Brochure: ADB Review: Water Issue

8/12/2019 Brochure: ADB Review: Water Issue

http://slidepdf.com/reader/full/brochure-adb-review-water-issue 1/321December 2006–January 2007

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WATERWATERDOUBLING FINANCING TOGET DOUBLE THE RESULTSDOUBLING FINANCING TOGET DOUBLE THE RESULTS

Policy NotesIs ADB deliveringon its Water Policy?

Project ProofRural, Urban,and Basin WaterProjects

AnalysisThe New WaterFinancing Program

Policy NotesIs ADB deliveringon its Water Policy?

Project ProofRural, Urban,and Basin WaterProjects

AnalysisThe New WaterFinancing Program

NEWS FROM THE ASIAN DEVELOPMENT BANK DECEMBER 2006–JANUARY 2007NEWS FROM THE ASIAN DEVELOPMENT BANK DECEMBER 2006–JANUARY 2007


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2 December 2006–January 2007

WATER FOR ALL

5 PROJECT PROOF Three Streams to a ThrivingFuture Rural, urban, and basin water—will ADB’s new

lens for analyzing water projects yield greater results?

6 Safe, Easy Water: When Women Want It,

They Get It

7 Phnom Penh’s War-Torn Water SystemNow Leads by Example

8 Suzhou Creek is Shanghai’s Comeback Kid

10 ANALYSIS Water Makes a Country GrowBy upping its investment offer, ADB finds an appetite—and a bite—in countries that believe in water to either supportor juice up their growth rates

ABOUT THE COVER AND THIS ISSUEADB’s Water Financing Program 2006–2010

will ensure that investments work better

and deliver actions where they count the

most—on the ground. This ADB Review issue

acknowledges the challenges in providing

safe and reliable water sources for all, and

the steps being taken to achieve this goal.

Photo by Steve Griffiths

with ADB, five countriesidentified barriers todoubling their investmentsin water

23 POLICY NOTESImproving the Flow

Is ADB delivering on its Water Policy? Yes and no,says an external reviewpanel

25 Fund’s Flow-OnEffect

After almost 5 years andover $15 million in grants,has ADB’s Water Fund beenwell spent?

26 PILOT AND DEMOTapping InnovationBig ideas worth testingon a smaller scale geta boost from a special fund

DEPARTMENTS

9 News for NGOs

29 Bookstore

18 Are Countrieson Track to MeetTarget 10 ofthe MDGs?

20 INTERVIEWBuilding BridgesOver TroubledWatersNew ADB mandate todouble water investments

22 COUNTRY DIALOGUESReservoir of IdeasBefore a typhoon could

interrupt finance talks ADB Review, Department of External Relations, Asian Development Bank,

6 ADB Avenue, Mandaluyong City 1550, Philippines; [email protected];

Fax +63 2 636 2648; www.adb.org/review. In this publication, “$” refers to US dollars.

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Volume 38, Number 4December 2006–January 2007Volume 38, Number 4December 2006–January 2007

LONG QUEUE FOR RELIEF The new Water FinancingProgram aims to reduce the risk of floods forabout 100 million people in Asia and the Pacific

SAFE, EASY, AND RELIABLEGovernments are improvingold water systems, buildingnew infrastructure, and seekingto ensure that the poor are

guaranteed water services

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L i b r a r y



3December 2006–January 2007

S t e v e G r i f f i t h s

O V E R V I E W

PROSPEROUS TIMES AHEAD This Cambodianwoman is just one of millions who willstand to benefit from the Water FinancingProgram’s goal to double investments inwater in the Asia and Pacific region

By Melissa Howell AlipaloCommunications Specialist and Writer for RSID’s Cooperation Fund for the Water Sector

Water is big news. Rarely does a day pass when a water issue is notfeatured prominently in the media. It is news when water supply

projects come to town, when chemicals contaminate drinking water,when floods wash away lives and livelihoods, and when economiesshow signs of stagnation because of diminishing water resources.

And it is news when industries and commerce are forced to look elsewhere fortheir water needs.

Less prominent are the everyday stories of the silent masses without access tosafe water supply. The figures are staggering: one in five people in Asia and thePacific lacks access to safe drinking water. Half the region’s population lacks accessto sanitation.


There’s plenty to worry aboutwhere water is concerned, butthere are also signs of progressand initiative to celebrate

There’s plenty to worry aboutwhere water is concerned, butthere are also signs of progressand initiative to celebrate

THRESHOLDWATER

THE

THRESHOLDWATER

THE




Of the 2.6 billion people worldwidewithout adequate sanitation, 2 billion livein the Asia and Pacific region. People suf-fering from easily preventable waterbornediseases take up half the world’s hospital

beds. Each year, waterborne diseases, whichare often easily treatable, kill more peoplethan HIV/AIDS and malaria combined.Each year, five times more children die fromwaterborne diseases than from HIV/AIDS.

Yet, a simple standpipe can reduce mortal-ity from waterborne diseases by 20%.

Patchy SupportDespite the news stories and the resultingincreasing public awareness of water issues,international economic support for water

projects has been patchy. And money spenton water does not always result in improv-ing the access or quality of water for thepoor, researchers say.

The most desperate countries—whereless than 60% of the people have access toimproved water sources—receive the small-est amount of project funds and water aid:about 12%.

Widespread criticism of governments’and decision makers’ failure to act on thecurrent water situation abounds. The term“water apartheid” has emerged to describethe inadequacies and unfairness of the way in which water issues have been managedby decision makers, but the question re-mains: why aren’t those in a position to domore to improve the access and quality of

water to all people not acting at all, or notacting fast enough?

However, some governments, in recog-nizing the dismal state of their water, areworking to improve old water systems andbuild new infrastructure. They are legisla-ting to protect water resources, seeking toensure the poor are guaranteed servicesand rights over water resources, and are in-

vesting in new areas—such as enhancingthe capacity of local government, utilities,and communities to deal with water issues.

Governments are seeking innovativesolutions, spending more of their own moneyon water, and are willing to borrow more fowater. Also, they now have a better under-standing of the value of partnerships withthe private sector in water issues.

Conservation Taps Technology Water technology has developed with conservation in mind. For example, a standardflush toilet today consumes six times lesswater than it did 10 years ago. Drip irrigation—widely used and shown to helpconserve water in developed countries—is being used increasingly across Asia andthe Pacific, and helping reduce povertyamong farmers who lack access to irrigatedland.

Governments in the region are showingthe willingness and the commitment to

face the water challenge head on. Howeverthe success stories remain outweighed bythe challenges that still exist.

And that is what this special issue of ADB Review is about: acknowledging thechallenges that face the region in its questto provide safe and reliable water resourcesto all people, and especially the poor, andrecognizing the bold and ambitious initia-tives already underway and those plannedto help change the water status quo.

We examine ADB’s new Water Financing Program 2006–2010, which is a com-mitment to more than double investmentsin water in the region over the next 4 yearsand the Water Financing PartnershipFacility, which aims to raise $100 millionin grants that will support governmentswilling to take on reforms and developskills within their institutions, utilitiesand communities.

And we ask ADB water operations staffor their views about the barriers and op-portunities that exist in some of the region’fastest-growing economies—the People’s

Republic of China, India, Pakistan, and Viet Nam, as well as in the slower yet hopeful economies of Indonesia and Philip-pines.

Through this issue of ADB Review, readers will gain a greater understanding ofthe many factors contributing to Asia’water woes and the streams of action ADBgovernments, and the communities needto undertake to help preserve, and achieveequitable access to, our most precious natu-ral resource: water.

Governments in theregion are showing thewillingness and thecommitment to face

the water challengehead on. However, thesuccess stories remainoutweighed by thechallenges that still exist

LOCAL TECHNOLOGY Rainwater catchment onthe airport runway inMajuro, Marshall Islands

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By Abby TanWriter for RSID’s Cooperation Fund forthe Water Sector

I

f football were played the way mostwater resources are managed, the gamewould be chaos. Water governance

could learn a thing or two from foot-ball.

In football, the game isn’t contained to just one corner of the field or controlled by one player for very long. No, the gamesplices in any given direction, at unevenpaces, and with great unpredictability.

What holds the game together are playerswho know their role, know the potentialimpact of their move and the rules govern-ing the game.

Water is like football in that they both—by design—are not easy to contain, yet needrules to thrive. Water cuts across diverse

Three Streams toa Thriving Future

landscapes, is managed by dozens of differ-ent government ministries, and used by multiple—often rival—users. It is hard tocall water a “sector” (like football is calleda “game”) because its management anduse often lack the rules needed to give itefficiency and effectiveness. As a result, wa-

ter resources have been depleted, polluted,and unfairly distributed—often leaving thepoor on the sidelines with no services andthe water resources in dismal conditions.

How long can this go on? Rules areexactly what water in Asia and the Pacificneed. The principles of integrated waterresource management (IWRM) are therules—the approach—that leading globaland regional institutions have been ad-

vocating for years. The problem is thateveryone in Asia—or even the majority of governments—is not playing by them, and,as a result, is faced with rivers either running

Rural, urban, and basin water—will ADB’s new lensfor analyzing water projects yield greater results?

too dry, flooded, or polluted to sustain theireconomic growth.

IWRM offers governments a solution. Itis all about coordination and thinking ho-listically to meet the demands from differ-ent sectors and between urban and ruralareas. ADB’s Water for All Policy advocates

implementing IWRM in basins specifically,as they are the foundation for sustainableuse by the various urban and rural users.

Yet, to know how to manage basins, we mustknow the water situation in rural and ur-ban areas.

Internally, ADB has applied a new lensfor studying the current status and direc-tion of its water operations, and the man-agement of water resources in the region.Projects are identified as either rural, ur-ban, or basin in nature, and ADB projectstaff have begun working together in small

groups to identify the specific issues,trends, barriers, and possible solutions forrural, urban, and basin water problems.

The following series of articles looksmore closely at exactly what ADB meansby “rural water,” “urban water,” and “basinwater” and the kinds of projects that char-acterize them. The idea behind this three-pronged approach is that an integrated planfor water can be assembled only when themechanics of its parts have been under-stood. Only then can Asia’s water resourcesand urban and rural economies truly have achance of thriving.

Rural WaterPostcard snapshots of tranquil Asian rural

scenes can be deceptive. Rural life is not all

free smiles, golden harvests, stately moun-

tains, and a patient pace of life. Reality is

harsher than that. But it could be made a

lot easier by way of water—more water for

irrigating fields, better drainage to preventfloods, drinking water within reasonable

reach of people’s homes, and simple sani-

tation.

Governments and private-sector

investors tend to give these kinds of im-

provements low priority, though, simply

because the economic returns on their in-

vestments are not high enough. However,

the return is huge for the individuals who

are spared from dry fields, floods, hours of

walking for water, and unsanitary environ-

ments around their home.

The challenge is to find and implement

simple technologies. Easy access to com-

munal hand pumps, village standpipes,

and collected rainwater can dramatically

improve the quality of rural life. There is aneed for new flood management methods

to be introduced and greater investments

in irrigation. Marginalized farmers must

come into sharper focus for irrigation in-

vestments to truly reduce poverty.

Water supply. Sanitation. Irrigation. Drainage.

E n r i c o

F r a n c i s c o

P R O J E C T P R O O F

MAXIMUM GAINS Easy and reliable accessto water—from communal hand pumpsto village standpipes—can dramaticallyimprove the quality of rural life




By Abby Tan

Writer for RSID’s Cooperation Fund forthe Water Sector

When potable water supply andsanitation finally started arriv-ing in some of the most remote

villages in the Philippines, project imple-menters noted a common factor: take-charge women.

Where women were organized and ac-tively ran the local water user groups,projects succeeded, whether in northerntribal areas or the lowland areas of Samar,

Leyte, and Panay islands.“The relationship between women and

water is life itself. Because from daybreak to sunset, women deal with water, in bath-ing, cooking, and washing. It is the lifelinefor women,” says ADB Gender Specialist

Jennifer Francis. Women are also the pri-mary caregivers of family members who fallill from waterborne diseases. The lack of safe drinking water is a major culprit of thekinds of diseases which affect an average of two out of three people in rural Philippines.

To get at this problem, the Rural WaterSupply and Sanitation Project aimed tobring safe and reliable water supply andsanitation systems, as well as education onhealth, hygiene, and monitoring water qual-ity, to 3,000 of the most remote communi-ties in 20 of the poorest provinces of thePhilippines.

Ultimately, 60,000 toilets and latrineswere built in villages and schools. “They can now take a bath daily. Before that they couldn’t; it was a luxury to take a pail of water for bathing,” says Project Consultant

Edna Balucan.The most efficient and self-sustaining

of the projects have been where women’sinvolvement was the highest. Ms. Balucansaid women usually took over the discus-sions in the user group meetings—an ob-servation shared by ADB Project OfficerPaul van Klaveren. “From the men you getthe formal answers,” he says. “From thewomen, you get the real story.”

These user groups were tasked with de-termining how the new water supply would

Safe, Easy Water: WhenWomen Want It, They Get It

user group in Guimaras used monthly feesto finance the construction of a water tankon top of a hill. A spring about 2 kilometersaway supplied the tank, which fed waterthrough a gravity system to 26 communafaucets that serve more than 100 households.

Women beneficiaries were also knownto act on their own initiative. ADB SenioUrban Development Specialist RudolFrauendorfer recalled a woman in theCordilleras who kept a meticulous recordof how much she had collected from usersand had spent on repairs for the village wa-ter system. “I was astounded,” he says.

Similar female initiatives have beenreported elsewhere. Three user groups inSouthern Leyte have succeeded in collecting monthly fees to sustain the facilitiesand are now moving forward to install wa

ter meters for individual household connections. In Eastern Samar, three villages joinedforces to form a “federated” user group toshare the water source from a spring. Theioperation and maintenance has led to further sharing with another village, and theyare upgrading the system to allow for indi

vidual connections. ADB Transport Specialist Shigehiko

Muramoto says, “If somebody teaches them(the women) how to run the water supplysystem—whether it is the institutionalfinancial, or the technical aspects—theycan do it.”

be distributed and paid for. Having a say gave women a sense of ownership, whichdrove their enthusiasm for the project. Theall-women board of the Bulan Bulan village

J o e C a n t r e l l

LIFELINE Women deal with water fromdaybreak to sunset—making them theideal organizers and managers of local

water user groups

Rural water Urban water Basin water

100

200

300

400

500

600

700

0

800

1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

2001 2 00 5

L e n d i n g i n $ m i l l i o n

Rural, Urban, and Basin Water Lending(1968–2007, 3-year moving average)




Phnom Penh’s War-Torn Water SystemNow Leads by ExampleBy Ma. Christina DueñasKnowledge and Communications Coordinator forRSID’s Cooperation Fund for the Water Sector

In 1993, the state of Phnom Penh’s wa-ter supply system was prime evidenceof the devastation that Cambodia’s 20-

year civil war and the Khmer Rouge rulehad dealt the city. The water system, thecapacity of which had shrunk by 40% be-tween the 1960s and early 1990s, was in astate of serious deterioration.

With century-old pipes and a poor dis-tribution network, roughly only a quarter of the population received piped water. ThePhnom Penh Water Supply Authority (PPWSA), the Government-owned watersupply utility, was barely functioning. Em-

ployees were demoralized and underpaid.Only 13% of connections had water meters.Only 28% of the water produced for the sys-tem was actually sold, with the collectionrate not even reaching 50%. Illegal connec-tions were prolific. Even worse, the employ-ees were responsible for much of the watertheft. They were installing illegal connec-tions at $1,000 per connection and receiv-ing kickbacks from large consumers inexchange for lower meter readings.

The year 1993 marked the dramatic

turnaround of PPWSA. With funding from ADB, and through internal reforms, PPWSA transformed itself into an efficient, self-financed, autonomous organization. At thehelm of the authority’s “culture of change”was the young engineer Ek Sonn Chan.

In his “culture of change,” Ek Sonn Chandid several things. He streamlined theutility’s workforce by giving more responsi-bility to higher management, promotingpromising staff, raising salaries and provid-

ing incentives, and fostering teamwork.He improved collection levels, install-

ing meters for all connections, compu-terizing the billing system, confrontingprominent nonpayers, and cutting off waterif they refused to pay.

He rehabilitated the whole distributionnetwork and treatment plants by hiring lo-cals instead of international consultants.

As most of the blueprints for the pipe sys-tem were destroyed during Cambodia’s

A CULTURE OF CHANGE Ek Sonn Chan, general director of the Phnom Penh Water Supply Authority, one of Asia’s most efficient utilities, visited ADB while in Manila to accept theRamon Magsaysay Award for Government Service. ADB staff member Xiaoyan Ye (right)

worked with Mr. Chan on the Phnom Penh Water Supply Project in the 1990s.

L a r r y R a m o s


Urban WaterIf cities are the engines of a country’s eco-

nomic growth, then water is the oil that

keeps those engines running. Common

among many Asian cities, though, is thefact that water shortage and pollution are

stunting growth, making it more expen-

sive to do business and do it efficiently.

This is true for the employer and the

employee. The productivity and efficiency

of the labor force suffer just as much as

industries and services when water services

are poor. Like businesses, people mitigate

these circumstances by investing their own

time and money into the problem—time

and money that could be better spent if

the proper water services were in place.

Water could also be helping raise ur-

ban economic standards of living. Inside

the miserable housing conditions of city

slums are the bulk of the city’s workforce. Yet they are the ones often faced with

the worst domestic water and sanitation

conditions. Their ability to live healthy,

productive, and efficient lives must be

secured and preserved for their own sake

as well the economy’s.

From anyone’s perspective—the indus-

trialist, the taxi driver, the hotel manager,

or restaurant waiter—water is important

for the urban economy, for urban liveli-

hoods, and overall quality of city life.

Water supply. Sanitation.

BUSINESS UNUSUAL An example of Manila’ssmall piped water networks

J a y D e l f i n




civil war, he painstakingly searched for thepipes, and mobilized communities to re-port leaks. He minimized illegal connec-tions and unaccounted-for water by forminginspection teams to search for illegal con-nections, penalizing water thieves, and giv-ing incentives to the public to report illegal

connections. And he increased water tariffs to cover

maintenance and operation costs, througha three-step increase in tariffs over 7 years,although the third step did not pushthrough because revenues had reached suf-ficient levels.

Phnom Penh’s water service now oper-ates 24 hours a day, covers all of inner-city Phnom Penh, and is being expanded to sur-rounding districts, with priority being givento urban poor communities. In particular,PPWSA now serves 15,000 families in 123

urban poor communities, giving the poorextra privileges such as subsidized tariffsor connection fees, installment connectionfees, and more. Nonrevenue water has alsodecreased from 72% to 8%, while bill col-lection is now at 99.9%.

Mr. Chan’s efforts have been duly recog-nized. He received the 2006 RamonMagsaysay Award for Government Service,the region’s version of the Nobel Prize.

Looking back on his achievements, Mr.Chan says, “It doesn’t matter whether waterdistribution is done by the private sector ora public agency, as long as these institu-tions are transparent, independent frompolitical pressures, and accountable.” Suzhou Creek is Shanghai’s

Comeback KidBy Cezar TignoWeb writer for www.adb.org/water

Shanghai’s Suzhou Creek, a tributary

to the Huangpu River, which cutsacross Shanghai before meeting the

mighty Yangtze River, breathes almostnormally these days, thanks to the effortsof the city government and people of Shanghai. The once murky and fetid riverhas been transformed into an ecologicalwonder.

For too many decades, though, the 53kilometers of the river served as a conve-nient sewer for the city as Shanghai grewto become one of the world’s largest mega-

cities. The 1970s and 1980s saw SuzhouCreek in a sordid state as the water turnedblack and putrid. Makeshift houses andsmall industries lined the riverbanks, add

ing to the polluted waters. A green heart tothe city was a distant dream.

Shanghai’s government embarked onthe huge task to clean up the creek throughthe ADB-financed Suzhou Creek Rehabili-tation Project. The major problem provedto be the task of managing the continuoustream of raw sewage dumped into theriver and the adjoining canals. The projectconstructed control gates to control flowsof waste from side canals and to increasewater flow in the main channels. The city

It doesn’t matterwhether water distri-bution is done by theprivate sector or apublic agency, as longas these institutions aretransparent, independentfrom political pressures,and accountable

Visit www.adb.org/water to request a copy ofthe DVD, “Water Voices,” which features thestory of Ek Sonn Chan and the Phnom PenhWater Supply Authority.


“

“

—Ek Sonn Chan, General Director ofthe Phnom Penh Water Supply Authority

Basin Water

Imagine a wetland the size of France—

that is the area of the basin of the threemother rivers that emerge from Russia to

meet at the northeastern Chinese border

in Heilongjian province and drain into the

Sea of Okhotsk.

This vast river basin once supported

thriving agricultural communities. But 50

years of efforts to control floods have re-

sulted in even worse flooding upstream,

more frequent droughts downstream, re-

duced agricultural production, and declin-ing biodiversity.

Similar problems occur in river basins

across Asia. To reverse such damage, gov-

ernments and communities are introduc-

ing new ways of managing and sharing

water resources. Often, this requires set-

ting up a basic legal framework that de-

termines who has the authority to manage

the basin, which may comprise rivers,

lakes, forests and wetlands, and encom-

pass cities as well as vast agricultural tracts.

For many basins, these issues are further

complicated by ecosystems that cut acrossadministrative and, in some cases, na-

tional, boundaries.

Water users across many sectors need

to agree and abide by a set of rules to

jointly operate flood management, hydro-

power, irrigation, and water supply infra-

structure—or risk dissipating the limited

resources available. The health of the

region’s river basins and the communities

that depend on them will increasingly de-

pend on people’s willingness to manage

each basin in ways that integrate the mul-

tiple demands on its resources.

Healthy rivers. Flood management. Hydropower.

REGIONAL RESOURCE Sanjiang Plain

wetlands in Heilongjiang Province, PRC

K y e o n g A e C h o e




Visit www.adb.org/water to request a free copyof the DVD, “China’s Water Challenge,” whichfeatures the cleanup of the Suzhou Creek.

S

t e v e G r i f f i t h s

RIVER REVIVAL Shanghai has turned fromits polluting ways to now be Suzhou Creek’sbest friend—promoting and protecting itfrom dumping of urban water

used special boats to pump oxygen intothe river to improve water quality.

The old wharves, industries, and housesalong the river were dismantled and relo-cated. The project supported a comprehen-sive resettlement plan that ensured therelocation of 7,700 people affected by therehabilitation project; and also creatednew employment opportunities for almost4,000 skilled and unskilled workers.

Wastewater is now collected in a sewernetwork that transports it to be processed ata state-of-the-art water treatment plant.Once treated, the water is discharged back into the river, helping flush out more filth.The network and treatment process is “anessential, basic measure” to prevent sewagefrom entering the river, says Xu Zuo Zheng,General Manager of the Shanghai SuzhouCreek Rehabilitation Construction Com-pany.

The city government is rightly proud of a new solid waste transfer station, whichhas replaced numerous unsightly barges

that once collected and transported solidwaste. Built in Jing’an District, in the heartof Shanghai, the garbage transfer station isof the best international design and is of-ten mistaken as a typically stylish urbanbuilding, its true function unsuspected.

After the cleanup was completed inSeptember 2005, the city government in-

vited residents to plant trees and flower-ing bushes in new parks created along thebanks of Suzhou Creek. Getting thepeople’s support and involvement was an

important element contributing to thesuccess of the rehabilitation efforts, saysEri Honda, an Urban Development Spe-cialist at ADB. The government invitedolder residents to write poetry about thebeautiful Suzhou River they rememberedfrom their youth.

A new museum about the history of Suzhou Creek was built to promote greaterenvironmental awareness among Shanghairesidents. Residents now enjoy the riverand some even do their early morning ex-ercises along the banks.

The revival of Suzhou Creek contin-ues, with hopes of bringing back aquaticlife by 2010. Mr. Xu says, “With improvedwater quality and the renewal of the em-bankments, Suzhou Creek should becomea place for sightseeing and tourism.” Ms.Honda says she has already seen many

people canoeing in the river.For Shanghai residents, maintaining

Suzhou Creek’s health means keepingtheir city healthy and alive. Vice Director

Zhu Shiqing, of the Shanghai Water Au-thority, says, “Environmental protectionis now the city’s priority. If the environ-ment is not protected, economic develop-ment will be negatively affected.”

NEWS FOR NGOS

New Fund to Boost CleanEnergy ProjectsADB has approved the creation of the

Asia Pacific Carbon Fund to boost clean

energy projects in Asia and the Pacific.

Part of a broader Carbon Market Initia-

tive, the fund will be an additional fi-

nancial source at the early stage of

project formulation through payments

for future certified emission reductions.

Combined with ADB’s financial services,

it will provide upfront capital and en-

able projects addressing renewable

energy and energy efficiency to move

forward. For more information, contact

Toru Kubo, Clean Energy and Climate

Change Specialist, Regional and Sus-tainable Development Department, at

[email protected].

Rating ADB’s WorkADB is viewed as effective and largely

successful in its work, but still has room

for improvement, according to an inde-

pendent perceptions survey of 700 opin-

ion leaders from government, media,

civil society, academia, private sector, and

development partners in 30 countries.

Respondents recognized ADB for its con-

tribution to development, and noted itsoperational excellence in areas such as

infrastructure, and regional cooperation

and integration. However, they believe

that ADB is spread too thinly and has

excessively bureaucratic procedures. For

details, contact Sue Hooper, Public Af-

fairs Specialist, Department of External

Relations, at [email protected].

Developing BusinessSkills in Rural Cambodia

The Cambodia Business Initiative in Ru-ral Development Foundation will soon

mobilize rural communities and busi-

ness associations in Cambodia, with

support from government agencies,

NGOs, and donors. The idea for the foun-

dation grew out of an ADB technical

assistance project that sought to con-

nect rural villages with companies to

help them develop business skills to im-

prove income and living standards.




By Eric Van ZantWriter

nder its new Water Fi-

nancing Program, ADB

is offering to double

spending on projects in

the water sector as a

means for ramping up investments

in infrastructure that is critical to

capturing and sustaining the huge

new opportunities emerging in

Asia’s booming economies.

“When you arrive in Bangalore, you cansmell the money,” says Keiichi Tamaki, an

ADB Urban Development Specialist, “andit’s looking for a good place to park.” Fothe past few years, investors have streamedinto the capital of India’s southwesternKarnataka State, home of its high-tech andoutsourcing boom, eager for return.

Hardly a week passes without an articlein the global media about the economicopportunity in Asia’s Silicon Valley, whereTata, Infosys, and Wipro hold court withthe world’s information technology (IT)giants. It is, indeed, a worthy symbol ofIndia’s emergence after decades-longeconomic stagnation.

However, money avoids risk if it can and

if India is to continue attracting investment to places like Bangalore—and if itis to ensure that benefits of large-scaleinvestment accrue also to the poorest—itneeds to deal with the deplorable state oinfrastructure in many parts of the countryincluding in Karnataka State.

Similarly, in countries throughout Asiawhere economies have been booming inrecent years, governments need to ramp upinvestments in the infrastructure uponwhich growth depends.

By upping its investmentoffer, ADB finds anappetite—and a bite—incountries that believe inwater to either support or juice up their growth rate

U

A D B

P h o t o

L i b r a r y

PART OF THE PIPELINE Governmentsare ramping up investments ininfrastructure to spur growth

Making a Country

GROW10 December 2006–January 2007




A N A L Y S I S

ADB’s Water Financing Program (WFP)is designed precisely to help countries meetthe infrastructure challenge in the watersector, which represents perhaps the mostcritical gap in financing. Safe and reliablewater sources, and the resources upon whichthey depend, are integral to sustained eco-

nomic growth, and to meeting the targetsof the internationally agreed MillenniumDevelopment Goals for reducing poverty.

The WFP will initially focus on six countries: the People’s Republic of China(PRC), India, Indonesia, Pakistan, Philip-pines, and Viet Nam, which together ac-count for a large part of the region’spopulation and are among ADB’s biggestclients. However, the program is open to all

ADB’s developing member countries(DMCs).

Modest and Unpredictable ADB’s investments in the water sector overthe last 15 years has been modest and un-predictable, averaging $790 million a yearfrom 1990 to 2005, and ranging from $330million in 2004 to $1.4 billion in 2005.

WFP is an offer to increase ADB’s overallinvestments in water operations to an aver-age that is well over $2 billion annually inthe next 5 years.

In the first phase, ADB has programmed$2.4 billion for 2006, $1.8 billion in 2007,and $1.7 billion in 2008. In the secondphase, in 2009–2010, total delivery couldreach $12 billion over 5 years.

WFP will also mobilize cofinancing andinvestments from government clients, theprivate sector, and multilateral and bilat-eral partners.

Through much of the area covered inthe six countries, actual demand for newprojects in the water sector is huge. Indeed,“it is unlimited in India,” says Hun Kim,Director of ADB’s South Asia Urban Devel-opment Division.

The issue becomes how to transformthat demand into bankable projects. In mostof the countries, the capacity for projectdesign and implementation is complicatedby the lack of skill, including in India.

In several countries—such as Indone-sia, Pakistan, and Philippines—that short-fall has been complicated by thedecentralization of government servicesfrom federal to lower-level governments. Todeal with these issues, the WFP will bebacked by a grant facility—the Water Fi-

nancing Partnership Facility—throughwhich more than $100 million in grantsmay be distributed to top off currentprojects and fund programs that will de-

velop human resources in public utilitiesand groups that manage water resources.

In others, such as the PRC and VietNam, borrowing or lending caps in one formor another make it difficult to boost lend-ing for water-sector projects.

However, reforms in recent years havemade ADB financially more flexible, intro-ducing several new products that will help

governments with limited expertise andfunds to create projects to improve rural,urban, and basin water resources. Measuressuch as the multitranche financing facility (MFF), for example, offer a line of credit (asort of up-front, umbrella financing) thatcan be drawn down by a government asneeds emerge or the capacity to carry through a project develops. It can combinepublic-sector lending with sub-sovereignlending and private sector operations.

Part of a Larger Effort Just as water has moved up ADB’s develop-ment agenda, it is gaining more recogni-tion within government ministries and themedia. The PRC and India have become afavorite place for international journaliststo illustrate the critical nature of Asia’swater conditions. But nearly every otherdeveloping country is facing what the PRCand India are facing, in addition to theirown local water issues.

ADB’s WFP is a part of the solution to Asia’s water woes. As Asia’s economies

boom, they are creating a huge need for en-abling infrastructure to continue attract-ing eager investors and to ensure capitalflows into areas outside the economic cen-ters where poverty is often highest.

Reforms in recent years have made ADB financially moreflexible, introducing several new products that will helpgovernments with limited expertise and funds to createprojects to improve rural, urban, and basin water resources

In places such as India’s KarnatakaState, and in the other five WFP countries,and throughout ADB’s DMCs, the WFP willseek creative solutions to ensure that thedevelopment of water sector infrastructurekeeps pace with the increasing demandsplaced upon it. However, more financing,

more partners, and more commitment by governments are needed to continue theinvestment momentum that this programis attempting to start.

The following sections outline some of the opportunities for and barriers to expan-sion of investment in each of these six coun-tries, as well as some of the barriers toinvestment. The sections also highlight justsome of the projects now emerging from thepipeline that will define ADB’s WFP.

I a n F o x

TAPPING THE POTENTIAL Demand for newwater-sector projects is huge; the issueis how to transform that demand intobankable projects




People’sRepublic

of ChinaFew countries are more directly impacted

by water issues than the PRC. Despite having

the world’s fourth largest freshwater re-

serves, the PRC, with just 7% of the world’s

water supplies yet 21% of its population, is

likely to face severe water challenges over

the coming years.

Issues include severe water pollution,

inadequate urban and rural water supply,

and the intense demand for water from

booming industries, farms, and sprawling

cities. These water-sector challenges can

only be addressed through a coherent and

integrated national water policy, a change

in behavior, and a greater understanding

of the challenges the country faces. The

PRC Government also sees the private sec-

tor as playing an integral role.

“There are a lot of areas that could be

further improved to increase investment,”

says Amy Leung, an Urban Development

Specialist in ADB’s East Asia Department.

She notes, however, that it will be difficult

given the cap on lending to the PRC at $1.5

billion; of that about 41% is for transport,25.3% for agriculture and natural resources,

22.5% for social infrastructure, and 11.3%

for energy. There is no lending cap, how-

ever, where projects involve private sector

participation.

In the water sector, ADB has also fo-

cused on improving the urban environ-

ment, public health, and quality of life for

urban residents through improving waste-

water management and supply of potable

water, construction and rehabilitation of

sewer networks, and strengthening water

resources management.For example, the recently completed

and ADB-financed Suzhou Creek Rehabili-

tation Project to clean up the Suzhou Creek

was important and a big success, says Ms.

Leung. The once murky and severely pollu-

ted river, which passes through Shanghai,

has been transformed into an ecological

wonder.

Meanwhile, a second phase of a project

to improve the handling of wastewater in

the capital of Hebei Province was approved

this year with a $100 million loan. Wuhan

is home to almost 8 million people and is a

center of communications, education, cul-

ture, commerce, trade, transportation, and

industry.

The project will construct new and up-

grade existing wastewater treatment facili-

ties, extend and rehabilitate collection

networks, and add larger-capacity storm-

water pumping stations, among others.

The city aims to treat 80% of its waste-

water by 2010.A third project, in Fuzhou, the capital

of Fujian Province, will improve wastewa-

ter treatment through the construction and

rehabilitation of sewer networks, rehabili-

tation of the system of inland creeks, and

the strengthening of urban governance in

water resources management.

There is also an increasing emphasis on

the policy and management tools needed

for better water resource management.

“The legal framework and governance are

areas where we can work with the Govern-

ment to improve,” says Ms. Leung. There is

a lot of work to be done as the water utili-

ties move from complete central Govern-

ment control to more independent financial

and operational management.

IndiaAn interesting thing happened recently

in Karnataka State as ADB went looking

for ways to increase investment in water-

sector projects: government officials there

expressed an interest in private-sector

involvement.

Renowned in past decades for its hos-

tility to intrusion on government turf, In-

These water-sectorchallenges can only beaddressed through acoherent and integratednational water policy,a change in behavior,and a greater under-standing of the chal-lenges the country faces

S t e v e G r i f f i t h s ( x 2 )

PEOPLE’S REPUBLIC OF CHINA The YellowRiver, infamous for great floods, is slowlydying because of pollution andoverdrawing; (below) a mother and herson from drought-stricken Gansu provincealso need a steady supply of clean, safewater




dian governments, state and federal, for

decades shunned the capital-rich private

sector, throwing up legal and regulatory

hurdles. In the 1990s, then Finance Minis-

ter Manmohan Singh (now Prime Minis-

ter) helped kick-start reforms that have

cleared room for the new economy to

emerge and made way for visionary politi-

cians in places like Karnataka.

“It was a pleasant surprise,” says Keiichi

Tamaki, who works in ADB’s South Asia

Department, of the new interest in the pri-

vate sector. However, he notes that Indian

governments are realizing they are in a “fu-

rious competition” for investment withcountries such as the PRC and, to retain the

interest they have already attracted, they

need to attend with greater urgency to in-

frastructure.

India is making good progress increas-

ing infrastructure for water supply and sani-

tation in urban and rural areas. However, it

is still lagging behind other countries in

expanding services that are reliable and

sustainable. The water supply in most cit-

ies is still intermittent, mostly between 2

and 4 hours a day.

“In India, we see lots of publicity aboutIT and the difference it is making in the

economy but when we look at the ground-

level reality in infrastructure, such as water

supply, it is in a deplorable state,” says Mr.

Tamaki.

And with 14% of the world’s popula-

tion, the country has only 4% of the total

average annual river run-off. A number of

areas are already in crisis, including in the

most populated and economically produc-

tive parts of the country. Estimates reveal

that by 2020, India’s demand for water will

exceed all sources of supply.At the same time, 70% of India’s irriga-

tion needs and 80% of its domestic water

supplies come from groundwater—in the

past a successful practice—but that has

lowered groundwater tables and depleted

aquifers. It is no longer sustainable. The pic-

ture is further muddied by unclear rules

governing the allocation of water rights of

the country’s interstate rivers, which drain

some 90% of India’s territory.

Funds are available for meeting these

challenges. For example, ADB is support-

ing India’s Jawaharlal Nehru National Ur-ban Renewal Mission, a national fund

created to encourage sustainable urban de-

velopment and expected to invest about

$11 billion equivalent in developing infra-

structure in 63 of the largest cities in India

over the next 7 years. ADB’s support will

help build capacity for identifying and pre-

paring projects, among others. “We have

the WFP and they have JNNURM. We can

take advantage of that,” notes Mr. Kim.

The main barrier now to increased in-

vestment, Mr. Kim and Mr. Tamaki say, is

the difficulty of linking funds available to

viable investment projects. “Indian towns

and cities are not yet creditworthy. The

commercial banks are not ready to help

them and they need support in conceptu-

alizing and producing a project,” says Mr.

Kim.

What is missing, says Mr. Tamaki, is a

workable model that can connect available

funds with projects and be replicated inother parts of the country, or region. In steps

Karnataka where rapid urbanization and

underinvestment in infrastructure have

created serious environmental and health

problems, as elsewhere in India’s cities. The

majority of urban households, particularly

the poor, have limited access to potable

water, sanitation, and drainage facilities and

services.

The situation is even more pronounced

in the so-called urban local bodies (ULBs)

of North Karnataka where rapid urbaniza-

tion is yet to start. In these ULBs, water sup-ply may be as infrequent as once a week.

Only a few have piped water for 1–2 hours

each day, and the quality is usually poor.

This deficiency is a serious impediment to

economic development.

To address the imbalance between

communities in the northern and southern

parts of the state, the Government asked

ADB for financing totaling $270 million

through the newly created MFF. Serving as

H a l s e y S t r e e t

T o m P

a n e l l a

Funds are availablefor meeting thesechallenges. The mainbarrier now to increas-ing investments is thedifficulty of linkingfunds available to viableinvestment projects

INDIA Constructing anirrigation canal (below);women in Gujarat(right) have to walk3–4 kilometers to fetchtheir day’s water supply

INDIA Constructing anirrigation canal (below);women in Gujarat(right) have to walk3–4 kilometers to fetchtheir day’s water supply




something like a line of credit, the funds

will be drawn down over an 8-year period

to finance an overhaul of the infrastructure

and institutions governing the state’s

water supply.

It will improve urban services for 4.3

million people in 25 ULBs, improve and

sustain infrastructure services, and promote

private-sector participation in selected

subsectors, with the aim of bringing in a

proper incentive framework for efficient

and equitable service provision.

To involve the private sector, compa-

nies will be invited to bid for either a

10-year lease-style contract (on water utili-

ties), in which the contractor is expectedto put up some funds itself, or a shorter-

term management contract sending a pri-

vate management team to a water utility.

The first requires private contractors

to bring partial bridge financing for the

construction, and operation and mainte-

nance costs of subprojects in exchange for

annuity-like and performance-based pay-

ments over a 10-year period. The second

recognizes that the risks of the first may

dissuade prospective private companies,

and the companies are instead invited to

bid for a so-called “performance-basedmanagement contract,” under which the

contractor is responsible for overall man-

agement and provision of services, typi-

cally over a 5 to 6-year period.

“Our money,” says Mr. Tamaki, “is at-

tempting to create a demonstration effect.

We hope that through it there will be a

continuous flow of money, which is already

available in India and looking for decent

investment opportunities, into these and

other utilities.” However, Mr. Tamaki ad-

mits that ADB funds are just a “drop in the

bucket.”

IndonesiaIn Indonesia, too, a fragmented political

environment presents a formidable barrier

to increased investment in the water sec-

tor. Few countries have decentralized as

fast as Indonesia has since the fall of Presi-

dent Suharto’s government in 1998. Once

one of the world’s most centralized coun-

tries, it is quickly becoming one of the mostdecentralized.

“Decentralization will have major ben-

efits in the future, but currently there is

still much to be done to get the legal and

institutional framework right—it is a very

slow process,” says Rudolf Frauendorfer,

a senior ADB Urban Development Special-

ist. “This impacts lending, particularly for

water supply and sanitation in the urban

areas,” he says.

The country has made excellent pro-

gress in reviewing and developing water

resources policy, but modernizing the leg-islative basis and implementing changes

on the ground is proving more difficult.

Unpaid debts in many of the country’s

more than 300 regional government-

owned water enterprises, called perusahaan

daerah air minum, or PDAMs—and in part

originating in the Suharto years—also

hinder increased investment.

Nonetheless, there is huge demand for

improving water-supply services in rural

and urban areas, says Mr. Frauendorfer:

only 39% of urban residents have access to

piped water, or 18% of the population coun-

trywide.

Indonesia’s leadership in river basin

management, in particular, holds promise

and is widely regarded as a success, withthe WFP envisioning lending of $700 mil-

lion a year from 2006 through 2010—a

jump from a total of about $1.36 billion

over 10 years ending in 2005.

Attention will be focused on the Citarum

River Basin, a system of several rivers, which

covers more than 11,000 square kilome-

ters, is home to about 9 million people,

and irrigates around 390,000 hectares of

rice. More than 85% of the basin’s water is

used for irrigation, and supplies some 80%

of Jakarta’s raw water.

Yet inadequate institutional arrange-ments, deteriorating infrastructure, com-

peting water demands from agriculture,

and rapid urban and industrial growth have

led to severe water supply shortages and

unhealthy environmental conditions

throughout the basin.

Once again, the new MFF is expected

to provide flexible and less-burdensome

funding for the complex array of interlinked

problems affecting the Citarum basin.

Indonesia’s leadership inriver basin managementis widely regarded asa success

INDONESIA The demand forimproving water supply andsanitation services is greatin rural and urban areas

A D B

P h o t o

L i b r a r y ( x 2 )




Under it, says Urooj Malik, a Director in

ADB’s Southeast Asia Department, ADB is

helping put together a 10–15 year program

that will deal with these problems in an

integrated manner. “Citarum will provide a

roadmap over 15 years,” he says.

The MFF is opening up new opportuni-

ties and raising considerable interest withits flexible and staggered debt commit-

ments. It is well-suited to putting in place

an integrated water resource management

(IWRM) plan, an area in which Indonesia is

among the leaders. “(Under the MFF) the

policy and institutional changes that are

required can work hand in glove with the

irrigation systems,” Mr. Malik says.

A TA for preparing the Integrated

Citarum Water Resources Management has

been completed and presented to the Gov-

ernment. The proposed project will aim to

improve environmental managementwithin the basin, address water conserva-

tion and use, and cover watershed man-

agement, agriculture, water supply, and

energy.

The TA will also help the Government

update the IWRM plan for the Citarum River

basin and strengthen the institutions over-

seeing it, and review the Government policy

on raw water tariffs and on the operation

and maintenance of water supply systems.

Fact-finding missions are already un-

derway as planning for the first tranches

under the MFF plan begin. Each tranche is

likely to be between $50 million and $100

million, with the first tranche focusing on

institutional-level reforms and project man-

agement.

PakistanIn Pakistan, the expansion of water-sector

investments is hindered by the lack of ca-

pacity for sector planning and strong man-

agement to take on new projects, and the

frequent disagreement among the federal

and four provincial governments over the

best way to proceed.

According to Katsuji Matsunami, a

Director in ADB’s Central and West AsianDepartment: “Sometimes it seems as if Pa-

kistan is not one country, but several under

a weak federal organization.”

There is consensus about the critical

need for increasing investment, but lack of

trust among the four provinces over the

allocation of water resources and toward

the federal Government must be overcome

for substantive progress.

The country has a long history of devel-

oping its infrastructure for water resources

management, and is home to the largest

contiguous irrigation system in the world.

Irrigated land is responsible for about 80%

of agricultural production. Agriculture rep-

resents 25% of Pakistan’s gross domestic

product, employs over 50% of the rural la-

bor force, and provides 60–70% of exports.

The Indus River canal system not only

supplies agricultural water but is also a

primary source of rural, municipal, and

industrial supply.

Clearly, water resources are vital to

Pakistan’s economic well-being, and their

improved management is vital to povertyreduction. There has been a longstanding

call for better water resource management

to exploit fully water’s productive benefits,

says Mr. Matsunami.

Yet the irrigation system urgently needs

rehabilitated and stronger institutional

arrangements: the rate at which ground-

water resources are being tapped is un-

sustainable; the coverage, quality, and

reliability of urban water supply are grossly

inadequate, especially in light of the

burgeoning urban population; and urban

wastewater treatment is nearly non-existent. Pakistan’s drainage network col-

lects agricultural wastes along with mostly

untreated municipal and industrial efflu-

ent and expels it into rivers.

Officials in Pakistan “are quite aware

that they need major water-sector invest-

ments and institutional reforms,” says Mr.

Matsunami. He notes that there has been

progress under the government of Presi-

dent Pervez Musharaff, and that the cur-

Water resources are vitalto Pakistan’s economic

well-being, and theirimproved management isvital to poverty reduction

I a n G i l l


PAKISTAN Irrigated land is responsible forabout 80% of agricultural production, andagriculture makes up 25% of the country’s

GDP, employs over 50% of the rural laborforce, and provides 60–70% of exports

PAKISTAN Irrigated land is responsible forabout 80% of agricultural production, andagriculture makes up 25% of the country’s

GDP, employs over 50% of the rural laborforce, and provides 60–70% of exports




rent Government has begun an ambitious

program of governance, administrative,

and economic reforms which have the po-

tential to bring major benefits to the water

sector. Motivated by the need for energy

and water storage as the country posts

economic growth rates above 8%, Presi-

dent Musharaff has also committed to the

building of five new mega dams. Provincial

governments have likewise shown a strong

commitment to reforms and are undertak-

ing major water sector investments.

ADB’s WFP “is music to their ears,” says

Mr. Matsunami. There is interest in the new

financing modalities, including the flexibil-

ity of the MFF, and there is talk of the need

for greater private-sector participation.

Programmed lending under the WFPwould raise loans to Pakistan to over $1.5

billion over the 3 years 2006–2008, from

roughly the same amount in the 10 years

ending in 2005.

To proceed, however, there needs to be

greater capacity at the federal, provincial,

and local levels for managing water re-

sources; for designing and implementing

projects; and better coordination among

the provinces and the federal Government.

ADB’s assistance to Pakistan in the wa-

ter sector, therefore, puts an emphasis on

capacity building. For example, the techni-cal assistance (TA) grant, Water Sector and

Irrigation Development, will help develop

a TA program in collaboration with the

Government suitable for financing by ADB

or other donors. The program will provide

significant capacity development at the

provincial and federal levels for investment

planning, policy analysis, and water re-

sources management. This emphasis on

strengthening institutions and capacity

development for water is fundamental to

support the desperately needed sector in-

vestment and ensure it provides sustain-

able economic growth for all Pakistanis.

PhilippinesIn the Philippines, opportunities to expand

water sector lending are hindered by some

of the same factors that affect Indonesia,

says Mr. Frauendorfer, particularly weak capacity at the local level for developing

new projects.

The Philippines has also suffered in re-

cent years from the poor performance of

previous projects and the sorry state of Gov-

ernment finances, although a cleanup of

the ADB loan portfolio and a concerted

effort by President Gloria Macapagal

Arroyo’s administration have improved the

situation markedly.

Outside Metro Manila, urban water

supply is mainly provided either by about

500 water districts, under the authorityof the Local Water Utilities Administration

(LWUA), or by more than 1,000 local

government-operated water utilities. Many

of the small water districts and local

government-operated water utilities lack

the staff skills to prepare new projects.

One recent project to help improve

water supply in urban areas outside Manila

successfully improved the capacity of water

districts for implementing water supply

subprojects and operation and mainte-

nance of their systems.

Before the project, only about 70% of

the urban population had access to safe

water. In smaller towns, the coverage was

much lower than the national urban aver-

age. ADB approved the Small Towns Water

Supply Sector Project in 1996 to enhanceurban water supply coverage

Outside Manila, ADB is looking at the

financing of water districts either through

LWUA—probably using the MFF—or, on

a sub-sovereign basis with larger, well-

performing water districts. The MFF seems

to be a suitable financing modality to ad-

dress the demand for improved urban

water supply in water districts and local

government-operated utilities.

One recent project tohelp improve watersupply in urban areasoutside Manila success-fully improved thecapacity of waterdistricts to implementwater supply subprojectsand operate andmaintain their systems

K e v i n

R o l a n d

H a m d

o r f

PHILIPPINES OutsideMetro Manila, wateris mainly providedby about 500 waterdistricts, under the

authority of the LocalWater Utilities Administration, or bymore than 1,000 localgovernment-operatedwater utilities

A D B P h o t o

L i b r a r y




Within Manila, ADB has also prepared

MFF financing for the rehabilitation and

improvement of the Angat Dam water-

source system, which provides 98% of the

city’s water supply. The MFF for the Angat

Water Utilization and Aqueduct Improve-ment Project would provide a $400 million

credit line for the Metropolitan Waterworks

and Sewerage System (MWSS), and would

be part of a 10-year investment program

amounting to about $1.4 billion. This pro-

gram covers major investments in improv-

ing and expanding raw water sources,

transmission, treatment facilities, distribu-

tion networks, and storage. The MWSS will

be responsible for the execution of various

subprojects under the operation.

Viet NamAt the WFP conference in September at

ADB headquarters, a high-level delegation

from Viet Nam came with ideas for $5 bil-

lion worth of projects, including hydro-

power, river basins, urban and rural water

supply, and sanitation. “They knew what

they wanted,” says Hubert Jenny, a Senior

Urban Development Engineer in the Infra-

structure Division at ADB.

He says that the question is not what,

but how? The country is still eligible for

cheap money from ADB’s concessionary

Asian Development Fund (ADF), but has

access to ordinary capital resources (OCR)

funding. However, officials are reluctant to

borrow OCR for anything outside the en-

ergy sector, a highly important sector in

Southeast Asia’s fastest-growing economy,

while ADF funding is at its cap and mostly

mobilized for 3 years.

In discussions with Government offi-cials, says Mr. Jenny, ADB is pointing

out that investment in water utilities, like

power utilities, can also pay off if adequate

tariffs are in place. “There are 300 towns

without central water-supply systems—

they use wells or are supplied by trucks—

and I guarantee those people are willing to

pay, but is the Government willing to

charge?” he says, adding that tanker water

is typically much more expensive than

piped water.

Improving the tariff structure would

provide funds for debt service and opera-tion and maintenance of facilities. “The ra-

tionale is there, and a tariff on water is also

an effective inducement to its conserva-

tion,” says Mr. Jenny. There has been a “very

positive” response from the Government.

ADB is exploring several ways to boost

investment, including OCR loans, guaran-

tees, and local currency financing, which

offer better rates than local commercial

banks (typically 7–12 years at 8–12%) with

Improving the tariff

structure would providefunds for debt serviceand operation andmaintenance of facilities

the use of ADB’s new financial instruments

from the Innovation & Efficiency Initiative,

this includes the MFF, an instrument allow-

ing the financing of a sector over 10 years.

For example, ADB is proposing to the Gov-

ernment an MFF funding for project prepa-

ration in Viet Nam of $300 million or more,

including $50 million for a first tranche for

the Tien Giang water supply project, with

another tranche of the same amount for a

Tien Giang sanitation project.

Meanwhile, another tranche could fund

the remaining towns excluded from the

Central Region Small and Medium TownsDevelopment Project. A proposed $50 mil-

lion ADF loan for the Small and Medium

Towns Development would provide water

supply and sanitation investments in Binh

Thuan, Dac Nong, Khanh Hoa, Ninh Thuan,

and Phu Yen provinces. Seven towns with

urban and water components duly pre-

pared were dropped due to lack of ADF

resources.

The objectives are to expand and reha-

bilitate facilities, support decentralized

management of water supply and sanita-

tion, and sustain the delivery of servicesthrough institutional and policy reforms,

capacity building, and adequate cost re-

covery.

ADB has also been in discussion with

state-owned Hanoi Water Company No.1

regarding the $60 million Phase 1 of the

Red River water supply project supply

for the capital, and a nonrevenue water

project of about $25 million to lower the

42% leakage rate in Hanoi.

I a n G i l l ( x 2 )

VIET NAM At the September WaterFinancing Program conference in Manila,the Government showed that they haveplans for several water projects, includinghydropower, river basins, urban and ruralwater supply, and sanitation




By Ma. Christina DueñasKnowledge and Communications Coordinator forRSID’s Cooperation Fund for the Water Sector

t was an unprecedented commitment:during the 4th World Water Forum inMarch 2006, ADB promised to doubleinvestments and accelerate actions

in water to get double the results.In 2000, the Millennium Develop-

ment Goals (MDGs) urged countries to usethe next 15 years to cut by half the numberof people without clean water and basicsanitation services. Six years down the line,some countries just aren’t getting there. Andworse, water problems of all kinds are esca-lating—from shortages to pollution to wet-lands degradation and more.

Clearly, countries need all the help they can get to accelerate their water programsand meet their MDG targets. This is where

ADB’s new Water Financing Program(WFP) 2006–2010 comes in.

Over the next 5 years, it intends to cata-lyze some $20 billion water investmentsin Asia-Pacific to ensure that 200 million gain sustainable access to

safe drinking water and improved sani-tation;

100 million people face reduced risksto floods;

40 million people have more produc-tive irrigation and drainage services;

integrated water resources managementis introduced in 25 river basins; and

countries improve their water gover-nance.

Wouter Lincklaen Arriens, ADB Lead Water Resources Specialist, talks candidly about the thinking behind this new pro-gram.

Why develop the WFP now? We need more investments if we want toresolve water problems. But financing alone

is not enough. We need to make sure thatthese new investments work better anddeliver results where they count the most—on the ground.

Unfortunately, despite increasingneed for water interventions, ADB’s invest-ment portfolio for 2000–2004 dropped to$4 billion, a dramatic reduction from the

$6.3 billion figure of 1995–1999. There isscope for ADB to be more responsive to theincreasing demand for water.

Is the WFP just about financing?No, it isn’t. Doubling investments is themeans to an end, not the end itself.

WFP is about providing water and sani-tation services, reducing people’s exposureto flood damage, improving irrigation anddrainage, and introducing sustainable wa-ter resource management practices.

It is also about taking bold, new stepsto deliver these results. WFP adopts a com-prehensive strategy for each investment—combining improvements in infrastructurewith promoting reforms, building institu-tional capacity, and forging strategic part-nerships.

Finally, WFP applies new lenses for ana-

lyzing water projects—rural water, urbanwater, and basin water. Rural water focuseson water supply, sanitation and irrigationin rural areas. Urban water focuses on water supply and sanitation in cities. Basinwater covers integrated water resourcesmanagement (IWRM), hydropower, floodmanagement, wetlands conservation, and

more.

Why focus on rural, urban, andbasin water?The linkages are clear. In Pakistan’s ruraareas, household water supply and pumpedirrigation water often come from the sameaquifer. Upstream of Jakarta in Indonesiaindustrial pollution corrupts the water supply of downstream city dwellers.

There are so many examples of thisinterconnectivity but we often miss thembecause we view water through the lensesof separate subsectors—water supply, irrigation, flood management, and others. Iwe use rural water, urban water and basinwater as our lenses, we can see the linkagesmore explicitly. And when we do, we’ll havea better chance of looking across institutional boundaries and addressing the op

A D B

P h o t o

L i b r a r y

New ADB mandate to double water investments

Building Bridges

Over Troubled Waters

ON THE GROUND At apress interview duringthe 4th World WaterForum in Mexico City

I




There are so many examples of [rural, urban, and basinwater] interconnectivity but we often miss them because

we view water through the lenses of separate subsectors—water supply, irrigation, flood management, and others.If we use rural water, urban water and basin water as ourlenses, we can see the linkages more explicitly. And whenwe do, we’ll have a better chance of looking acrossinstitutional boundaries and addressing the opportunitiesand consequences of our project interventions

A D B

P h o t o

L i b r a r y

portunities and consequences of our projectinterventions.

How would countries benefit fromthe WFP?For sure, client countries can count on im-proving their service delivery and water

quality. In fact, WFP plans to enable coun-tries to go beyond the MDG targets andachieve more extensive coverage.

But they can also access a number of in-country and regional initiatives that pro-

vide more rapid assistance. Through thenew Water Financing Partnership Facility,which aims to raise $100 million in grants,

ADB will support governments, apex bod-ies, river basin organizations, water utili-ties, and communities pursue reforms andinnovations, build their capacity, forge stra-tegic alliances, monitor the results of theirinvestments, and more.

What will help WFP to succeed?Even when WFP was just being developed,it already succeeded in directing moreattention to ADB’s water operations. Theresult was a significantly increased 2006–2008 pipeline of over $7 billion, with goodindications that this will further increase.

Beyond that, we can already observe

I N T E R V I E W

several indicators on the readiness of ADBand its client countries for a program likethe WFP. For starters, senior levels in gov-ernments now accept that a more inte-grated and sustainable approach to waterresources management is essential. And

ADB has just introduced a range of new

financing modalities to address constraintsraised by its clients, such as the multi-tranche financing facility, local-currency financing, subsovereign lending, and more.

Add to that the fact that ADB now hasgreater success in delivering project inter-

ventions to specific target groups, particu-larly the urban and rural poor. We think that the conditions for the success of WFPare now moving into place.

What changes can we expect in ADB’s water programming?

The next 5 years will be exciting times forwater in ADB. One of the main challengeswill be to increase investment in sanita-tion and wastewater treatment to mirrorthe investments made in water supply.Given the current spotlight on renewableenergy, we can also expect a significant in-crease in investment demand for hydro-power development. That will requirecloser coordination as part of IWRM.

In addition, ADB will need to continueassisting its clients to introduce enablingconditions and build the capacity of na-tional water apex bodies, river basin orga-nizations, and utilities.

WFP will offer a range of interventionsbut the ultimate test will be in deliveringthe desired results for the community,country, and regional stakeholders con-cerned.

IDEAS EXCHANGE Talking with regionalwater specialists in Cambodia as partof the review of ADB’s water policyimplementation


“—Wouter Lincklaen Arriens, ADB Lead Water Resources Specialist

“

IDEAS EXCHANGE Talking with regionalwater specialists in Cambodia as partof the review of ADB’s water policyimplementation




By Cezar TignoWeb writer for www.adb.org/water

The looming bad weather onManila’s skyline in the last week of September seemed a Shake-spearean witches’ brew. But some-

thing else was brewing inside ADB Head-quarters that week. Delegations fromIndia, Indonesia, Pakistan, Philippines,and Viet Nam that included a strategicmix of high-level national and local gov-

ernment officials from different minis-tries—78 in all—were meeting with ADBwater operations staff to discuss the barri-ers and opportunities facing their watersectors.

The country-based dialogues were thecenterpiece of the conference entitledDoubling Water Financing and Results. Theconference started action on ADB’s New

Water Financing Program, which aims todouble ADB’s water investments in theregion between 2006 and 2010. The coun-try teams worked for two days to answerthe conference’s central question, “Howcan ADB help address your country’s waterinvestment needs?”

“The five countries were specifically invited to the conference because they represent a great proportion of the region’sneed for better water service delivery andresource management,” ADB Water Com-mittee Chair Arjun Thapan said.

Hun Kim, Director of ADB’s South AsiaUrban Development Division, said, “Thisis the first time that we had the chance

to sit down and seriously talk with DMCofficials from all levels of government—national, state, and local.”

The conference was part of a longerchain of efforts to achieve the MillenniumDevelopment Goals, particularly the wa-ter targets aimed at improving access tosafe drinking water and sanitation for half of the world’s poor by 2015.

By the time the conference ended on28 September, typhoon Milenyo—one of the strongest to hit the Philippines in

Reservoir of IdeasBefore a typhoon could interrupt finance talks with ADB, five countries identi-fied barriers to doubling their investments in water

recent years—started ravaging Manila’sstreets. Most delegates’ flights were delayedby at least a day, but they weren’t returninghome empty handed.

Solving Problems,Finding Opportunities

As an outcome of the conference, delegatesproduced country reports on their water sec-tor barriers and opportunities, which werepresented at the last plenary session.

India identified funding requirements

for water supply and sanitation improve-ments in cities not covered by the Jawar-harlal Nehru National Urban RenewalMission, which ADB supports. The coun-try delegation said it needs ADB’s supportin developing a complete irrigation projectfor 15 million hectares of agricultural landthat is currently underutilized.

The delegation from Viet Nam listedhydropower, irrigation, and urban watersupply and sanitation as its main concerns.

Also high on the Government’s agenda isreducing nonrevenue water in Hanoi, andlarge infrastructure projects along the RedRiver and the Mekong Delta.

The Philippines showed a great interestin sub-sovereign lending to local govern-ments as a way of helping expand access towater supply and sanitation outside MetroManila. More money is also needed to bring

integrated water resource managementplans to the Agusan River basin inMindanao.

Pakistan’s river basins—Ravi, TochiNaigaj, and the Balochistan aquifer—demand immediate integrated water resource management, while construction omajor multi-purpose dams and development of flood management strategies arerequired in rural areas.

The dialogue between Indonesia and ADB zeroed in on the pollution problem o

the Citarum river basin, which suppliesaround 80% of Jakarta’s water. Representatives from the country came prepared witha detailed analysis of water-sector barriersand, with the ADB team, discussed thei

vision and investment targets. ADB’s new Multitranche Financing Fa

cility was of special interest to participantsas it acts as a line of credit, providing largeramounts in slices to finance cluster projectsIndia, Indonesia, and Viet Nam have re-quested in-country dialogues similar tothose conducted at the conference to pursue investment possibilities using themultitranche facility.

Senior officials from the People’s Republic of China were also invited but didnot attend. Discussions are, however, ongoing regarding the conduct of a future in-country dialogue.

C O U N T R Y D I A L O G U E S

L a r r y R a m o s




By Melissa Howell AlipaloCommunications Specialist and Writer forRSID’s Cooperation Fund for the Water Sector

Is ADB’s Water Policy half full or half empty? An Independent Review Panelconsidered this question during itsevaluation of ADB’s implementation

of the Water for All Policy, approved in2001.

The Panel concluded that the Policy’simplementation was both half full and half empty, acknowledging successful elements,

but also highlighting areas that need im-provement.

“ADB must think ‘outside the box’ andconduct ‘business unusual’ to improve con-ditions in Asia’s water sector and to meetthe Millennium Development Goals(MDGs) by 2015,” says Erna Witoelar, thePanel Chair. Ms. Witoelar is also the UnitedNations Special Ambassador for MDGs in

Asia and the Pacific, and the former Indo-nesian Minister of Human Settlementsand Regional Development.

Released in May this year in Hyderabad,India, during ADB’s Annual Meeting, thereview included five main recommendations

Improving the FlowIs ADB delivering on its Water Policy? Yes and no, says an external review panel

to improve ADB’s water sector operationsand investments. These are to: increase

ADB’s investments and develop its staff ca-pacity; develop long-term partnerships withstakeholders in developing member coun-tries (DMCs), and among donors; focus theimplementation of integrated water resourcemanagement (IWRM) on stakeholder needsand ownership; promote “business unusual”through innovations to increase access,affordability, efficiency, and cost effective-ness; and to improve ADB’s processes to en-sure effective policy implementation.

The Panel found that ADB’s lendinglevels and staff capacity had not keptpace with the increasing needs of the wa-ter sector in DMCs. It suggested that ADBdouble its investments in the water sectorover the next 5 years and sustain those lev-els with balanced investments in infrastruc-ture, capacity building, and reforms. It alsosuggested that ADB develop a long-termstrategic plan for recruiting, retaining, anddeveloping its water sector staff.

Need to Build Broad-based SupportRecommending that ADB develop long-term partnerships with stakeholders in

DMCs and among donors, the Panel foundthat ADB’s impact in the region’s water sec-tor had been weakened by its “project-by-project” approach. It suggested that ADBfocus on building broad-based support forthe Water Policy’s principles through long-term programs rather than project-centricregional and in-country programs. It alsosuggested that ADB take the lead amongdonors in the sector to harmonize efforts.

This broad-based approach to supportshould give special attention to imple-menting IWRM as the panel found institu-

tions in DMCs to be severely constrainedin this area, needing training and help withplanning and implementation. The Panelsuggested that women, civil society, thepoor, and other marginalized groups whoseneeds must be considered be given greateropportunities to be more involved in thedecision-making process. Such involvementwould increase the feeling of ownershipamong these groups and this would resultin more effective implementation. ThePanel also particularly cited support forIWRM in river basins, the foundation of awater sector.

On the sector’s services side, the Panelfound that ADB needs to clarify its standon water pricing and charges. It suggestedthat ADB remove ambiguities in the WaterPolicy, specifically on issues of subsidies,cross-subsidies, and differential pricing.

The Panel also recommended that ADBwork harder at expediting service delivery

The Panel suggested

that ADB focus onbuilding broad-basedsupport for the WaterPolicy’s principlesthrough long-termprograms rather thanproject-centric regionaland in-country programs

P O L I C Y N O T E S

REVIEW PANEL AT WORK (From left) Wilson Siahan, Erna Witoelar, Pradeep Singh,Li Yuanyuan, Ravi Narayanan, Annelie Hutach, Gilbert Llanto, K.E. Seetharam, and

Wouter Lincklaen Arriens

R i c h i e A b r i n a




to the poor, which would help countriesmeet their relative MDG targets. Thiswould require alternative approaches to thetypical, large-scale infrastructure projectsthat sometimes span up to 10 years.

There was also a need, the Panel noted,to change ADB’s corporate culture so thatthe principles of the Water Policy drive theorganization’s day-to-day operations, affect-ing the size, scope, direction, and characterof ADB’s water-sector portfolio. To do this,

the Panel said ADB’s water operations staff needed tools and incentives to absorb genu-inely the Water Policy’s principles into theirown work and throughout the project cycle.

One way of addressing the gap betweenpolicy and practice inside ADB would beto create an operational strategy and planlinked to staff’s 3-year rolling work plans.These strategies and plans, the Panel sug-gested, should be punctuated with quanti-fiable targets and implemented throughoutits business processes.

Doubling Investments in WaterIn response to the findings, ADB says itsupports the “general thrust” of the Panel’sreport and recommendations.

“The review has provided ADB with im-portant feedback on how the Water Policy isbeing implemented,” says Bindu Lohani,Director General of ADB’s Regional andSustainable Development Department. Hesays ADB accepts the challenges outlinedby the Panel, and is committed to increas-ing investments in the water sector—to

more than $2 billion a year—catalyzing re-forms, and supporting capacity development.

As such, ADB’s new Water FinancingProgram will double ADB investments inthe water sector over the next 5 years andprovide additional technical assistance forDMC water sector reform and capacity building.

ADB’s Water Committee is expected towork with operations staff in building anaction plan based on the Panel’s recommen-dations.

ADB’s new Water Financ-ing Program will double ADB investments in thewater sector over thenext 5 years

1. Promote a national focus on water-

sector reform. There is an urgent need

for water-sector reform throughout Asiaand the Pacific. ADB helps its developing

member countries (DMCs) reform their

water sectors by assisting in the establish-

ment of effective national water policies

and water legislation, strong coordination

arrangements between institutions, and a

national water action plan for reform. ADB

also provides support, advice, and train-

ing to countries in setting up and operat-

ing these institutions.

2. Foster the integrated management

of water resources. From drinking, cook-

ing, or sanitation to irrigating crops, manu-

facturing, or tourism, water across Asia

has multiple uses, multiple demands on

it, and a wide variety of agencies and insti-

tutions responsible for it. ADB promotes

water investment projects that are based

on a comprehensive assessment of the

river basin concerned, with a participatory

approach. ADB particularly focuses on

interlinked water investments within river

basins.

3. Improve and expand the delivery of

water services. In many parts of Asia and

the Pacific, people have inadequate access

to water services. About 682 million

people—one third of Asia’s population—

do not have safe drinking water. ADB’s

goal is to make water services efficient,

affordable, and sustainable in water sup-

ply and sanitation, and irrigation and

drainage. To meet this goal, ADB supports

autonomous and accountable service pro-

viders, private-sector participation, public-

private partnerships, and promotes greateraccess to water services for the poor.

4. Foster the conservation of water and

increase system efficiencies. Globally,

water withdrawals have increased by

more than six-fold during the last century.

In the Asia and Pacific region, water with-

drawals are the highest in Central Asia

(85%), followed by South Asia (48%), and

Mongolia and the northern People’s

Republic of China (25%). ADB supports

appropriate water tariffs that encourage

users to conserve water and allow serviceproviders to recover costs. Cost recovery

leads to increased system maintenance

and provides the necessary capital for ex-

panding services to poor consumers. ADB

supports the improved regulation of ser-

vice providers and increased public aware-

ness on water conservation. ADB also

supports provisions to ensure that the

needs of the poor are met.

5. Promote regional cooperation and

increase the mutually beneficial use of

shared water resources within and be-

tween countries. Whether it be the

Mekong in Southeast Asia, the Syr Darya

and Amu Darya in Central Asia, or the

Ganges-Brahmaputra river system in India

and Bangladesh, many Asian countries

share their water. ADB supports regional

activities that help countries exchange in-

formation about their experiences with

water-sector reform and the benefits of

shared water resources. ADB also supports

the creation of sound hydrologic and

socio-environmental databases related totransboundary water resources and joint

projects between neighboring countries.

6. Facilitate the exchange of water

sector information and experience.

ADB supports socially inclusive develop-

ment in the water sector and participation

at all levels. In particular, ADB supports

water investments that involve public, pri-

vate, and community partnerships.

7. Improve governance and capacity

building. Many experts view today’s watercrisis as not so much a crisis of water scar-

city but a crisis of governance. On a global

scale, there is enough water to provide

“water security” for all, but only if there is

a change in the way it is managed and

developed. ADB prioritizes support of good

governance through decentralization, ca-

pacity building, and improved monitor-

ing, evaluation, and learning at all levels in

the water sector.

ADB’s Water for All Policy, approved in 2001, has seven principal elements

Seven Keys to Water for All




disease, and other water-related challenges.Clearly, there was an urgent need for ac-tions that responded to these challenges.

ADB established the Fund to jump-startwater reforms in the Asia-Pacific region.

With a variety of interventions, CFWSaimed to address the differing needs of

stakeholders—women trudging 12 kilo-meters a day to fetch water, water utilitiesneeding to recover their costs to survive inthe business, national governments need-ing to decide on water rights, regional waternetworks needing to teach their membersto benchmark their performance.

Under the MicroscopeIn late 2005, the Government of the Neth-erlands—the CFWS’s major donor—taskedexpert evaluators Bert van Woersem and

Jetse Heun to review the Fund’s operations.

“The Fund has definitely added valuefor ADB and its developing member coun-tries (DMCs),” said Mr. van Woersem andMr. Heun in their report that highlighted,among others, the Fund’s specific contribu-tions. These included: improving waterpolicies, reforms, and strategies throughinnovative products and approaches; devel-oping the capacity of critical water organi-zations; and opening up dialogue betweenstakeholders in DMCs, such as governments,development agencies, and civil society.

Although Mr. van Woersem and Mr.Heun say that some of the results of theFund’s interventions will be long term, they acknowledged that during the Fund’s first4 years of operation, there had already beensome positive results.

For example, the Fund has commis-sioned studies that provide new knowledgeon performance benchmarking for waterutilities, river basin organizations, andnational water sector apex bodies.

Responding to complex stakeholderneeds also means using different tech-

niques, media, and approaches, many of which were untried by ADB in the past. Inthis, Mr. van Woersem and Mr. Heun foundthe CFWS to also be successful.

One previously untried approach was aseries of water media workshops—in whichmore than 400 journalists participated—to increase journalists’ understanding of water issues.

“Influencing one Chinese journalist canlead to hundreds of thousands of readershaving a better understanding of water,”

By Ma. Christina DueñasKnowledge and Communications Coordinator forRSID’s Cooperation Fund for the Water Sector

Why does Baguio City in thePhilippines, a water cradlewith reliable water wells,face water scarcity on a daily

basis? There is an easy explanation: justlook at the city’s thriving tourism industry,rapid urbanization encroaching on forest-land, dilapidated infrastructure, fragment-

ed water management, and weak regulation.Taking the bull by its horns, the City

government decided to integrate waterresource management and service delivery.

With support from ADB’s Cooperation Fundfor the Water Sector (CFWS), the city improved coordination among its wateragencies, formulated a water investment

Fund’s Flow-On Effect After almost 5 years and over $15 million in grants,has ADB’s Water Fund been well spent?

agenda, and enacted a water code. Then,this year, it won an international award foroutstanding achievement in promotingsocially-equitable and sustainable devel-opment.

The success of Baguio City’s programmakes CFWS’s $50,000 investment inthe city money well spent. However, canthe same be said for the rest of the Fund’s$20 million investments?

Looming Water Crisis

CFWS evolved after the widespread real-ization that a water crisis was looming. In2001, one in three people in Asia hadno access to a safe water supply, and half the population had no sanitation facilities.

Asia is home to nearly two thirds of theworld’s poor, and they are the hardest hitby floods, drought, scarcity, pollution,

The Fund has definitely added value for ADBand its developing member countries

BETTER UNDERSTANDING Wang Ning, a participant in ADB’s media workshops andcorrespondent from China Economic Times in Beijing, interviews Dhaka residents

during an exchange assignment with Bangladesh’s Forum of Environmental Journalists

T i m

C u l l e n

“ “—Fund Reviewers Bert van Woersem and Jetse Heun




By Cezar TignoWeb writer for www.adb.org/water

or 2007, about $600,000 is available in grants to nongovernmentorganizations (NGOs), local governments, and ADB project staff

who want to test promising newsolutions at the community-level.

ADB’s Pilot and Demonstration Activities (PDA) fund provides grants, usually ofabout $50,000 each, for testing ideas thatare both innovative and replicable on alarger scale. By testing innovation on a smalscale first, the fund hopes to provide large-scale projects with fresh ideas that comewith the benefit of lessons learned and rec-ommendations.

Since 2002, the fund has financed 28projects worth $2.1 million. Fifteen have

been completed. PDAs have been proposedand approved in every subregion of Asia andthe Pacific. The majority of PDAs—11—have been approved in Southeast Asia, 7 inSouth Asia, 4 in the Pacific, and 3 each inEast Asia, Central Asia, and West Asia.

The subject of PDAs varies widely, buthe majority have dealt with institutionareforms (10), policy reform (7), and publicawareness (5). The other PDAs have focused on women, the poor, and technologySometimes the PDA involves technologyor approaches tested elsewhere but need-ing to be tested in a specific location, orthose involving nuances. Certainly, wastewater treatment plants are no innovation

And the principles of integrated water resource management have been around fodecades. Yet the PDA fund supported twosuch projects recently because they broughtthe tested innovations to new contexts.

Smart SanitationOnce known for its pristine sands, thebeaches of Lilo-an, Cebu in Central Phil

ippines provided the local economy with asteady supply of tourists for restaurantssouvenir shops, and beach vendors.

Then came the slime and stench. Newspaper headlines, such as “Dirty Beach

Water Unfit for Swimming,” spelled doomfor Lilo-an’s dependence on beach tourism

The Lilo-an Public Market became theprimary suspect as investigations intothe pollutants revealed liquid extracts from

vegetables, fish, and meat. Wastewaterfrom the market’s public toilets was also

The Cooperation Fund for the Water Sector (CFWS) is a 5-year, $20 million fund, in its

final year of supporting the following set of activities designed to add value to ADB’s

water projects, and carry out its Water for All Policy:

Promotion and awareness—designed to raise awareness on water issues,policies, reforms, and strategies

Knowledge management and capacity development—develops critical

capacities in ADB staff and country stakeholders

Pilot and demonstration activities—promotes innovative local initiatives

Water partnerships—strengthens national and regional water partnerships

in the region

Regional events—supports important events that promote water reforms

Program coordination, monitoring and evaluation—ensures smooth

implementation of activities and achievement of results

As of October 2006, CFWS’ resources have been allocated as follows ( see table).

The Fund is expected to end in mid-2007.

CFWS at a Glance

RETA RETA RETA RETA

Program Category 6031 6093 6123 6219 Total

(In $ million)

Promotion and Public Awareness 0.79 0.20 1.00 0.52 2.51

Knowledge Base and Capacity Building 1.24 0.22 0.63 1.84 3.92

Pilot and Demonstration Activities 0.40 0.00 0.501 0.60 1.50

Water Partnerships 0.63 0.00 1.33 1.30 3.26

Regional Events and Initiatives 0.40 0.48 0.53 0.63 2.04

Program Coordination, Monitoring, 0.33 0.10 0.32 0.71 1.46

and Evaluation

Total 3.80 1.00 4.30 5.60 14.70

said Wang Yao, editor of Chinese newspa-per Quingnian Cankao.

The Fund’s Pilot and Demonstration Activities (PDAs) are another innovation.These grants to nongovernment organiza-tions, governments, and ADB project staff support local initiatives with significantpotential for replication or scaling up.

Demand-driven and operating withina 12-month timeframe, PDAs enable com-

munities to solve their water problemsfaster. From cleaning up coastlines throughwastewater treatment facilities, to provid-ing livelihood opportunities through dripirrigation, the Dutch review found thatPDAs allow people, especially the poor, tomanage better their water resources.

What’s Next?“The Fund should intensify its efforts tofocus on activities in a three-fold manner,”says Mr. van Woersem and Mr. Heun. The

CFWS should work on a number of strate-gic themes, on a selected number of coun-tries, and on issues directly related to ADB’scomparative advantages, such as the tech-nical expertise that project staff offer coun-tries along with loan money.

The lessons from CFWS’s implementa-tion and the Dutch review are especially helpful as ADB begins work on the Fund’ssuccessor, the Water Financing Partnership

Facility. This facility will raise and invest$100 million to support ADB’s new WaterFinancing Program 2006–2010, which willdeliver substantial investment, reforms, andcapacity development in rural and -urbanwater services, and river basin management.

If the $20 million from CFWS can al-ready do so much, imagine how muchmore good the new $100 million financingfacility can do. The challenge will be tokeep pushing for more reforms and innova-tions.

F




P I L O T A N D D E M O

found to be flowing untreated into the sea.Coliform bacteria that thrive on these kindsof wastes rose to alarming levels.

The local government, with the help of the Department of Environment and Natu-ral Resources, applied for PDA funding tobuild a wastewater treatment plant. Butnot just any plant. On less than $50,000,the local government built a plant that usesa “rotating biological contactor” to inter-cept wastewater from the public market

and households through Lilo-an’s existingcanal system. It removes all toxic elementsbefore releasing the sanitized water safely back into the ocean.

Another innovative feature of the Lilo-an treatment facility is that it is decentral-ized. A cooperative of market vendors andresidents learned how to operate and main-tain the plant through training seminars.The PDA also financed workshops that fedthem ideas on how to quickly and easily raise funds to recover the plant’s cost within10 years.

“I still can’t believe that we are able toown and operate a wastewater treatmentfacility—the first of its kind in northernCebu,” Lilo-an Mayor Maria Sevilla says.

Weekend tourists are returning to Lilo-an’s beaches, bringing hopes of a thrivingtourism industry.

Conflict ManagementIt is usually not a good idea to meddle inother people’s business, especially whenthere is potential for conflict. But other

people’s conflict is precisely the businessof Thailand’s Bang Pakong River BasinCommittee.

By looking after the river’s health, thewater management experts on this commit-tee must settle intense conflicts betweenshrimp, fish and agricultural farmers, fac-tory owners, tourism promoters, and largeresidential communities. Their uses of theriver often compete, leaving someone withtoo little or too dirty water—depending onhow influential they are.

Tapping InnovationBig ideas worth testing on a smaller scale get a boostfrom a special fund

The river basin committee receivedPDA funding to develop a way of resolvingconflicts between the river’s users. Thecommittee started by holding consulta-tions with different groups about their usesand level of understanding of basin issues.

Workshops were also held to address mis-understandings and educate users about theriver.

“We need to increase people’s awarenessso we can address the river basin’s prob-

lems,” said committee member SuaydeeChamroon. “The different users of the riverhave to come together and find a solution.”

Together, they agreed with the commit-tee to use the “Water Evaluation and Allo-cation Program,” or WEAP system, formanaging the basin. The WEAP system isa computer software program that helpsgroups like the Bang Pakong River BasinCommittee balance supply and demandissues.

The software system will provide thecommittee with three essential tools: a wa-ter balance database, for maintaining wa-ter demand and supply information; ascenario generation tool, for simulatingwater demand, supply, runoff, stream flows,storage, pollution generation, treatment and

MARKET CULPRITS Investigation into Lilo-an'sseaside pollution detected extracts fromvegetables, fish, and meat. The suspect list

narrowed sharply to the public market,where about 120 vendors make their living.

KEEPING IT SIMPLE The Lilo-an local governmentopted for a rather simple aerobic wastewatertreatment technique known for its low operationand maintenance efforts and costs, whicha cooperative of market vendors oversee.

discharge and in-stream water quality; anda policy analysis tool for evaluating a rangeof water development and management op-tions, taking into account the competinguses within a water system.

The committee also established an in-dependent network for users to share infor-

mation and experiences and resolveconflicts through focus group discussions,workshops, training, and dialogue.

The committee will soon begin for-mally testing the WEAP system. Already,though, the government committee hasearned respect among user groups for tak-ing these initial steps and treating them asco-managers of the Bang Pakong.

A D B P h o t o

L i b r a r y ( x 2 )




Which ideas qualify?Proposed projects should:

Focus on freshwater resources and/or

freshwater services.

Be able to be implemented within

12 months or less.

Involve a maximum request for

$50,000 financial assistance.

Not duplicate ongoing or pipelined

activity in the developing member

country (DMC).

Be directly relevant to the “sector

outcomes” cited in ADB’s CountryStrategy and Program for the country

concerned.

Which ideas would not qualify? Projects wholly comprising workshops

and conferences or training/course

materials development

Projects wholly focused on capacity

building

Activities that would typically be

included in an ADB technical assis-

tance or loan-funded project

What kind of assistance wouldsuccessful ideas get?Successful proposals will be allotted up

to a maximum of $50,000 funding assis-

tance. These funds can be used for,

among others, consultant services in

developing, validating and demonstrat-

ing new approaches, and field-based

applied research and demonstration by

local stakeholders, including NGOs.

How are proposals considered?The program has 10 criteria of equal

weight:

Innovation—new to the particular

situation/market

Replicability: Actual—with strong

“demonstration” element; includes

advocacy and dissemination

Replicability: Potential—tests origi-

nal approaches, but with little work on

bringing-to-scale

Does Your Idea Have Potential?Grants from ADB’s Pilot and Demonstration Activities (PDA) fund to test innovative water projects on a small scale areavailable to nongovernment organizations (NGOs), local governments and ADB staff. Here are answers to frequentlyasked questions about the fund.

Lesson learned—generates distinct

and relevant “lessons learned”

Pro-poor—directly benefits the poor

Participatory and gender-sensitive

—engages immediate stakeholders,

especially the poor and vulnerable

ADB operations support—directly

supports ADB operations in DMCs

Technically strong—internally logical,

has a realistic timeline and budget,

implementers are aptly experienced

and skilled, roles and responsibilities

are clear, there are indicators againstwhich to assess quality, and has a

public dissemination plan

Consistent with ADB’s Water for

All Policy

Contributes to the achievement of

the Millennium Development Goals

Who can apply? NGOs, community associations,

or other development partners in

an ADB DMC

A professional staff member of

an ADB regional department

(In the case of non-ADB proposals,

a PDA activity officer from ADB staff

will be assigned to oversee the

project.)

How should proposals besubmitted? Proposals should use the standard

“Request for Support Form” and

include details on how the proposal

would address the PDA ranking

criteria. Forms can be downloadedfrom www.adb.org/water/pda/

request_form.pdf.

Proposals should be submitted to

the PDA coordinator who will pool

all received proposals on a monthly

basis for evaluation. E-mail proposals

to [email protected].

Who will evaluate the proposals?ADB’s Water Committee reviews and

ranks proposals as follows:

“High” can be funded immediately.

“Medium or Low” will be on hold

pending availability of funds and/or

improvement of the proposal.

“Not qualified”

What are the next steps uponsubmission of the proposal? Proponents will be informed in

writing of the evaluation resultsand ranking.

For approved proposals, the propo-

nents will develop the detailed terms

of reference and implementation

plan for the PDA. They will work

with the PDA coordinator regarding

administrative arrangements.

For the implementation of each PDA,

national and international NGOs,

academic/research institutions and,

where needed, domestic and/or

international short-term individual

consultants will be engaged to help

the PDA activity officer implement

PDAs in DMCs.

Engagement of implementing parties

will take place after the Water

Committee has approved the PDA

proposal, and a DMC focal agency

has given concurrence for

implementing the PDA in the

host country.

After DMC concurrence has been

obtained, ADB will enter into a

letter of agreement (LOA) withthe implementing agency for

the implementation of the PDA.

Implementing parties can begin

operations upon receipt of all

required documents. The funds will

be released based on the

implementing party’s billing.




ADB Policy and OperationsADB Water Policy “Water for All”

Water Brief: The ADB Water for All Policy

Water Policy

Water for the Poor—Setting the Rules and

Finding the Money

Charting Change

Gender Responsiveness in ADB Water Policies

and Projects

Water Brief: Results from ADB’s Commitmentsat the 3WWF

Water for All #15: An Agenda for Change

Water for All: Translating Policy Into Action—

Summary of Review Panel’s Report*

Water for All: Translating Policy Into Action—

The Review Panel’s Final Report and

Recommendations

EvaluationWater for All #14: Water Voices Documentaries

Cooperation Fund for the Water Sector: Findings

from the 2005 Review of the Netherlands’

Ministry of Foreign Affairs

FinanceCooperation Fund for the Water Sector

Water Financing Program: Background Paper

Water Brief: Water Financing Program

ADB Review: Water Financing Program Issue

Millennium Development GoalsAsia Water Watch 2015

Strategic Thinking to Achieve Water MDGs

Visionary and Analytical Perspectives of Water and

Sanitation—Coverage and Achievement of

the MDG Targets

Water Brief: Asia Water Watch 2015

Water Brief: The MDGs and the importance of

Target 10

Planning Tools and TechniquesDhaka Diagnostic Water Assessment

Model Terms of Reference: Diagnostic City Water

Assessments

Model Terms of Reference: Implementing Zonal

Management Approach to Urban Water Supplies

Water Knowledge Products

Book

Water brief

DVD

CD-ROM

Book

Technical notes

Water brief

Book: Water for All series

Book

Technical report


Water brief

Fact sheet

Technical report

Water brief

Magazine

Book

Technical report

Technical report

Water brief

Water brief

Technical report

Model terms of reference


Read or view these print, electronic, and multimedia materials on Asia’s water sector produced byADB and its partners. For more information, visit ADB’s “Water for All” website www.adb.org/water.

B O O K S T O R E

TITLES PRODUCT TYPE CATEGORY

Rural Urban Basin General





Model Terms of Reference: Mainstreaming Small

Scale Private Water Piped Networks

Model Terms of Reference: Planning Urban

Sanitation and Wastewater Management

Improvements

ReformsWater Brief: Water and the International Agenda—

From Dublin to Mexico

Promoting Water Sector Reforms

Water Brief: Apex Bodies—The Coordinating Eye

Behind WS Reforms

Water Brief: Fostering Participation—Water

Management by Local Communities

Water for All e-newsletter

Water in the 21st Century

SanitationSmarter Sanitation

Water Brief: Sanitation and Wastewater

Management—Saving Public Health and

Sustaining Environment

Water and PovertyPoverty and Environment Partnership: Linking

Poverty Reduction and Water Management

Water Brief: Water and Poverty

Water for All #1: Water & Poverty—Fighting

Poverty through Water Management

Water for All #2: Poverty & Water—Understanding

How Water Affects the PoorWater for All #3: The Water & Poverty Initiative—

What Can We Learn and What Must We Do?

Water for All #4: Water & Poverty—The Themes

Water for All #5: Water & Poverty—The Realities

Water for All #6: Water for the Poor—Partnerships

for Action

Water for All #7: Water & Poverty at the 3rd World

Water Forum

Water for All #9: Impact of Water on the Poor

Water For All Publication Series 2006

China’s Water Challenge

Water Voices Series

Water ResourcesDams and Development

Islands and Climate Change

Saving Cambodia’s Great Lake

NARBO Information Sheet

Supporting the Development of Effective and

Efficient River Basin Organizations*

Water Brief: Integrated Water Resources Management*

Water Brief: Water and Floods

Water for All #11: Floods and the Poor



Water brief

Technical report

Water brief

Water brief

E-newsletter

Book

CD-ROM

Water brief

Book

Water brief









CD-ROM

DVD

DVD

CD-ROM

DVD

DVD

Fact sheet

Technical report

Water brief

Water brief








B O O K S T O R E

Water for All #12: Past Experience and

Future Challenges

Water for All #16: Dams and Development

Water For All Publication Series 2006

China’s Water ChallengeWater Voices Series

Water SupplyAsian Water Utilities: Reaching the Urban Poor

Databook on Southeast Asian Water Utilities

Developing a Flagship Program on Water in

Metros—Background Paper on Indonesia

Developing a Flagship Program on Water in

Metros—Background Paper on PRC

Serving the Rural Poor—A Review of Civil-Society-Led

Initiatives in Rural Water Supply and Sanitation

Water Brief: How the Poor Suffer

Water Brief: Should Asia’s Urban Poor Pay for Water?Water for All # 10: Water in Asian Cities—Utilities’

Performance and Civil Society Views

Water for All # 13: Small Piped Water Networks

Water for All # 8: Bringing Water to the Poor—

Selected ADB Case Studies

Country PapersWater Sector Roadmap: Bangladesh

Water Sector Roadmap: Cambodia

Water Sector Roadmap: Pakistan

Water Sector Roadmap: Viet Nam

Country Water Profile: People’s Republic of China

Country Water Profile: IndiaCountry Water Profile: Indonesia

Country Water Profile: Pakistan

Country Water Profile: Philippines

Country Water Profile: Viet Nam





CD-ROM

DVDDVD

Book

Book

Technical report

Technical report

Technical report

Water brief

Water briefBook: Water for All series



Technical report

Technical report

Technical report

Technical report

Technical report

Technical reportTechnical report

Technical report

Technical report

Technical report

Water for All News is a monthly electronic

e-newsletter that features stories on successful

water initiatives in ADB developing member

countries as well as articles and case studies on

water actions on the ground. Whether you are

a policymaker, working in a water agency,

doing research, or a water user, you will find

ideas here to take action to help solve many

water-related problems facing the region.

Take time to browse through and sign up

for monthly delivery of new issues to your

email address.

To subscribe, visit www.adb.org/water

Water for All News“Smarter Sanitation” is a new electronic toolkit to help national and local

governments put their sanitation and wastewater sectors on the MDG suc-

cess path. Loaded with links to the best websites, resources, and case studies

and virtually everything about sanitation and wastewater management thatplanners and managers need to know. It also includes SANEX™, a high–

powered software for assessing and planning

sanitation systems in developing countries.

This innovative toolkit is ADB’s way of doing

business unusual itself, and getting its developing

member country partners to also think in innovative

ways. Time is of the essence. By 2015, developing

countries have agreed to halve the proportion of

people without sustainable access to safe drinking

water and improved sanitation.

Smarter Sanitation Toolkit

* Forthcoming




S N A P S H O T

To read ADB Review online,

go to www.adb.org/review

For information, send an e-mail

to [email protected] orgo to www.adb.org

To explore business opportunities

with ADB, go to www.adb.org/

business/opportunities

For publications,

go to www.adb.org/publications

F th l t t

ADB ONLINEwww.adb.orgPublisher: Jeffrey Hiday

Editor: Carolyn Dedolph

Contributing Editors: Melissa Howell-Alipalo, Ma. Christina Dueñas, Judy Bryant

Layout Artist: Keech Hidalgo

Assistant Editors: Frix del Rosario, Lily Bernal

Distribution: Publishing Unit

Fulfillment: ADB Printing Unit

ADB Review reports on development news from Asia and the Pacific and on the

activities of the Asian Development Bank. Opinions and materials in ADB Review

do not necessarily reflect the official views of ADB. Materials may be reprinted

with credit given to ADB Review . Comments may be e-mailed

to [email protected]. For a free subscription, e-mail

[email protected]; fax a message to +63 2 636 2648; or

write to ADB Review , Department of External Relations,

Asian Development Bank 6 ADB Avenue Mandaluyong City

SOLVING ASIA’S WATER WOES Asia is home to almost 700 million people who drink unsafe water each day, and some2 billion who do not have adequate sanitation. The Water Financing Program (WFP) 2006–2010 intends to improve the qualityof life for some 300 million Asians in the next 5 years. This issue of ADB Review explores the thinking behind the WFP, its three-

pronged approach to water projects, and the prospects of key Asian countries in terms of doubling their water investments.

Brochure: ADB Review: Water Issue

Documents

Transcript of Brochure: ADB Review: Water Issue