Water

Water Briefs
Water Financing Program 2006–2010
September 2006

“In addition to meeting MDG target 10 of halving the proportion of people without safe drinking water and improved sanitation by 2015, investments in water are also crucial in meeting other targets, such as those relating to the incidence of poverty, the proportion of the world’s poor who suffer from hunger, reducing child and maternal mortality, the incidence of major diseases, and environmental sustainability”

— Geert van der Linden, ADB Vice President for Knowledge Management and Sustainable Development

Water is central to human existence. It is also a key factor in reducing poverty, improving livelihoods, and promoting economic growth. Yet, investments to provide people with safe drinking water and decent toilet facilities, allocate and preserve water resources, and properly manage wastewater have fallen seriously behind demands. In 2002, about 700 million people in Asia and the Pacific were still without access to safe water, and about 2 billion had inadequate or no sanitation facilities. Lives and livelihoods continue to be lost due to floods, conversion of wetlands, or pollution of water resources.

The Asia Water Watch 2015¹ study, commissioned by Asian Development Bank (ADB), World Health Organization, United Nations Development Programme, and United Nations Economic and Social Commission for Asia and the Pacific , estimates that annual investments of at least $8 billion will be needed over the next decade to meet the Millennium Development Goal targets for safe drinking water and sanitation alone. More investments will be needed for irrigation services, river basin management, flood management and mitigation, and wastewater management to ensure the future of this precious resource.

To address these challenges, the World Panel on Financing Water Infrastructure and its successor, the Gurria Task Force on Water Financing, recommended the doubling of all official and private capital flows to the water sector.

Taking up this challenge, ADB developed a strong pipeline of water projects for 2006–2008. However, experience indicates that “business as usual” is not enough. Water must be prioritized in ADB’s overall investment program.

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The new WFP focuses on the delivery of substantial investment, reform, and capacity development in three key areas—rural water services, urban water services, and river basin water management. It combines expanded investments in water infrastructure with a strong emphasis on good governance to manage water as a resource and as a service, and a focus on better decision making and implementation.

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The WFP will focus on achieving these results:

• 200 million people with sustainable access to safe drinking water and improved sanitation;
• 100 million people with reduced risks to floods;
• 40 million people with more productive and Efficient irrigation and drainage services;
• integrated water resource management (IWRM) introduced in 25 river basins; and
• improved water governance through national water reforms and capacity development.

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The WFP will ensure the delivery of substantial investment, reform, and capacity development programs in these key areas:

• Rural water – will focus on investments to improve health and livelihoods in rural communities, including those for water supply and sanitation, and irrigation and drainage.
• Urban water – will concentrate on sustaining economic growth in cities through investments in water supply, sanitation and wastewater management, and environmental improvement.
• Basin water – will promote IWRM and healthy rivers through investments in infrastructure and management of multifunctional water regulation and hydropower facilities, flood management, watershed and wetlands conservation, and more.

Governments will have the chance to choose from a range of new financing options that carry reduced commitment fees and offer more flexibility in terms of managing long-term investment partnership. They are also suitable for governments undergoing decentralization, and appeal to local governments. These include

• subsovereign and nonsovereign public sector lending;
• multitranche financing;
• local currency financing for the public sector;
• refinancing;
• financing syndications; and
• risk-sharing arrangements.

To complement higher levels of lending, ADB will pursue additional bilateral cofinancing partnerships to support the Water Financing Program 2006–2010. A Water Financing Partnership Facility is being developed for this purpose.

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The Program provides an opportunity for ADB’s developing member countries to increase investments in water infrastructure and services, combined with support for reforms and capacity development.

If you want to discuss how the Program can work for your country, contact the ADB resident mission in your country, or the following staff at ADB Headquarters in Manila, Philippines.

To contact the ADB resident mission in your country:
     Check the number and address at www.adb.org/Help/contacts.asp

For basin and rural water investments:
     Wouter Lincklaen Arriens
     Lead Water Resources Specialist
     water@adb.org

For urban water investments:
     Anand Chiplunkar
     Senior Water Supply and Sanitation Specialist
     achiplunkar@adb.org

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• Water Financing Program (WFP) 2006–2010