Water

Results of ADB Water Week 2004 Water for the Poor: Setting the Rules and Finding the Money Change Agenda Changing the focus of lending Catalyzing water investments to the rural poor Urban water supplies should increasingly be financed from tariffs and investments, and should be shifted to rural areas where the majority of the poor live

Results of ADB Water Week 2004 Change Agenda Changing selection criteria Changing incentives and advocacy Changing regulation Changing the rules to reward efficiency Changing the focus of lending Changing the nature of water project Changing water financing partners

The vast majority of Asia's poor live in rural areas and they are short-changed with the majority of investments going to cities. The rural community is being left behind in terms of access to public services like health, education, and safe water provision. To meet the Millenium Development Goals, we have to refocus our attention on the needs of the rural poor. Investing in rural areas cannot be held up by decisions to raise tariffs in cities.

Many city water supply authorities and planners in Asia and the Pacific still hold to two serious misconceptions: (i) that they can't afford to provide all residents with house connections and 24-hour service; and (ii) that 24-hour universal coverage requires external financing and support. These misconceptions are readily debunked by examining those developing country cities that have achieved 24-hour universal coverage, and by running some simple budget models for any city over about one million population. Fact is, it should be possible for all large- and mid-sized cities in Asia and the Pacific to achieve and sustain 24-hour universal coverage, financed predominantly by service charges supplemented by modest commercial borrowings for capital expenditure and restructuring.

The rural community is being left behind in terms of access to public services like health, education, and safe water provision. If MDGs are to be met, the need is greatest in rural areas.

For development, rural areas have significant disadvantages. They are dispersed and, often, are difficult to reach as infrastructure is less developed there. Townships and villages are small in size, meaning that projects must be small in size. Infrastructure like water, consequently, often finds it difficult to generate the required economic and financial returns on an investment. Cities, on the other hand, have large critical masses which make financial proposals for loans financially attractive.

To date, the cities have principally benefited from development loans. Studies, however, demonstrate that cities, through their tariffs and commercial borrowing capacity, are able to finance all their water services and capital needs.

If this holds true, then official development assistance resources and central government support could be diverted from urban water supply development to rural and small town water supply.

• Government ensuring that sovereign loans are passed down to sub-national levels at the same preferential rates that are extended to them.

• Donors, particularly the large multilateral donors, seeking ways of lending directly to sub-national levels so that lending operations parallel the decentralization process which is being encouraged for national governments.

• Civil society paying more attention to the rural community. National NGOs must place more emphasis on activities in rural areas and, in the case of water, develop capacities to organize communities on a self-help basis, to develop and manage their own water provision.

ADB's water policy aims to provide a comprehensive and integrated framework through which ADB will reinforce a qualitative shift in its operations that places greater emphasis on the integrated water resources management approach. The policy notes that ADB's water strategies in its developing member countries will derive from overall country strategies. Since financial and other resources needed to support development efforts in countries are limited, resources to address water-related issues will have to be carefully prioritized relative to the requirements of other critical development needs.

Increase in investments in the water sector will have to correspond with increases in capacities to manage the investments. The process is expected to be gradual and will have to be carefully synchronized.