Download Water Infrastructure for Sustainable Development

Water Infrastructure for
Sustainable Development
Abel Mejia
Water Manager
The World Bank
Outline
Water and Poverty: the Big
Picture
 Implications for the
Infrastructure Sector
 Governance and the Political
Economy of Water
 The Way Forward

Outline

Water and Poverty: the Big Picture









The Millennium Development Goals
Water Security
Urbanization
Access to Electricity
Environmental Services
Climate Change
Implications for the Infrastructure Sector
Governance and the Political Economy of
Water
The Way Forward
Water and Poverty
1 billion lack access
to safe water
 2.6 billion are without
basic sanitation

The MDGs


On track: Water supply
Off track: Sanitation
• >500 million people will be missed

Beyond the pipes
• Good policies, accountable
and capable institutions required
Urbanization

The urban shift and growth of slums
has major implications on water
infrastructure development
Challenges: Urbanization
Projected Population
Developing & Transition Countries (DTC) and
OECD
9
Megacities
Cities
Towns
Other rural
Fragile lands
8
Population (billions)
7
6
5
4
Rapid
urban
growth in
secondary
cities &
towns
3
2
Still many
in fragile
rural areas
1
0
DTC
OECD
1950
DTC
OECD
1970
DTC
OECD
2000
DTC
OECD
2030
DTC
OECD
2050
Annual Cost of Environmental
Degradation in Colombia
(Percentage
of GDP
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
Water,
Urban & Indoor
Sanitation & Air Pollution
Hygiene
Natural
Disasters
Land
Degradation
Water Security
Access to Electricity



1.6 billion people lack basic electricity
service
Access rates:3% in parts of Africa
Clean Energy
• Re-emergence of hydropower
Environmental Services

Recognize the Value of
Water Ecosystems
• Glaciers
• Coastal systems
• Lakes and wetlands
• Aquifers
• Tropical forests
Adaptation to Climate Change
Impact on water cycle,
water availability, and
water allocation at the
global, regional, basin, and
even local levels


Smaller stocks of
existing water
infrastructure in
developing countries
Impact supply and
demand of water
resources and associated
infrastructure
Relative change in runoff in the twenty-first century mean of
relative change (percentage) in runoff for the period 2041–60
compared to 1900-1970. (P. C. D. Milly1 2005)
Average Annual Precipitation and Variability in LAC and SSA
2500
Northern Equatorial LAC
2000
Southern Equatorial LAC
1500
mm/yr
Northern Equatorial SSA
Northern Warm Temperate
LAC
1000
Southern Warm Temperate
LAC
Brazil-Arid LAC
500
Polar LAC
0
Arid LAC
-500
Southern Equatorial SSA
Northern Warm Temperate
SSA
Southern Warm Temperate
SSA
Southern Arid SSA
Northern Arid SSA
Average Annual Runoff and Variability in LAC and SSA
2500
2000
1500
mm/yr
Northern Equatorial LAC
1000
Southern Equatorial LAC
Northern Equatorial SSA
500
Northern Warm Temperate LAC
Polar LAC
Arid LAC
Southern Warm Temperate SSA
Southern Arid SSA
Brazil-Arid LAC
0
-500
Southern Warm Temperate LAC
Southern Equatorial SSA
Northern Warm Temperate SSA
Northern Arid SSA
Economy-wide impacts
3.0
1.0
5.0
0.0
-1.0
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0.0
1979
Real GDP growth (%)
2.0
10.0
-2.0
-5.0
-3.0
Real GDP grow th (%)
Variability in Rainfall (Meter)
-10.0
-4.0
Years
Rainfall & GDP growth: Zimbabwe 1978-1993
80
25
20
60
10
20
5
0
2000
-5
-10
-15
-40
rainfall variation around the mean
-60
1999
1997
1998
1996
1995
1993
1994
1992
1991
1990
1989
1988
1987
1986
1985
1984
-20
1983
0
1982
percentage
15
40
GDP growth
-80
-20
-25
-30
year
Rainfall & GDP growth: Ethiopia 1982-2000
Variability in Rainfall (Meter)
15.0
Impact on Infrastructure




Damage from coastal flooding,
glacier melt, hurricanes
Salt water intrusion into aquifers and
lower flows from glaciers reduce
drinking water supplies
Need for more water storage,
wetlands loss
Overexploitation of aquifers
Glaciers in the Andes (Colombia, Ecuador, Peru, Bolivia,
Chile, Argentina) have lost volume
Photos of the Qori Kalis
Argentina's Upsala Glacier, once the biggest in South
America, is now disappearing at a rate of 200 meters
per year
A temperature increase of 4o C is anticipated to
lead to a collapse of the Amazon Rainforest
Ecosystem (Brazil, Colombia, Bolivia)
Most Important Effects in LAC





Glacier Melt
Coral Bleaching in the Caribbean
Increased Hurricane Frequency
and Intensity
Collapse of Tropical Rainforest
Coastal Flooding
Economic impact from climate change in
LAC by 2050





Combined impact of sea level rise, loss of
fisheries and tourism calculated to equal 530% of GDP in the Caribbean
Water supply to cities will be affected (Quito
may see water supply costs increase by 30%,
La Paz, Lima, Bogotá also to be affected by
diminished supplies caused by climate
change)
Power generation will be more expensive as it
shifts from hydro to thermal
Health costs will be affected by increased
exposure to tropical diseases
The cost of hurricane impact has increased by
two orders of magnitude in the Caribbean
basin in the last 20 years and hurricane
intensity is expected to continue increasing
Outline


Water and Poverty: the Big Picture
Implications for the Infrastructure Sector







Global Context
A Minimum Platform
S-Curve
Adapting to Climate Change
The World Bank
Governance and the Political Economy of
Water
The Way Forward
Gro wth in GD P p e r wo rk e r
In fr a s tr u c tu r e a c c u m u la tio n a n d g r o w th
(1 9 6 0 -9 7 c o untry ave rag e s , p e rc e nt)
6%
4%
2%
0%
O thers
-2 %
lac
y = 0 .4 2 2 4 x + 0 .0 0 0 7
R 2 = 0 .3 4 8 7
eap7
-4 %
-2 %
0%
2%
4%
6%
8%
10%
12%
Gro w th in in fra s tru c tu re s to c k s p e r w o rk e r
Source: Easterly, Calderón and Serven
Investments in Water
Water investments provide multiple
co-benefits and are drivers of growth and
poverty alleviation.
• Health
• Environment
• Building government
track record
• Education
• Gender equality
• Economic growth
Water Infrastructure & Institutions
A minimum platform for infrastructure and
institutions is needed to move along the
path of sustainable development.
water management AND
OR infrastructure
small-scale AND
OR large scale water infrastructure
public AND
OR private investments
Key is to blend options reflecting needs &
Investments in Water
The S-Curve
Considerations of Climate Change

Challenges for developing countries
• Needs for additional water infrastructure
and nonstructural investments
• Adaptive management to address
uncertainty about implications of climate
variability and long term impacts on the
water balance
Adapting to Climate Change



Augment Supply:
•
•
•
•
•
Expand alternatives of water supply and storage
Increase efficiency of water supply services
Control water balance at basin level
Sustainable aquifer management (recharge)
Desalination
•
•
•
•
Foster water quality management at basin level
Phased approach to investments and standards
Support priority investments in wastewater treatment
Support reuse
Pollution Management:
Water Consumption
• Economic incentives to reduce consumption and waste
• Support R&D on cutting edge water technologies and
reuse
• Increase productivity of water in irrigation systems
Priorities for World Bank
Assistance








Water Supply, Sanitation, Hygiene
Integrated Water Resources Management
Agriculture Water Management
Floods and Droughts
Hydropower
Ecosystem Management
Groundwater
Adaptation to Climate Change in Water
Global Context of Water
Annual Investments in Water Resources
$US (Billions)
180
180
160
140
120
100
80
60
40
20
0
Needed for
Water
Security*
75
3.6
Investments
in Water
Resources*
World
Bank**
*Source: Global Water Partnership
** Average annual investments FY04-FY07
The World Bank’s Water Portfolio
2500
$US (millions)
2000
WSS
I&D
WRM
Hydro
1500
1000
500
0
FY04
FY05
Note: As of October, 2007
FY06
FY07
Support efficiency and sustainability
of water investments




Charge the well-to-do, subsidize the poor
• From (regressive) consumption subsidies to
connection subsidies for the poor
• Public Expenditure Reviews to inform public
financing policy
Apply smart technology
• Focus on system improvement before expanding
capacity
• Flexible standards decrease cost
• New irrigation and drainage techniques, reuse,
desalination
• Better designs of dams
Secure O&M
• Revenues from consumers, as a minimum, should
cover O&M to underpin sustainability
‘Climate proof’ new investment
• The infrastructure that is built now, will be subject
to increasing variability and climatic uncertainty
Outline



Water and Poverty: the Big Picture
Implications for the Infrastructure
Sector
Governance and the Political Economy
of Water






Governance of Utilities
Corruption Risks
Regional Examples
Drivers of Corruption
Reducing Corruption
The Way Forward
Corruption


Water institutions are vulnerable to
corruption.
Where to look?


Corruptible
financial flows
Discretionary
decisions
affecting value
Traditional ‘clientelist’ model
POLITICIANS
Operational subsidies
Appointment of directors
Political favours
Untendered contracts
Over-staffing
UTILITY
COMPANY
EMPLOYEES
Poor
quality of
service
Artificially
depressed
tariffs
CONNECTED
POPULATION
Source: Foster 2001
CONTRACTORS
UNCONNECTED
POPULATION
High prices
Reformed model
Strategic
guidance
POLICY–MAKERS
Price and quality
regulation
REGULATORY
AGENCY
Competitive tendering
Efficient service
UTILITY COMPANY
EMPLOYEES
Good quality of
service
Cost-recovery
tariffs
CONNECTED
POPULATION
Source: Foster 2001
Connections
CONTRACTORS
UNCONNECTED
POPULATION
Policy environment
The Path for Reforms Uganda
03 staff performance
contracts
02 automatic tariff
indexation
00 ext & int performance
contracts
98-00 service & revenue
enhancement programs
98 new MD
97 new Board
97 corporate plan
95 new statute
end 80s & 90s Major rehab
mid 80s new government
70s political turmoil
Utility performance
Public Policy: Macro-Micro
links
Policy Environment
Impossible
Good
Realistic
Unrealistic
Bad
low
Utility Performance
high
Public Policy: Macro-Micro
links
Macro
 Inflation
 Exchange Rate
 Fiscal Deficit
 Subsidy Policy
 Law: labor,
environment,
water,
procurement, …
 SOE reform
Micro
 Appointment of
key managers
 Budget and
Investment
priorities
 O&M policy
 Staffing level
 Client orientation
 Commercial
policy
Understanding where corruption
risk occurs
Donor
finacing
REGULATOR
GOVERNMENT
Gov’t
Officers
UTILITY
MANAGEMENT
- Human Resources
- Stores
- Accounting
Utility
Managers
CAPITAL PROJECTS
- Planning and budgeting
- Tendering and procurement
- Project selection
- Project planning and design
- Construction
- Supervision
Suppliers
and
Contractors
PUBLIC UTILITY
Utility
Employees
UTILITY
OPERATIONS
- Commercial operations
- Service and repairs
Petty Corruption
DONORS
CUSTOMERS
PRIVATE
CONTRACTORS
Grand
Corruption
Regional Examples of Corruption
In Africa
•80 percent of urban
water utilities in
Africa are considered
financially unviable
In 21 water companies
in Africa, nearly twothirds of operating costs
were due to corruption
Cross, Piers. WSP. 2007.
Estache & Kouassi. 2002
In South Asia
• False readings: 41% of
customers had paid a bribe
in last 6 months
• Illegal connections: 20%
of households admitted
paying a bribe to utility
staff
• Contractors: 15%
excess cost because of
collusion
• Kickbacks: 6-11% of
contracts value
Cross, Piers. WSP. 2007.
Drivers of Corruption
in Public Works



Unclear procurement
and tendering
Lack of compliance
monitoring and
enforcement
sanctions
Low salaries of utility
staff
Understanding how to help reduce
corruption
Central
Government
Long
route
Local Government
Medium route
Public /
Consumers
Short
route
WDR 2004 Framework: “Paths of Accountability”
Providers
Possible intervention points
Support country-level probity:
Political competitors
• Public expenditure management &
accountability
• Public procurement
Central
Government
• Ombudsman, anti-graft
commission
Build clear accountability paths:
•Sector structure
Political competitors
•Regulation
•Performance contracts
•OBA
Demand
for
service +
probity
Local Government
•Provider governance
•Capacity building
Support provider-level
probity :
•Procedural integrity
•Financial integrity
Public /
Consumers
Strengthen consumer
demand:
•Consumer groups
•Report cards
•Complaints mechanisms
Management
•Technical audits
•Procedural audits
Information on
performance
Providers
The new model: balancing
multiple accountabilities
Rich
Clients
Poor
Min. Finance
Regulator
National Gov
Utility
Min. Environment
Donors
Local Gov.
Financiers
Union
Sector Min.
Credit Rating
MDGs
Extent of reform in Latin America
Regulation
Chile
100%
Argentina
88%
Bolivia
100%
Colombia
100%
Perú
100%
Brasil
24%
Uruguay
100%
México
19%
Venezuela
3%
Nicaragua
100%
Panamá
100%
Paraguay
100%
Ecuador
0%
El Salvador
0%
Honduras
0%
Costa Rica
0%
Guatemala
0%
Source: Foster 2001
PSP
86%
62%
28%
13%
0%
1%
17%
19%
3%
0%
0%
0%
0%
0%
0%
0%
0%


At the regional level,
regulation has gone
much further than PSP
It is estimated that of
urban water
consumers
• 41% enjoy regulatory
protection
• 15% are supplied by a
private operator (rising
to 25% and 34% in
certain segments)
Outline




Water and Poverty: the Big
Picture
Implications for the
Infrastructure Sector
Governance and the Political
Economy of Water
The Way Forward
The Way Forward






Holistic approach to water resources
management and climate change
Address governance and political
economy issues
Scaling-up support to reach the MDGs
Enhance coordination of donors
Improve quality of fiscal spending
Develop technical capacity to absorb
incremental resources
Thank you