Water Infrastructure for Water Infrastructure for Sustainable DevelopmentSustainable Development
Abel MejiaAbel Mejia
Water ManagerWater Manager
The World BankThe World Bank
OutlineOutline
Water and Poverty: the Big Water and Poverty: the Big PicturePicture
Implications for the Implications for the Infrastructure Sector Infrastructure Sector
Governance and the Political Governance and the Political Economy of WaterEconomy of Water
The Way ForwardThe Way Forward
OutlineOutline
Water and Poverty: the Big PictureWater and Poverty: the Big Picture The Millennium Development GoalsThe Millennium Development Goals Water SecurityWater Security UrbanizationUrbanization Access to ElectricityAccess to Electricity Environmental ServicesEnvironmental Services Climate ChangeClimate Change
Implications for the Infrastructure SectorImplications for the Infrastructure Sector Governance and the Political Economy of Governance and the Political Economy of
WaterWater The Way ForwardThe Way Forward
Water and PovertyWater and Poverty
1 billion lack access 1 billion lack access to safe waterto safe water
2.6 billion are without 2.6 billion are without basic sanitationbasic sanitation
The MDGsThe MDGs On track: Water supplyOn track: Water supply Off track: SanitationOff track: Sanitation
• >500 million people will be missed>500 million people will be missed Beyond the pipesBeyond the pipes
• Good policies, accountable Good policies, accountable and capable institutions requiredand capable institutions required
UrbanizationUrbanization
The urban shift and growth of slums The urban shift and growth of slums has major implications on water has major implications on water infrastructure developmentinfrastructure development
0
1
2
3
4
5
6
7
8
9
DTC OECD DTC OECD DTC OECD DTC OECD DTC OECD
Popu
latio
n (b
illion
s)
MegacitiesCitiesTownsOther ruralFragile lands
1950 1970 2000 2030 2050
Projected Population Developing & Transition Countries (DTC) and
OECD
Rapid urban growth in secondary cities & towns
Still many in fragile rural areas
Challenges: UrbanizationChallenges: Urbanization
Annual Cost of Environmental Annual Cost of Environmental Degradation in Colombia Degradation in Colombia
((Percentage of GDPPercentage of GDP
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
Water,Sanitation &
Hygiene
Urban & IndoorAir Pollution
NaturalDisasters
LandDegradation
Water SecurityWater Security
Access to ElectricityAccess to Electricity
1.6 billion people lack basic electricity 1.6 billion people lack basic electricity serviceservice
Access rates:3% in parts of AfricaAccess rates:3% in parts of Africa Clean EnergyClean Energy
• Re-emergence of hydropowerRe-emergence of hydropower
Environmental ServicesEnvironmental Services
Recognize the Value Recognize the Value of Water Ecosystemsof Water Ecosystems• GlaciersGlaciers• Coastal systemsCoastal systems• Lakes and wetlandsLakes and wetlands• AquifersAquifers• Tropical forestsTropical forests
Adaptation to Climate ChangeAdaptation to Climate Change
Impact on water cycle, Impact on water cycle, water availability, and water availability, and water allocation at the water allocation at the global, regional, basin, global, regional, basin, and even local levelsand even local levels
Smaller stocks of Smaller stocks of existing water existing water infrastructure in infrastructure in developing countriesdeveloping countries
Impact supply and Impact supply and demand of water demand of water resources and resources and associated associated infrastructure 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
Polar LAC
Brazil-Arid LAC
Northern Warm Temperate LAC
Southern Equatorial LAC
Northern Equatorial LAC
Southern Arid SSA
Northern Equatorial SSA
Arid LAC
Southern Warm Temperate LAC
Northern Arid SSA
Northern Warm Temperate SSA
Southern Warm Temperate SSA
Southern Equatorial SSA
-500
0
500
1000
1500
2000
2500
mm
/yr
Average Annual Runoff and Variability in LAC and SSA
Polar LAC
Brazil-Arid LAC
Northern Warm Temperate LAC
Southern Equatorial LAC
Northern Equatorial LAC
Southern Arid SSA
Arid LAC
Southern Warm Temperate LAC
Northern Arid SSA
Southern Warm Temperate SSA
Northern Warm Temperate SSASouthern Equatorial SSA
Northern Equatorial SSA
-500
0
500
1000
1500
2000
2500
mm
/yr
-80
-60
-40
-20
0
20
40
60
80
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
year
pe
rce
nta
ge
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
rainfall variation around the mean
GDP growth
-80
-60
-40
-20
0
20
40
60
80
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
year
pe
rce
nta
ge
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
rainfall variation around the mean
GDP growth
Rainfall & GDP growth: Ethiopia 1982-2000
-10.0
-5.0
0.0
5.0
10.0
15.0
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
Years
Real
GD
P g
row
th (
%)
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Vari
ab
ilit
y i
n R
ain
fall
(M
ete
r)
Real GDP grow th (%)
Variability in Rainfall (Meter)
Rainfall & GDP growth: Zimbabwe 1978-1993
Economy-wide impacts
Impact on InfrastructureImpact on Infrastructure Damage from coastal flooding, Damage from coastal flooding,
glacier melt, hurricanesglacier melt, hurricanes
Salt water intrusion into aquifers and Salt water intrusion into aquifers and lower flows from glaciers reduce lower flows from glaciers reduce drinking water suppliesdrinking water supplies
Need for more water storage, Need for more water storage, wetlands losswetlands loss
Overexploitation of aquifersOverexploitation of aquifers
Photos of the Qori KalisPhotos of the Qori Kalis
Glaciers in the Andes (Colombia, Ecuador, Peru, Bolivia, Chile, Argentina) have lost volume
Argentina's Upsala Glacier, once the biggest in South Argentina's Upsala Glacier, once the biggest in South America, is now disappearing at a rate of 200 meters America, is now disappearing at a rate of 200 meters
per yearper year
A temperature increase of 4A temperature increase of 4oo C is anticipated to C is anticipated to lead to a collapse of the Amazon Rainforest lead to a collapse of the Amazon Rainforest
Ecosystem (Brazil, Colombia, Bolivia)Ecosystem (Brazil, Colombia, Bolivia)
Most Important Effects in LACMost Important Effects in LAC Glacier Melt Glacier Melt Coral Bleaching in the Caribbean Coral Bleaching in the Caribbean Increased Hurricane Frequency Increased Hurricane Frequency
and Intensity and Intensity Collapse of Tropical Rainforest Collapse of Tropical Rainforest Coastal Flooding Coastal Flooding
Economic impact from climate change in Economic impact from climate change in LAC by 2050LAC by 2050
Combined impact of sea level rise, loss of fisheries and Combined impact of sea level rise, loss of fisheries and tourism calculated to equal 5-30% of GDP in the tourism calculated to equal 5-30% of GDP in the CaribbeanCaribbean
Water supply to cities will be affected (Quito may see Water supply to cities will be affected (Quito may see water supply costs increase by 30%, La Paz, Lima, water supply costs increase by 30%, La Paz, Lima, Bogotá also to be affected by diminished supplies Bogotá also to be affected by diminished supplies caused by climate change)caused by climate change)
Power generation will be more expensive as it shifts Power generation will be more expensive as it shifts from hydro to thermalfrom hydro to thermal
Health costs will be affected by increased exposure to Health costs will be affected by increased exposure to tropical diseasestropical diseases
The cost of hurricane impact has increased by two The cost of hurricane impact has increased by two orders of magnitude in the Caribbean basin in the last orders of magnitude in the Caribbean basin in the last 20 years and hurricane intensity is expected to 20 years and hurricane intensity is expected to continue increasingcontinue increasing
Loss of biodiversity and ecosystem integrity: priceless!Loss of biodiversity and ecosystem integrity: priceless!
OutlineOutline
Water and Poverty: the Big PictureWater and Poverty: the Big Picture Implications for the Infrastructure SectorImplications for the Infrastructure Sector
Global ContextGlobal Context A Minimum PlatformA Minimum Platform S-CurveS-Curve Adapting to Climate ChangeAdapting to Climate Change The World BankThe World Bank
Governance and the Political Economy of Governance and the Political Economy of WaterWater
The Way ForwardThe Way Forward
Infrastructure accumulation and growth (1960-97 country averages, percent)
y = 0.4224x + 0.0007
R2 = 0.3487
-4%
-2%
0%
2%
4%
6%
-2% 0% 2% 4% 6% 8% 10% 12%
Growth in infrastructure stocks per worker
Gro
wth
in
GD
P p
er
wo
rke
r
Others
lac
eap7
Source: Easterly, Calderón and Serven
Investments in WaterInvestments in WaterWater investments provide multiple Water investments provide multiple co-benefits and are drivers of growth and co-benefits and are drivers of growth and poverty alleviation. poverty alleviation.
• Health Health • EnvironmentEnvironment • Building government Building government track recordtrack record
• Education Education • Gender equality Gender equality • Economic growthEconomic growth
Water Infrastructure & InstitutionsWater Infrastructure & InstitutionsA minimum platform for infrastructure and A minimum platform for infrastructure and institutions is needed to move along the institutions is needed to move along the path of sustainable development.path of sustainable development.
small-scale OR large scale water infrastructure
water management OR infrastructure
public OR private investmentsAND
AND
AND
Key is to blend options reflecting needs & specific country context ( no universal recipe)
Investments in WaterInvestments in Water
The S-CurveThe S-Curve
Considerations of Climate ChangeConsiderations of Climate Change
Challenges for developing countriesChallenges for developing countries• Needs for additional water infrastructure Needs for additional water infrastructure
and nonstructural investmentsand nonstructural investments• Adaptive management to address Adaptive management to address
uncertainty about implications of uncertainty about implications of climate variability and long term climate variability and long term impacts on the water balance impacts on the water balance
Adapting to Climate ChangeAdapting to Climate Change
Augment Supply: Augment Supply: • Expand alternatives of water supply and storageExpand alternatives of water supply and storage• Increase efficiency of water supply servicesIncrease efficiency of water supply services• Control water balance at basin levelControl water balance at basin level• Sustainable aquifer management (recharge)Sustainable aquifer management (recharge)• DesalinationDesalination
Pollution Management:Pollution Management:• Foster water quality management at basin levelFoster water quality management at basin level• Phased approach to investments and standardsPhased approach to investments and standards• Support priority investments in wastewater treatmentSupport priority investments in wastewater treatment• Support reuseSupport reuse
Water ConsumptionWater Consumption• Economic incentives to reduce consumption and wasteEconomic incentives to reduce consumption and waste• Support R&D on cutting edge water technologies and Support R&D on cutting edge water technologies and
reusereuse• Increase productivity of water in irrigation systemsIncrease productivity of water in irrigation systems
Priorities for World Bank Priorities for World Bank AssistanceAssistance
Water Supply, Sanitation, HygieneWater Supply, Sanitation, Hygiene Integrated Water Resources ManagementIntegrated Water Resources Management Agriculture Water ManagementAgriculture Water Management Floods and DroughtsFloods and Droughts Hydropower Hydropower Ecosystem ManagementEcosystem Management GroundwaterGroundwater Adaptation to Climate Change in WaterAdaptation to Climate Change in Water
Global Context of WaterGlobal Context of Water
180
75
3.60
20406080
100120140160180
$US
(B
illi
on
s)
Needed forWater
Security*
Investmentsin Water
Resources*
WorldBank**
Annual Investments in Water Resources
*Source: Global Water Partnership
** Average annual investments FY04-FY07
The World Bank’s Water The World Bank’s Water PortfolioPortfolio
0
500
1000
1500
2000
2500
FY04 FY05 FY06 FY07
$U
S (
mil
lio
ns
)
WSS I&DWRMHydro
Note: As of October, 2007
Support efficiency and sustainability Support efficiency and sustainability of water investmentsof water investments
Charge the well-to-do, subsidize the poorCharge the well-to-do, subsidize the poor• From (regressive) consumption subsidies to connection From (regressive) consumption subsidies to connection
subsidies for the poorsubsidies for the poor• Public Expenditure Reviews to inform public financing Public Expenditure Reviews to inform public financing
policypolicy Apply smart technologyApply smart technology
• Focus on system improvement before expanding Focus on system improvement before expanding capacitycapacity
• Flexible standards decrease cost Flexible standards decrease cost • New irrigation and drainage techniques, reuse, New irrigation and drainage techniques, reuse,
desalinationdesalination• Better designs of damsBetter designs of dams
Secure O&MSecure O&M• Revenues from consumers, as a minimum, should cover Revenues from consumers, as a minimum, should cover
O&M to underpin sustainabilityO&M to underpin sustainability ‘‘Climate proof’ new investmentClimate proof’ new investment
• The infrastructure that is built now, will be subject to The infrastructure that is built now, will be subject to increasing variability and climatic uncertaintyincreasing variability and climatic uncertainty
OutlineOutline
Water and Poverty: the Big PictureWater and Poverty: the Big Picture Implications for the Infrastructure Implications for the Infrastructure
SectorSector Governance and the Political Economy Governance and the Political Economy
of Waterof Water Governance of UtilitiesGovernance of Utilities Corruption RisksCorruption Risks Regional ExamplesRegional Examples Drivers of CorruptionDrivers of Corruption Reducing CorruptionReducing Corruption
The Way ForwardThe Way Forward
CorruptionCorruption
Water institutions are vulnerable to Water institutions are vulnerable to corruption.corruption.
Where to look?Where to look? Corruptible financial Corruptible financial
flowsflows Discretionary Discretionary
decisions affectingdecisions affecting valuevalue
Traditional ‘clientelist’ modelTraditional ‘clientelist’ model
POLITICIANS
EMPLOYEESUTILITY
COMPANY
CONNECTEDPOPULATION
Operational subsidiesAppointment of directors
Political favours
Artificiallydepressed
tariffs
Poorquality of
service
Over-staffing
UNCONNECTEDPOPULATION
High prices
CONTRACTORS
Untendered contracts
Source: Foster 2001
Reformed modelReformed model Strategic
guidance
REGULATORYAGENCY
Price and qualityregulation
UTILITY COMPANY
Efficient service
EMPLOYEES
Good quality ofservice
Cost-recoverytariffs
CONNECTEDPOPULATION Connections
UNCONNECTEDPOPULATION
POLICY–MAKERS
CONTRACTORS
Competitive tendering
Source: Foster 2001
Utility performance
Pol
icy
env
ironm
ent
70s political turmoilmid 80s new government
end 80s & 90s Major rehab95 new statute
97 new Board98 new MD
98-00 service & revenue enhancement programs
00 ext & int performance contracts
02 automatic tariff indexation
03 staff performance contracts
97 corporate plan
The Path for Reforms UgandaThe Path for Reforms Uganda
Public Policy: Macro-Micro Public Policy: Macro-Micro linkslinks
Pol
icy
Env
iron
men
t
Utility Performancelow high
Good
Bad
Realistic
Unrealistic
Impossible
Public Policy: Macro-Micro Public Policy: Macro-Micro linkslinks
MacroMacro InflationInflation Exchange RateExchange Rate Fiscal DeficitFiscal Deficit Subsidy PolicySubsidy Policy Law: labor, Law: labor,
environment, environment, water, water, procurement, …procurement, …
SOE reformSOE reform
MicroMicro Appointment of Appointment of
key managerskey managers Budget and Budget and
Investment Investment prioritiespriorities
O&M policyO&M policy Staffing levelStaffing level Client orientationClient orientation Commercial policyCommercial policy
Understanding where corruption Understanding where corruption risk occursrisk occurs
PUBLIC UTILITY
GOVERNMENT
CUSTOMERS
REGULATOR
DONORS
PRIVATECONTRACTORS
Donor finacing
- Human Resources- Stores- Accounting
- Commercial operations- Service and repairs
- Planning and budgeting- Tendering and procurement- Project selection- Project planning and design- Construction- Supervision
Gov’t Officers
Utility Managers
Utility Employees
CAPITAL PROJECTS
Suppliers and
Contractors
UTILITY MANAGEMENT
UTILITY OPERATIONS
Petty Corruption
Grand Corruption
Regional Examples of CorruptionRegional Examples of Corruption
In South AsiaIn South AsiaIn AfricaIn Africa•80 percent of urban 80 percent of urban water utilities inwater utilities inAfrica are considered Africa are considered financially unviablefinancially unviable
In 21 water companies in In 21 water companies in Africa, nearly two-thirds Africa, nearly two-thirds of operating costs were of operating costs were due to corruptiondue to corruption
• • False readings: False readings: 41% of41% ofcustomers had paid a bribecustomers had paid a bribein last 6 monthsin last 6 months• • Illegal connections: Illegal connections: 20%20%of households admittedof households admittedpaying a bribe to utilitypaying a bribe to utilitystaffstaff• • Contractors: Contractors: 15%15%excess cost because ofexcess cost because ofcollusioncollusion• • Kickbacks: Kickbacks: 6-11% of6-11% ofcontracts valuecontracts value
Cross, Piers. WSP. 2007.Estache & Kouassi. 2002Cross, Piers. WSP. 2007.
Drivers of Corruption Drivers of Corruption in Public Worksin Public Works
Unclear procurement Unclear procurement and tenderingand tendering
Lack of compliance Lack of compliance monitoring and monitoring and enforcement enforcement sanctionssanctions
Low salaries of utility Low salaries of utility staffstaff
Understanding how to help reduce Understanding how to help reduce corruptioncorruption
Central Government
ProvidersPublic /
Consumers
Local Government
WDR 2004 Framework: “Paths of Accountability”
Long route
Short route
Medium route
Possible intervention pointsPossible intervention points
Central Government
Providers
Public / Consumers
Local Government
Political competitors
Political competitors
Management
Information on performance
Demand for
service + probity
Public / Consumers
Support country-level probity:
• Public expenditure management & accountability
• Public procurement
• Ombudsman, anti-graft commission
Build clear accountability paths:
•Sector structure
•Regulation
•Performance contracts
•OBA
•Provider governance
Strengthen consumer demand:
•Consumer groups
•Report cards
•Complaints mechanisms
•Capacity building
•Procedural integritySupport provider-level
probity :
•Financial integrity
•Technical audits
•Procedural audits
The new model: balancing The new model: balancing multiple accountabilitiesmultiple accountabilities
Regulator
Clients
National Gov
Utility
Local Gov.Financiers
Union
Donors
Credit Rating
Min. Finance
Sector Min.
Min. Environment
Rich
Poor
MDGs
Extent of reform in Latin AmericaExtent of reform in Latin America
At the regional level, At the regional level, regulation has gone regulation has gone much further than PSPmuch further than PSP
It is estimated that of It is estimated that of urban water urban water consumersconsumers• 41% enjoy regulatory 41% enjoy regulatory
protectionprotection• 15% are supplied by a 15% are supplied by a
private operator (rising private operator (rising to 25% and 34% in to 25% and 34% in certain segments)certain segments)
Regulation PSP Chile 100% 86% Argentina 88% 62% Bolivia 100% 28% Colombia 100% 13% Perú 100% 0% Brasil 24% 1% Uruguay 100% 17% México 19% 19% Venezuela 3% 3% Nicaragua 100% 0% Panamá 100% 0% Paraguay 100% 0% Ecuador 0% 0% El Salvador 0% 0% Honduras 0% 0% Costa Rica 0% 0% Guatemala 0% 0%
Source: Foster 2001
OutlineOutline
Water and Poverty: the Big Water and Poverty: the Big PicturePicture
Implications for the Implications for the Infrastructure SectorInfrastructure Sector
Governance and the Political Governance and the Political Economy of WaterEconomy of Water
The Way ForwardThe Way Forward
The Way ForwardThe Way Forward
Holistic approach to water resources Holistic approach to water resources management and climate changemanagement and climate change
Address governance and political Address governance and political economy issueseconomy issues
Scaling-up support to reach the MDGsScaling-up support to reach the MDGs Enhance coordination of donorsEnhance coordination of donors Improve quality of fiscal spendingImprove quality of fiscal spending Develop technical capacity to absorb Develop technical capacity to absorb
incremental resourcesincremental resources
Thank you