WATER RESOURCES AT WATER RESOURCES AT THE IDBTHE IDB

Washington, D.C.Washington, D.C.May 2004May 2004

STRUCTURE OF PRESENTATION

• Overview of LACOverview of LAC• Main ChallengesMain Challenges• The IWRM StrategyThe IWRM Strategy• Financing the Strategy: Financing the Strategy:

The Water PartnershipThe Water Partnership• Pipeline of projectsPipeline of projects

OVERVIEW OF LACOVERVIEW OF LAC

0%

20%

40%

60%

80%

100%

1960 1965 1970 1975 1980 1985 1990 1995 2000

% p

opul

atio

n

Latin America Argentina Brazil Guatemala

URBANIZATION IN LACURBANIZATION IN LAC

Total LAC = 517 millions

389 millions = 75% in urban areas

APPROXIMATELY 116 (50 IN URBAN AREAS) MILLION PEOPLE WITH NO ACCESS TO APPROXIMATELY 116 (50 IN URBAN AREAS) MILLION PEOPLE WITH NO ACCESS TO SANITATION SYSTEMS AND 75 WITHOUT POTABLE WATER (26 IN URBAN AREAS)SANITATION SYSTEMS AND 75 WITHOUT POTABLE WATER (26 IN URBAN AREAS)

URBAN FLOODS COST MEXICO US$ 150 MILLION/YR, SEVERE IN CENTRAL AND URBAN FLOODS COST MEXICO US$ 150 MILLION/YR, SEVERE IN CENTRAL AND SOUTH AMERICA (eg CHILE THIS MONTH)SOUTH AMERICA (eg CHILE THIS MONTH)

70% OF WATER EXTRACTIONS ARE FOR AGRICULTURE70% OF WATER EXTRACTIONS ARE FOR AGRICULTURE

HYDROPOWER GENERATES 64% OF TOTAL ENERGYHYDROPOWER GENERATES 64% OF TOTAL ENERGY

NAVIGATION VERY IMPORTANT (AMAZON RIVER BASIN, RIO DE LA PLATA BASIN). NAVIGATION VERY IMPORTANT (AMAZON RIVER BASIN, RIO DE LA PLATA BASIN). IN 2000, 18 MILLION TONS OF GOODS WERE TRANPORTED IN THE AMAZON BASININ 2000, 18 MILLION TONS OF GOODS WERE TRANPORTED IN THE AMAZON BASIN

70%

Potential (millions Gwh/yr)

Total utilized

Percentage utilized

70%

1.0

72%

0.8

NorthAmerica

Europe

33%

1.6 6%

1.0

21%

3.6

SouthAmerica

África

Asia

HYDROPOWER POTENTIALHYDROPOWER POTENTIAL

MAIN WATER RESOURCES MAIN WATER RESOURCES MANAGEMENT PROBLEMS IN LACMANAGEMENT PROBLEMS IN LAC

WEAK INSTITUTIONS (UNDERFUNDED, POLITICIZED, ILL-WEAK INSTITUTIONS (UNDERFUNDED, POLITICIZED, ILL-ORGANIZED, UNDERSTAFFED) RESULTING IN DETEORIORATED ORGANIZED, UNDERSTAFFED) RESULTING IN DETEORIORATED INFRASTRUCTURE AND LOW EFFICIENCIESINFRASTRUCTURE AND LOW EFFICIENCIES

WEAK REGULATORY FRAMEWORKS PREFERRED OVER WEAK REGULATORY FRAMEWORKS PREFERRED OVER INCENTIVE-BASED APPROACHES INCENTIVE-BASED APPROACHES

LACK OF OR OUTDATED LEGAL FRAMEWORKS AND NO LACK OF OR OUTDATED LEGAL FRAMEWORKS AND NO ENFORCEMENTENFORCEMENT

HIGH RATES OF URBANIZATION LEADING TO POOR WATER HIGH RATES OF URBANIZATION LEADING TO POOR WATER QUALITYQUALITY

WATER RESOURCES MANAGEMENT ACTIVITIES ARE DIFFUSED WATER RESOURCES MANAGEMENT ACTIVITIES ARE DIFFUSED AND FRAGMENTEDAND FRAGMENTED

WATER HIGHLY CONCENTRATED IN A FEW AREASWATER HIGHLY CONCENTRATED IN A FEW AREAS

Social Challenges

Economic Challenges

FinancialChallenges

EnvironmentalChallenges

InstitutionalChallenges

MAIN CHALLENGES IN LACMAIN CHALLENGES IN LAC

Increase coverage ratesImprove health conditions

natural hazard risk mitigation

Economic valuation of water resourcesWater allocation among competing uses

integrated approaches to water management

Raise funds for operation and maintenanceFinancing infrastructure

Financing institutional development

Reduce and control pollutionIntegrated approaches to water managementEcosystem approach to water management

Water law reformsInstitutional innovation including regulation

Stakeholder participation

IADBs STRATEGY ON IADBs STRATEGY ON INTEGRATED WATER INTEGRATED WATER

RESOURCES MANAGEMENTRESOURCES MANAGEMENT

THE GOALS

SUPPORT THE SUPPORT THE IMPLEMENTATION IN LAC OFIMPLEMENTATION IN LAC OF::

PRINCIPLES OF DUBLINPRINCIPLES OF DUBLIN

AGENDA 21 AGENDA 21

THE SAN JOSE DECLARATIONTHE SAN JOSE DECLARATION

BOLIVIA SUMMIT ON BOLIVIA SUMMIT ON SUSTAINABLE DEVELOPMENTSUSTAINABLE DEVELOPMENT

SPECIFIC OBJECTIVES

FROM DEVELOPMENT TO MANAGEMENTFROM DEVELOPMENT TO MANAGEMENT

FROM SECTORAL TO INTEGRATED FROM SECTORAL TO INTEGRATED APPROACHES IN WATER RESOURCES LEADING APPROACHES IN WATER RESOURCES LEADING TO:TO:

MORE EFFICIENT WAYS TO ALLOCATE AND MORE EFFICIENT WAYS TO ALLOCATE AND CONSERVE WATER AND TO SOLVE CONSERVE WATER AND TO SOLVE CONFLICTS AMONG COMPETING USES; CONFLICTS AMONG COMPETING USES;

ACCOUNT FOR THE SOCIAL, ECONOMIC AND ACCOUNT FOR THE SOCIAL, ECONOMIC AND ENVIRONMENTAL VALUE OF WATER; ANDENVIRONMENTAL VALUE OF WATER; AND

INCREASE PARTICIPATION OF THE PRIVATE INCREASE PARTICIPATION OF THE PRIVATE SECTOR AND COMMUNITIESSECTOR AND COMMUNITIES

CHANGE IN PARADIGM:

GUIDING PRINCIPLESPROMOTING COMPREHENSIVE NATIONAL WATER PROMOTING COMPREHENSIVE NATIONAL WATER RESOURCE MANAGEMENT POLICIES AND RESOURCE MANAGEMENT POLICIES AND STRATEGIESSTRATEGIESFOCUS ON INSTITUTIONAL INNOVATION AND FOCUS ON INSTITUTIONAL INNOVATION AND CAPACITY BUILDINGCAPACITY BUILDINGATTENTION TO BOTH SHORT- AND LONG-TERM ATTENTION TO BOTH SHORT- AND LONG-TERM EFFORTS FOR BANK ACTIONEFFORTS FOR BANK ACTIONCONFORMING TO BANK’S AND COUNTRIES CONFORMING TO BANK’S AND COUNTRIES OBJECTIVES AND TO INTERNATIONALLY OBJECTIVES AND TO INTERNATIONALLY ACCEPTED PRINCIPLESACCEPTED PRINCIPLESINCENTIVES FOR COUNTRY INVOLVEMENT AND INCENTIVES FOR COUNTRY INVOLVEMENT AND FOR INTERNAL BANK COORDINATION; ANDFOR INTERNAL BANK COORDINATION; ANDCOOPERATION AND COORDINATION AMONG COOPERATION AND COORDINATION AMONG INTERNATIONAL FINANCIAL ORGANIZATIONSINTERNATIONAL FINANCIAL ORGANIZATIONS

SITUATIONS TO ENCOURAGE

INTEGRATEDINTEGRATED WATER RESOURCES MANAGEMENT WATER RESOURCES MANAGEMENT STAKEHOLDERSTAKEHOLDER EMPOWERMENTEMPOWERMENT AND AND

PARTICIPATIONPARTICIPATION PRIVATE SECTOR PARTICIPATIONPRIVATE SECTOR PARTICIPATION ENTITY TO ENTITY TO COORDINATECOORDINATE “TOP-DOWN” AND “TOP-DOWN” AND

“BOTTOM-UP” APPROACHES“BOTTOM-UP” APPROACHES MARKET OR OTHER MARKET OR OTHER INCENTIVE-ORIENTEDINCENTIVE-ORIENTED

MECHANISMS TO ALLOCATE THE RESOURCE MECHANISMS TO ALLOCATE THE RESOURCE ENTITY TO COORDINATE, FACILITATE, AND ENTITY TO COORDINATE, FACILITATE, AND

REGULATE THE PROCESS OF WATER ALLOCATION REGULATE THE PROCESS OF WATER ALLOCATION PLACED PLACED OUTSIDE AND ABOVE OFOUTSIDE AND ABOVE OF ANY SPECIFIC ANY SPECIFIC WATER-USE-SUB-SECTORWATER-USE-SUB-SECTOR

STRATEGIC INSTRUMENTS

COST RECOVERYCOST RECOVERY PRIVATE SECTOR PARTICIPATIONPRIVATE SECTOR PARTICIPATION CAPACITY BUILDINGCAPACITY BUILDING STAKEHOLDER PARTICIPATIONSTAKEHOLDER PARTICIPATION DECENTRALIZATIONDECENTRALIZATION TRADABLE WATER RIGHTSTRADABLE WATER RIGHTS RIVER BASIN COUNCILSRIVER BASIN COUNCILS

LEVELS OF ACTION FOR THE BANK

CONSTITUTIONAL LEVEL:Establishing laws and policies-a national strategy for integratedwater resources management

ORGANIZATIONAL LEVEL:River basin management- allocating water flows, assimilative capacity, ecosystem maintenance, capability, potential energy

OPERATIONAL LEVEL:Water uses and users-using water resources, subject tooperational rules, to meet demands and needs

FINANCING THE STRATEGYFINANCING THE STRATEGY

BANK INSTRUMENTS

IDB

MIF

IIC

PRI

•COUNTRY DIALOGUE•COUNTRY AND REGIONAL TECHNICAL ASSISTANCE GRANTS•TRUST FUNDS•SECTOR AND HYBRID LOANS•PROJECT SPECIFIC LOANS •SMALL PROJECT LOANS•COFINANCING

•COUNTRY AND REGIONAL TECHNICAL ASSISTANCE GRANTS•FOR MICROENTERPRISE AND SMALL ENTERPRISE•EQUITY FUNDS/INVESTMENTS•SMALL BUSINESS VENTURE CAPITAL FUNDS

•PRIVATE SECTOR LOANS•GUARANTEES•SUBORDINATED LOANS

•PRIVATE SECTOR LOANS TO SMALL AND MEDIUM•ENTERPRISE•EQUITY FUNDS/INVESTMENTS•COFINANCING

The IDB-Netherlands - Water Partnership Program

INWAP

INWAP´S OBJECTIVE:

The general objective of INWAP is to support the The general objective of INWAP is to support the implementation of internationally recognized implementation of internationally recognized principles of integrated water resources principles of integrated water resources management (IWRM) in Latin America and the management (IWRM) in Latin America and the Caribbean. Caribbean.

This objective will be achieved through joint This objective will be achieved through joint efforts: internally to improve and strengthen the efforts: internally to improve and strengthen the Bank’s operational capacity in the area of IWRM, Bank’s operational capacity in the area of IWRM, and externally to improve such capacity in the and externally to improve such capacity in the Bank’s borrowing member countries. Bank’s borrowing member countries.

INWAP 2004 Work Plan centers around two sets of strategic priorities:

The ones stated on the Bank´s The ones stated on the Bank´s Institutional StrategyInstitutional Strategy

The ones stated on the Bank´s The ones stated on the Bank´s Integrated Water Resources Integrated Water Resources Management StrategyManagement Strategy

Priorities stated under the Bank´s Institutional Strategy:

The Bank´s two overarching objective are: The Bank´s two overarching objective are: a) sustainable economic growth, and b) a) sustainable economic growth, and b) poverty reduction and the promotion of poverty reduction and the promotion of social equitysocial equity, implemented through four , implemented through four priority actions areas: priority actions areas: social development, social development, modernization of the state, competitiveness, modernization of the state, competitiveness, and regional integration.and regional integration. Environment is a Environment is a cross-cutting theme. cross-cutting theme.

Priorities stated under the the Bank´s Integrated Water Resources Management Strategy :

The goal of the strategy isThe goal of the strategy is:…¨to support water :…¨to support water resources conservation through a process of change resources conservation through a process of change regarding water resources issues; namely, a shift regarding water resources issues; namely, a shift from development to management and from a from development to management and from a sectoral to an integrated approach¨sectoral to an integrated approach¨. .

The strategy aims to mainstream critical aspects of The strategy aims to mainstream critical aspects of IWRM related to each country’s water sector in IWRM related to each country’s water sector in general in the Bank’s water-related operations. general in the Bank’s water-related operations.

Strategic Lines of Action for the 2004 Work Plan:

Based on the main objectives of the Based on the main objectives of the Bank and the principles of the Bank and the principles of the IWRM Strategy, new eligible IWRM Strategy, new eligible activities will place emphasis on: activities will place emphasis on:

Poverty Reduction and the Poverty Reduction and the Promotion of Social EquityPromotion of Social Equity

Water GovernanceWater Governance

Areas of concentration are: a) support compliance with the Millennium Development Goals (MDGs) in potable water and sanitation and b) provide the methodological tools to assess the impact of water-related activities on the poor.

 

Poverty Reduction and the Promotion of Social Equity

Water Governance Areas of concentration are: a) support the Areas of concentration are: a) support the

formulation of IWRM strategies and plans as set in formulation of IWRM strategies and plans as set in the Implementation Plan of the World Sustainable the Implementation Plan of the World Sustainable Summit and b) strengthen the institutional, legal, Summit and b) strengthen the institutional, legal, and policy frameworks of the Bank's borrowing and policy frameworks of the Bank's borrowing member countries.member countries.

Strategic Lines of Action for the 2004 Work Plan:

Based on the main objectives of the Based on the main objectives of the Bank and the principles of the Bank and the principles of the IWRM Strategy, new eligible IWRM Strategy, new eligible activities will place emphasis on: activities will place emphasis on:

Poverty Reduction and the Poverty Reduction and the Promotion of Social EquityPromotion of Social Equity

Water GovernanceWater Governance

IN W A P ´s S tra te g ic A c tivit ie s fo r 2 0 04

F a c ility fo r S m a ll S ca leP ro v ide rs in W a ter

M D G ´s in w a te ra n d san ita tion

E m p irica lly L in k ingW a ter a nd P ove rty

W a ter a nd p ove rty

P o verty R e d uc tion

W a te r R e sou rcesP la n fo r B ra z il

A w a re n e ss a nd T ra in ingS tra teg y o n IW R M P la ns

T e ch n ica l S em in aro n W Q M

C o u rse o n IW R Mfo r C en tra l A m e rica

IW R M stra te g iesa n d p la ns

W a te r P o licyfo r B o liv ia

N a tio n a l T a riffF ra m ew o rk fo r P e ru

C o n gre ss o n P u b licP o lic ie s fo r W R M

C a p a c ity B u ild in g fo rL e g isla to rs

In s titu tio na l, le g a la n d po licy

fra m e w o rks

W ate G o vern an ce

ID B ´s IW R M S tra te g y O b je c tives

INWAP´s Strategic Activities for 2004

Pipeline of IDB Loans

For 2004-2005 there are approx. USD 2.9 billion in For 2004-2005 there are approx. USD 2.9 billion in the pipeline the pipeline

USD 1 billion in USD 1 billion in hydropowerhydropower (Tocoma in VE, Porce (Tocoma in VE, Porce III in CO, two small PRI projects in BR and PN)III in CO, two small PRI projects in BR and PN)

USD 250 million in USD 250 million in irrigationirrigation (BR, ME and JA) (BR, ME and JA) USD 1.5 billion in USD 1.5 billion in potable water and sanitationpotable water and sanitation

(large loans in ME and BR and smaller loans in (large loans in ME and BR and smaller loans in variety of countries)variety of countries)

USD 40 million in USD 40 million in watershed managementwatershed management (CR, PN (CR, PN and VE)and VE)