World Bank Endorses Water Resources Strategy

Contacts:
Sergio Jellinek (202) 458-2841
sjellinek@worldbank.org
Richard Uku (202) 473-3432
ruku@worldbank.org

New approach strengthens efforts to reduce poverty and improve access to water services by investing in better and environmentally sound management and infrastructure.

The Board of Executive Directors of the World Bank yesterday unanimously endorsed a new Water Resources Strategy aimed at providing more effective assistance to countries, using water as a vehicle for increasing growth and reducing poverty in a socially and environmentally responsible manner. By providing water access to unserved millions through more efficient use of existing resources and the strengthening of capacity in poor countries, the new strategy will make a significant contribution to the international development goal of halving poverty by 2015.

There is a large and growing demand for greater World Bank engagement with water. Currently, about 16 percent of all World Bank lending is for water – with about 4 percent going for water resources management, and similar amounts for each of the main water-service sectors (potable water and sanitation, irrigation and drainage, and hydropower). Lending is projected to continue to grow over the next three years.

Executive Directors commended the new strategy for its focus on poverty and for its balanced approach to supporting both better water resource management as well as priority new infrastructure. They also welcomed the emphasis given to environmental and social safeguards in order to ensure the sustainability of programs and projects.

During the past century, while world population tripled, the aggregate use of water has increased six-fold. Irrigation, industry, and municipal use account for 70 percent, 20 percent, and 10 percent of global water withdrawals, respectively. These increases have come at high environmental costs: some rivers no longer reach the sea; 50 percent of the world’s wetlands have disappeared in the past century and 20 percent of freshwater fish are now endangered or extinct. Many of the most important groundwater aquifers are being mined, with water tables already deep and dropping by meters every year, and some are damaged permanently by salinization. Without appropriate action taken to address the situation, four billion people – one half of the world’s population – are expected to live under conditions of severe water stress in 2025, particularly in Africa, the Middle East, and South Asia.

“Many countries are now facing sharply-increasing costs of supplying water, often associated with costly inter-basin transfers or even desalination. In response, The World Bank is rising to this challenge highlighted by heads of state at the Johannesburg Summit on Sustainable Development in September last year. We need to assist poor and middle income countries in confronting the financial hurdles affecting the water sector if we want to avert a crisis, caused by water stress,” warns Ian Johnson, Vice President for Sustainable Development at the World Bank. “Partnerships between public, private sector, and civil society will be key in order to mobilize resources.”

The newly-released strategy reflects the demand from poor countries for a more balanced approach in which better management of existing resources is complemented by investment in priority water infrastructure. “It is not a case of either management or new infrastructure,” Johnson notes. “It is both. The strategy aims at reversing the trend of inequality in water availability between rich and poor countries.”

In fact, many poor countries facing similar climate variability as rich countries, have as little as 1/100th as much water infrastructure capacity. The result is great vulnerability to the vicissitudes of climate variability, a vulnerability which is exacerbated by climate change. There is much that can and must be done by managing watersheds better, and managing demand. At the same time, major water infrastructure has a vital role to play in poor countries, just as it did in rich countries. While rich countries use over 70 percent of economically-viable hydro-electric potential, Africa, for example, uses only 3 percent of this potential.

The unanimous endorsement of the strategy by the Bank’s Board (representatives of the 184 developed and developing countries) follows an extensive consultation process and vigorous debate over the last two years. More than 20 formal consultations, involving governments, non-governmental organizations (NGOs), the private sector, and other stakeholders were conducted in the process of developing this strategy.

The new approach complements the Bank’s 1993 Water Resources Management Policy Paper. While the principles articulated in the 1993 Policy Paper remain relevant and appropriate, this Strategy draws on the lessons of a decade of implementation experience. It focuses on the constraints to effective implementation and, more specifically, on ways in which the World Bank can become a more effective partner to both poor and middle-income countries.

The new vision stresses that the Bank’s water assistance must be tailored to country circumstances and be consistent with the Government’s long-term poverty reduction objectives. One of those objectives is ensuring that people have basic access to water and sanitation. “Access to water and sanitation are important Millennium Development Goals,” according to Jamal Saghir, Director of the World Bank’s Energy & Water Department, “and we are committed to contributing to the achievement of those goals. In some countries we will need to move ahead in strengthening the role of the public sector in the delivery of services, while in other countries public-private partnerships may be the way to go. A one-size-fits-all approach does not work in this sector. It is really a question of whichever solution works best and gets water to people, especially the poor. Everyone pays for water. In both urban and rural areas, the poor often pay the highest (in cash) for water delivery through informal vendors. In fact, they pay ten times more than do richer consumers with house connections. At the end of the day, there is no perfect or ideal solution. It is really a question of whichever solution works best and gets water to people.”

A central water management challenge in most countries is agriculture, which accounts for over 70% of water use. “Irrigation has played a major role in food security and poverty reduction in many developing countries”. notes Kevin Cleaver, Director of the Bank’s Agriculture and Rural Department. “But there is an urgent need to reform irrigation institutions to improve accountability and to maximize returns per unit of water used. This requires greater participation by farmers, greater accountability in irrigation departments and investment in modern infrastructure. In many settings, too, water needs to be re-allocated from irrigation to urban, industrial and environmental uses. This can only happen if farmers are assigned water rights, and mechanisms are introduced which encourage them to voluntarily transfer water to higher-value uses.”

According toJohn Briscoe, the Bank’s Senior Water Adviser,“The Bank’s borrowers, in both poor and middle-income countries see the Bank as having a unique comparative advantage in dealing with the complex issues of both reforming the way in which water is managed and in the development of priority water infrastructure. They want the Bank involved as a full-service knowledge and investment partner. On the management side the Bank will work with its borrowers in a practical and realistic manner to make changes happen over time. On the infrastructure side, the strategy reflects a strong demand from borrowers, and the Board, for the Bank to be a more effective partner in helping countries build priority water infrastructure.”

An important element of the new strategy aims at transforming water from a potential source of conflict, to a major catalyst for economic integration and cooperation at all levels – from villages to international river basins. Cooperative programs for water resources management have played an important role in regional integration and stability in Eastern Europe (the Baltic Sea), Southeast Asia (Thailand and Laos), Southern Africa (the Orange Basin), and South Asia (the Indus Basin). A number of the largest water management interventions by the World Bank, dating back to the Indus Treaty in 1960 and extending forward to current projects (including regional initiatives for the Mekong and Nile), are showing that beyond the direct economic benefits of such cooperation, there is also often a “security dividend”, which can be a powerful catalyst for broader cooperation, growth, and security.

A rising tide lifts all boats

Major water development projects in Brazil, India, Malaysia, and the United States show large direct benefits (from irrigation and hydropower) but with indirect benefits typically twice as large. In many cases, the poor benefit enormously from this economic activity. In Petrolina in Northeast Brazil, for example, water infrastructure has been the basis for the development of a dynamic rural economy. This has meant the creation of a large number of high-quality, permanent agricultural jobs (40 percent held by women). And for every job in agriculture, two jobs have been created in the supporting commercial and industrial sectors. These opportunities have meant a reversal in the historic pattern of out-migration, with the benefiting districts growing at twice the state average. Similarly in India, water infrastructure has evened out the seasonal demand for labor, resulting in major gains for the poor.

Recent analyses in India have shown that irrigation infrastructure has a major impact on the returns to investments in education. “The return to five years of primary schooling versus no schooling in Indian districts where agricultural conditions were conducive to the adoption of Green Revolution technologies was high (32 percent) whereas in districts where conditions were not conducive estimated returns to schooling were negative”. This multitude of direct and indirect impacts has a striking impact on poverty: in unirrigated districts 69 percent of people are poor, while in irrigated districts only 26 percent are poor.

Please see the following website for the Water Resources Sector Strategy: www.worldbank.org/water



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