nations Secretary-General'sAdvisory Board for Water and Sanitation, UN Habitat, the Water and SanitationProgram, and others. Partnerships are guided by the five key result areas ofAPWF: (a) developing knowledge and lessons on priority water sector topicsthrough a network of knowledge hubs, (b) increasing local capacity throughnetworking among practitioner organizations, (c) increasing public outreach andawareness, (d) monitoring water investments and results, and (e) organizingAsia-Pacific Water Summits. ADB has accepted the responsibility of serving aslead organization for APWF's theme of water financing and for its key result area

of increasing public outreach and awareness.

6. All DMCs are eligible for project support 2, and program quality support activities may beimplemented in DMCs or in other countries as needed. Project proposals for WFPF supportshould:

a. be consistent with ADB’s Water for All policy;b. contribute significantly to WFP targets 3;c. introduce innovative solutions;d. adopt a participatory approach;e. have high demonstration value in the sector;f. have good potential for replication in the country and/or region; and

2 For the Netherlands contribution under WFPF (through single donor trust fund), support for water supply andsanitation projects will be limited to ADF countries. The Netherlands support for other water projects is availableto all DMCs. For the Australian contribution under WFPF (through multidonor trust fund), there are no countryrestrictions. However, Australia’s policy seeks to demonstrate that investments in IWRM will contribute tosustainable economic growth, especially in Southeast Asia and the Pacific. For the Austrian contribution underWFPF (through multidonor trust fund), there are no country restrictions. However, Austria would like to supportactivities in the listed Central Asian Republics and South Caucuses (Armenia, Azerbaijan, Georgia, Kazakhstan,Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan) as a priority.

3 Through project implementation or through reforms or capacity development.



24 Appendix 1

g. link with CPS and results frameworks.

II. GOVERNANCE STRUCTURE

7. The Financing Partners and ADB jointly steer the operation of WFPF and meet annuallyto review progress, administration matters, Annual Work Programs, and strategic directions ofthe Facility.

8. A Steering Committee for WFPF (WSC) provides strategic direction for WFPF. The WSCis the designated authority for approving the allocation of WFPF resources for specific projects.Chair: Director General, Regional and Sustainable Development Department (RSDD); andMembers: Director Generals of user departments (UDs).

9. ADB’s Water Committee (WC) reviews and makes recommendations on projectproposals for assistance from WFPF, and makes policy and procedural recommendations to theWSC regarding WFPF operations.

10. The Sustainable Infrastructure Division (RSID) of RSDD manages WFPF. Director, RSID

or his/her designate acts as the Facility Manager for WFPF and oversees the day to dayoperations, monitoring and evaluation, and reporting of WFPF, with assistance from a team ofconsultants who have technical and administrative expertise serving in a management unit. TheFacility Manager serves as the secretariat for WFPF operations, prepares semi-annual progressreports and annual reports and annual work programs for WFPF and serves as the focal pointfor WFPF partners for technical matters.

11. The Office of Cofinancing Operations (OCO) facilitates contributions to the WTF andWTFs, and act as the official channel of communication for financial issues between ADB andWFPF partners. OCO also leads negotiations and discussions with such partners on proceduralagreements for contributions and framework agreements, where applicable.

12. The organization structure for WFPF governance is shown on the attached sheet.



Appendix 1 25

The WFPF Governance Structure

Party ResponsibilitiesFinancing Partners

Members: WFPF contributors (i) Provide strategic direction to WFPF(ii) Meet with ADB for Annual Consultation(iii) Review progress and administration and

Annual Work Program

WFPF Steering Committee (SC)Chair: DG, RSDDSeretariat: RSIDMembers: DGs of User Departments(UDs)

(i) Provide strategic direction to WFPF(ii) DG, RSDD approves WFPF policy and

procedures(iii) Approves allocation of funds to applications for

TAs and grant components of investments

Water Committee (WC) Chair and Co-Chair: Directors, EASSand PSIF 1Secretariat: RSIDMembers: Water specialists nominatedby the Chair as members

(i) Review and endorse proposals for WFPFsupport

(ii) Advise SC on strategic direction policy &procedures of WFPF to support WFPimplementation

Facility ManagerManager: Director, RSIDAssistant: A team of consultants

(i) Serve as Secretariat and oversee WFPF day-to-day operations

(ii) Oversee review process for applications(iii) Review applications for compliance with

Implementation Guidelines for use of fundsand eligibility criteria

(iv) Prepare Annual Work Program and progressreports

(v) Serve as focal point for WFPF partners fortechnical matters

(vi) Approve applications for direct charges

OCOContact: Designated by Head, OCO (i) Facilitate coordination with financing partners

(ii) Communicate on financial issues among thepartners

(iii) Lead negotiations with partners on financialand procedural agreements for WFPFcontributions and framework agreements



26 Appendix 2

WATER FINANCING PARTNERSHIP FACILITYDESIGN AND MONITORING FRAMEWORK

Introduction

1. Since the Water Financing Partnership Facility (WFPF) was established to provideadditional financial and knowledge resources for the implementation of ADB’s Water FinancingProgram, it is thought sufficient to have one design and monitoring framework (DMF) to coverthe objectives of both the Program and one of its critical funding sources – the WFPF. This alsoavoids confusion in having two separate DMFs that are targeted ultimately at the same impactsand outcomes.

2. The key points to note are:

a. The DMF for the Water Financing Program has been expanded to add more detailon specific outputs that fall within its three major output components as these outputsare financed from the WFPF;

b. The target outputs indicated in the WFPF DMF were defined using as basis the $100million expected total contributions from the WFPF financing partners and using2008-2010 as the period covered since full operationalization of WFPF began inJanuary 2008 and committed contributions to date are 2010.

3. The Water Financing Program aims to double ADB’s investments in water during theperiod 2006-2010, thus resulting in significant increase in the number of people in Asia-Pacificregion with access to safe and water supply and sanitation services, higher productivity andefficiency of irrigation and drainage services, coupled with the integrated management of water

resources in river basins for sustained economic growth and environmental improvement. Withthese as targeted outcomes, the activities to be supported by the resources from WFPF arethose directly contributing to the achievements of such outcomes as described below.

How WFPF Resources will help achieve WFP Targeted Outcomes: Rationale for Choiceof Indicators

4. The specific output indicators used in the proposed DMF for WFPF are those thatdirectly reflect the activities to be financed from WFPF resources and directly contribute to thefollowing 3 major outputs of the Water Financing Program:

a. Component 1: Increased levels of water investment– to be supported by WFPF

in terms of additional resources to:

(i) prepare projects (through PPTAs) resulting in fundable investment proposals,(ii) finance grant components of investments that support either works, goods

and services designed to enhance project design and implementation, and(iii) finance specific activities that directly support project development

Furthermore, it is envisaged that the WFPF will not only provide additional resources toproduce the outputs described above but also provide added value such as:



Appendix 2 27

(i) greater assurance of outcomes by increasing country commitments throughsector assessments and investment dialogues with government.

(ii) greater reach to the underserved by facilitating preparation of additionalprojects and leveraging more resources from partners.

(iii) faster decision making by means of: WFPF-financed activities such as waterservices expert pool that makes possible provision of incremental experts to helpin project design and implementation; knowledge products and tools; or use ofdirect charge as a modality to access WFPF resources in addition to loans andTAs.

(iv) boosting innovation and business unusual by supporting activities like pilotand demonstration, development of knowledge products and organization ofknowledge events.

(v) being more strategic by addressing specific and priority issues such as gender,climate change, environment and sanitation.

b. Component 2: Policy and institutional reforms accelerated – supported byWFPF in terms of additional resources to fund loans, TAs or other modalities thataddress policy, legislation, regulations and institutional; and related undertakingssuch as: support to reform assessments and studies; support to strengtheningcoordination mechanism and facilitating reform process such as assistance inestablishing or strengthening national water sector apex bodies; and engagement ofcivil society.

c. Component 3: Institutional capacity strengthened and knowledge baseexpanded – supported by WFPF in terms of additional resources for pilot anddemonstrations that produce new and innovative approaches, strategies andtechnologies; capacity development interventions targeted at key water sectororganizations such as water utilities, river basin organizations, water usersassociations/irrigators association and apex bodies as well asimplementing/executing agencies, knowledge products development, establishmentof knowledge partnerships, regional cooperation, and civil society participation.



28 Appendix 2

WFPDesign Summary

PerformanceTargets/Indicators

Data Sources/ReportingMechanisms

Assumptions and Risks

ImpactHealthy people andenvironment

MDG goals on water andsanitation

Reduction in the incidence ofwater related fatalities anddisease

Increase in the number ofcountries implementing IWRM

Country-level and UNprogress reports onMDGs.

UNDP/WHO countryreports.

Country water sectorstrategies and reports ofGlobal Water Partnership

AssumptionsGovernments makeachievement of water MDGsa prioritySustained emphasis on waterinvestment to keep pace withincreased demand -population and economicgrowthFinancial mechanisms forsustainable maintenanceprograms in placeIWRM policies adopted in linewith WSSD commitments

OutcomeImproved coverage, quality andcontinuity of water service

delivery within a framework ofsustainable management ofnatural resources

200 million with increasedaccess to safe water and

sanitation100 million with reduced riskto floods

40 million with improvedirrigation

IWRM introduced into 25 riverbasins

Improved water governanceas demonstrated by theoutcome achievement onpolicy and reform measures 5

In terms of investments:Between 2006-2010,25% of ADB lending is inwater, $12 M in ADB fundsinvested in water, and $8additional investmentsleveraged from other donors,government and privatesector.

Country sector reportsand analysis prepared by

ADB (e.g. Water UtilitiesData Handbook).

Reports of UN and otheragencies.

Reports of researchbodies e.g. IWMI.

Governance surveys intargeted countries

Project documents

AssumptionsLeadership of key agenciesand utilities

Implementation ofgovernance reforms forresource management andservice deliveryCommunity involvementApplication of IWRMprinciples

RisksIntensified opposition toprivate sector involvement inwater service deliveryBudgetary constraints

Output

Component 1Increased levels of waterInvestment (infrastructure )

Fundable investmentprojects

70% or $70 Million of WFPFresources spent on projectinvestment support

At least 30 6 PPTAs eitherfunded in full or cofinancedwith other sources, of whichno less than 50% translate toinvestment projects

Published ADB data onpast and future publicand private sectorinvestments andtechnical assistance.

AssumptionsADB investment products areattractive to DMCsReplenishment of OCR/ADFto support increased waterinvestmentInternal resources allocatedto deliver increased waterprogramWFPF contributions arereceived based on the

5 Governance indicators are under development6 30 PPTAs is based on average cost of $800K per TA or a total of $24M during the period 2008-2010



Appendix 2 29

WFPDesign Summary




Loans supported withgrants

Project developmentsupport

Such increase in investmentlevel is supported by theadded value provided byWFPF in terms of:

Faster decision making bymeans of:

WFPF governance andapproval processes,including use of templatesand tools

Use of direct chargemodality support for short-term and stand aloneactivities with specificoutputs and outcomes ismade possible withoutneed for RETA

Greater assurance ofoutcomes by increasingcountry commitment

Investment DialoguesUse of knowledge products

Greater reach to underservedby

More PPTAsMore knowledge products More partners

Boosts innovation andbusiness unusual

PDA financingKnowledge productsKnowledge eventsTake up of new products

At least 15 7 loans providedgrant support for eithergoods, works or services

At least 30 8 applications fordirect charges add value toproject development throughimproved design andimplementation, bettercommunication withstakeholders, etc.

Applications for TAs andGCIs are approved within 1month upon receipt of bi-monthly applications thatmeet qualification criteria

Applications for directcharges are approved withinone week upon receipt ofapplications that meetqualification criteria

Dialogues conducted in eachof six priority countries thatproduce updated waterpriorities

At least 50 million populationof WFP targeted outcomesdirectly traceable to WFPFfunding

Post evaluation confirms newideas, methods, technologyand approaches taken up andapplied from WFPF financedinitiatives

Water InformationSystem using as sourcedata CSPs, PPRs and

reports of individualfunded outputs.

ADB databases

WFPF reports onapproved applications

WFPF financingproposals screeninganalyses

BTOR on dialogues

ADB water database

Post evaluation study ofPPTAs and subsequentloan project design

Post evaluation ofapproved technicalassistance projects

committed date ofcontirbutions

RisksLow DMC demand for

increased investment in thesector

AssumptionThat ADB existing processes arenot applied in each case but areable to be modified to enablethese features to speed upprocessing

7 15 grant component of loan is based on average cost of $1M per project or a total of $15M during 2008-20108 30 applications for direct charges is based on average cost of $100K each or a total of $3M during 2008-2



30 Appendix 2

WFPDesign Summary




Being more strategic by

Funding climate change

Funding sanitation

Funding environment

Funding gender initiatives

Funding initiatives that helpstrengthen partnership withor empower civil society

Component 2Policy and institutionalreforms accelerated

Nonlending assistanceaddressing reforms in theareas of:

policy,legislationregulationinstitutionalarrangements

Component 3Institutional capacitystrengthened and knowledgebase expanded

Pilot and demonstrationprojects

Water sector organizationscapacity improvement

Water Utilities

River BasinOrganizations (RBOs)

At least 15 projects

demonstrating climate changeadaptation measures

At least 15 projectsdemonstrating increasedinvestment in sanitation

At least 15 projectsdemonstrating environmentalprotection and preservation

At least 10 projectsdemonstrating gendermainstreaming

At least 10 projectsdemonstrating greaterinvolvement of civil societyboth at policy and projectlevels

At least 15% or $15M ofWFPF resources allocated tothis component

At least 15 TAs (ADTAs,piggy-backed TAs, SSTAs,RETAs) and direct chargeapplications are designed toadvance reform measures ineach of the areas of policy,legislation, regulation orinstitutional arrangements

At least 15% or $15M ofWFPF resources allocated tothis component

80% of approved projectscompleted within scheduleand replication /upscalingoccurring for at least 40%

Improvement in utilitiesperformance using as basisthe adopted utilityperformance indicators

Implementation of

ADB project documents

(loans and TAs); WFPFapplication documents

Project documents,WFP/WFPF reports




TA documents, reportson sector work dealingwith policies andlegislation

PDA Project CompletionReports

Reports andbenchmarking activities

Benchmarking reports,Reports by NARBO



Appendix 2 31

WFPDesign Summary




Irrigation Water UsersAssociation (WUA)

Sector Apex Bodies

Water sector agencies

Knowledge products

Knowledge hubs

Knowledge sharing events

Regional cooperationengaging with selectedregional entities such asGlobal Water Partnership,Netherlands WaterPartnership, Asia PacificWater Forum

benchmarking and peerreview process in RBOs inAsia-Pacific Region

Program for benchmarkingirrigation service providersdeveloped and implemented

Implementation ofbenchmarking and peerprocess in apex bodiescompleted for all regions.

Capacity building of sectoragencies supported either aspart of loans and TAs or asstand alone activities

Knowledge productsdeveloped on schedule andachieve targeted distributionlevels

At least 5 regional knowledgehubs operational by end 2010

At least 2 annual major waterevents participated in, i.e.World Water Week,Singapore International WaterWeek.

Scheduled outputs completedon time.

(Network of Asian RiverBasin Organizations)

Benchmarking reports,

project reports

Benchmarking reports

Water Committee andWFPF reports

Water Committee reports


Events-related reports,back-to-office reports(BTORs)


ActivitiesInvestment

Demonstrate expansion in 5 target countriesMobilize private financeBuild momentum for water investments

ReformsIntensify support for national water sector reformsSupport development of regulatory frameworksExtend support for IWRM into the targeted 25 basins

Capacity DevelopmentDevelop new and innovative approaches, methodologiesStrengthen institutional capacityEnhance the knowledge base and knowledge productsStrengthen regional partnerships

Inputs:ADB TA grant resourcesADB LendingADB staff resources

Asia Financing PartnershipFacility approx $100 million

Project Support Window(70%)

Program Quality Window(30%)

Government resourcesPrivate sector resourcesNGO resources



32 Appendix 2

Acronyms

ADF - Asian Development FundADTA - Advisory Technical AssistanceCASCWUA - Central Asia and South Caucasus Water Utilities AssociationDMC - Developing Member CountryDMF - Design and Monitoring FrameworkIWRM - Integrated Water Resources ManagementKP - Knowledge ProductMDG - Millennium Development GoalNARBO - Network of Asian River Basin OrganizationsOCR - Ordinary Capital ResourcesPDA - Pilot and Demonstration ActivitiesPPTA - Project Preparation Technical AssistanceRETA - Regional Technical AssistanceSAWUN - South Asia Water Utilities NetworkSEAWUN - Southeast Asia Water Utilities NetworkSSTA - Small Scale Technical AssistanceTA - Technical AssistanceUN - United NationsUNDP - United Nations Development ProgramWFP - Water Financing ProgramWFPF - Water Financing Partnership FacilityWHO - World Health OrganizationWSSD - World Summit on Sustainable DevelopmentWUA - Water Users Association



Appendix 3 33

Water Financing Partnership Facility Project DatabaseList of January-December 2010 Approved Allocations



34 Appendix 3



Appendix 4 35

Water Financing Partnership Facility - Multidonor Trust FundDisbursement as of 31 December 2010 and Projected Disbursements in 2011



36 Appendix 4



Appendix 4 37



38 Appendix 4



Appendix 4 39



40 Appendix 5

Water Financing Partnership Facility - Netherlands Trust FundDisbursements as of 31 December 2010 and Projections until 2011



Appendix 5 41



42 Appendix 7





44 Appendix 6





46 Appendix 6





48 Appendix 6



Appendix 6 49



50 Appendix 7





52 Appendix 7



Appendix 8 53

Water Financing Partnership Facility Project DatabaseApproved Allocations - By Modality



54 Appendix 8



Appendix 8 55



56 Appendix 8



Appendix 8 57



58 Appendix 8



Appendix 8 59



60 Appendix 9

Water Financing Partnership Facility Project DatabaseApproved Allocations - By Sector (Rural, Urban, Basin)



Appendix 9 61



62 Appendix 9



Appendix 9 63



64 Appendix 9



Appendix 9 65



66 Appendix 9



Appendix 9 67



68 Appendix 10

Water Financing Partnership Facility Project DatabaseApproved Allocations - By Region



Appendix 10 69



70 Appendix 10



Appendix 10 71



72 Appendix 10



Appendix 10 73



74 Appendix 10



Appendix 10 75

Documents

2010 Water Financing Partnership Facility: Annual Report (January-December)