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Water Financing Program Conference
Accelerating Investment to Meet Asia’s Water Needs

Opening Remarks:

Haruhiko Kuroda
President
Asian Development Bank

26 September 2006
Manila, Philippines

 

Introduction: Water Vital to Achieving MDGs

Good morning, and welcome to ADB for this important conference.

The Asia and Pacific region is at a critical moment on the timeline of the Millennium Development Goals (MDGs) – the global commitment to end poverty and deprivation.

Improvements in the MDG indicators for income levels, hunger, communicable diseases, maternal and child mortality rates, and environmental sustainability rest on many factors. But all have one factor in common: Water. Water is essential to sustain life, to provide food, to create the conditions for higher levels of health, education and income.

Today, more than 600 million people in Asia still do not have a safe, reliable supply of drinking water. Nearly 2 billion have no sanitation facilities. Moreover, the region’s fresh water resources – our rivers basins, watersheds, wetlands and ecosystems – are in peril from pollution and inadequate management. In short, Asia’s water challenges are of massive proportions.

Accelerating Progress is Urgent: Finance and Reforms

The MDGs have the year 2015 in sight. But we believe it is urgent to accelerate the MDG target for water to 2010 in order to achieve other MDG goals. For example, according to UNICEF, m alnutrition and the lack of safe water and sanitation contribute to half of all under-five children’s deaths in developing countries. In Asia, more than 4 million children die each year without having reached their 5 th birthday. If the target of reducing child mortality is to be met, water must be made an even higher priority.

While progress has been made, efforts to increase finance, undertake reforms and increase capacity have not moved at a sufficient pace to meet MDG Target 10. According to “Asia Water Watch 2015,” a joint-agency report published by ADB, the region needs a minimum $8 billion in annual investments to meet the water supply and sanitation target alone. In 2003, at the 3rd World Water Forum in Japan, the Camdessus Report similarly warned that financing in the water sector needed to double to achieve Target 10. With these warnings in mind, ADB is committed to doing everything we can to increase investments in water and achieve the MDGs.

As outlined in our medium term strategy for 2006-2010, we are aiming to increase our support for water investments to 25% of our overall business. In dollar terms, our Water Financing Program for 2006-2010 will be expanded to well over $2 billion a year over the next five years for water projects, institutional reforms and improvements to water governance in three key areas:

  1. Rural water services to improve health and livelihoods,
  2. Urban water services to support sustained economic growth, and
  3. Basin water management to promote integrated water resource management and healthy rivers.

This program will also mobilize cofinancing from multilateral and bilateral partners and the private sector. And it will employ the full range of ADB’s new financing products, which include subsovereign and nonsovereign public sector lending, multitranche financing, local currency financing, refinancing, financing syndications, and risk-sharing arrangements.

Of course, financing alone is not enough. Water reforms and improved governance are also crucial. It is for this reason that ADB takes a comprehensive approach that includes support for reforms and capacity building, along with financing.

Effective reforms can remove the institutional barriers that prevent water utilities from being financially viable and sustainable. Such barriers include weak regulatory frameworks and artificially low tariff levels. Reforms must also reflect the principles of integrated water resource management, given the fundamental role river basins play. ADB is committed to assisting governments and communities to implement these reforms and manage investment projects and programs.

Good examples in the region can demonstrate the way forward. The People’s Republic of China’s success with nationwide water tariff reforms to improve performance, efficiency, and transparency is one such example. The story of the phenomenal improvements by the Phnom Penh Water Supply Authority in Cambodia is another. The Authority’s General Director recently received the Magsaysay Award for Government Service, often mentioned as the Asian equivalent of the Nobel Prize. During the conference more examples will be highlighted.

More assistance is also needed to introduce integrated water resources management in river basins across the region, including flood management programs. Several countries, including the People’s Republic of China, Indonesia, and Viet Nam are studying the application of innovative approaches that combine structural and non-structural interventions. Dialogue is ongoing with others..

Regional Partnerships are Key

Building on these and other successes, and our new Water Financing Program, ADB is well positioned to lead the way for achievement of MDG 10 in the region. We recognize that individual countries cannot meet this important challenge on their own. Strong regional partnerships involving governments, development institutions, civil society and the private sector are needed to support your efforts.

ADB has been at the forefront of coordinating capacity building activities, such as performance benchmarking, with water utilities, river basin organizations and national water apex bodies across the region. To support our expanded goals for the water sector, we are currently developing several new partnerships.

  • We are formalizing the ATRIUM training and research initiative for urban management with the Government of Singapore.
  • We recently signed a letter of agreement with the Global Water Partnership to establish a water utility network pairing strong and weak utilities together for peer-driven capacity building programs. The Global Water Partnership will also assist ADB in developing integrated water resource management plans for 25 river basins in the region.
  • And we are currently renewing our membership with the Cities Alliance. This is an important partnership with Asian city governments and other development organizations to improve the living conditions of the poor, particularly through urban development strategies and slum eradication programs.
  • Finally, alongside this conference, we will tomorrow join the Japan Water Forum for the official launch of the new Asia Pacific Water Forum. The Forum will bring together leaders of government, private sector and civil society in a Summit to focus specifically on water financing and results to achieve the MDGs.
Concluding Remarks

Ladies and gentlemen, let me close by encouraging all of you to consider, over the next two days, how ADB can help you to identify, design and implement practical solutions to meeting your country’s water sector challenges. We consider our institution to be not only a financier for development, but an advisor and knowledge provider – a true partner, with specific expertise in the water sector and in the region. Your challenges are also our challenges. Let’s work together to create a better standard of living and a sustainable future for Asia’s poor.

Thank you, and best wishes for a productive conference.