55835 AN EVALUATION OF WORLD BANK SUPPORT, 1997­2007 Water and Development Volume 1 IEG Study Series The World Bank Group WORKING FOR A WORLD FREE OF POVERTY T he World Bank Group consists of five institutions-- the International Bank for Reconstruction and De- velopment (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Invest- ment Disputes (ICSID). Its mission is to fight poverty for lasting results and to help people help themselves and their environment by providing resources, sharing knowl- edge, building capacity, and forging partnerships in the public and private sectors. The Independent Evaluation Group IMPROVING DEVELOPMENT RESULTS THROUGH EXCELLENCE IN EVALUATION T he Independent Evaluation Group (IEG) is an indepen- dent, three-part unit within the World Bank Group. IEG-World Bank is charged with evaluating the activities of the IBRD (The World Bank) and IDA, IEG-IFC focuses on assessment of IFC's work toward private sector develop- ment, and IEG-MIGA evaluates the contributions of MIGA guarantee projects and services. IEG reports directly to the Bank's Board of Directors through the Director-General, Evaluation. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank Group's work, and to provide accountability in the achievement of its objectives. It also improves Bank Group work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. AN EVALUATION OF WORLD BANK SUPPORT, 1997­2007 Wate r a n d D e ve l o p m e n t Volume 1 2010 The World Bank Washington, D.C. ©2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved 1 2 3 4 13 12 11 10 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Execu- tive Directors of The World Bank or the governments they represent. This volume does not support any general inferences beyond the scope of the evaluation, including any inferences about the World Bank Group's past, current, or prospective overall performance. The World Bank Group does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Cover photo: The Bund, Shanghai, China. Two children along the Bund admire the Shanghai skyline. Photo courtesy of Jody Cobb/Getty Images. ISBN: 978-0-8213-8393-3 eISBN: 978-0-8213-8394-0 DOI: 10.1596/978-0-8213-8393-3 Library of Congress Cataloging-in-Publication data have been applied for. World Bank InfoShop Independent Evaluation Group E-mail: pic@worldbank.org Communications, Learning, and Strategy Telephone: 202-458-5454 E-mail: ieg@worldbank.org Facsimile: 202-522-1500 Telephone: 202-458-4497 Facsimile: 202-522-3125 Printed on Recycled Paper ii | Gender and Development Table of Contents Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .viii Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x Management Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xvi Chairperson's Comments: Committee on Development Effectiveness (CODE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx Statement of the Advisory Panel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxii 1. Water and the World Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Global Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Water Milestones and the Bank's Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Evolution of the World Bank's Strategic Approach to Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Scope and Purpose of the Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2. The Bank's Water-Related Activities and Their Performance . . . . . . . . . . . . . . . 7 Overview of the Water Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Trends in the Water Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Portfolio Performance: Ratings against Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Integrating Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Changes in Portfolio Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Prioritizing Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3 Managing Water Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Watershed Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Groundwater Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 River Basin Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Hydrological and Meteorological Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Managing Efficiency of Use and Demand for Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 4 Water and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Coping with Water Disasters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Water and Environmental Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Rivers, Lakes, Coastal Zones, and Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Appendix A: Evaluation Methodology | iii 5. Water Use and Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Irrigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Water Supply and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Multipurpose Dams and Hydropower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 6. Water Management Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 The Institutional Aspects of Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 The Context for Private Sector Participation in WSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Integrated Water Resources Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Transboundary Water: Managing across National Frontiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 7. Conclusion, Findings, and Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Main Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Boxes 1.1 Bank Strategy and Integrated Water Resources Management . . . . . . . . . . . . . . 4 3.1 Improved Water Management Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.2 A GEF Project That Works Both Upstream and Downstream . . . . . . . . . . . . . . . 24 3.3 Groundwater Is Depleting Rapidly in the Republic of Yemen . . . . . . . . . . . . . . 25 3.4 Artificial Recharge of the Souss Aquifer, Morocco . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.5 River Basin Management in Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.6 Early Warning System Used for Monitoring Lake Sarez in Tajikistan . . . . . . . . 30 3.7 Sustainable Monitoring Is Difficult to Establish . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.8 Paying for Water Is Well Accepted in Tanzania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 4.1 Nonstructural Flood Control Yields High Returns in the Yangtze Basin . . . . . 39 4.2 Counterbalancing Cyclical Drought Events through Long-Term Monitoring and Early Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4.3 Point and Nonpoint Source Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4.4 How the Failure of Irrigation System Rehabilitation Led Chinese Farmers to Irrigate with Groundwater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4.5 The Benefits of Partial Restoration of Mangrove Forests in Vietnam. . . . . . . . 46 4.6 Successful Wetland Restoration Created a Replicable Model for Uzbekistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 5.1 Benchmarking Utility Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 5.2 Gender and Water: Findings of the IEG Gender Evaluation . . . . . . . . . . . . . . . . 56 5.3 Some Reasons for Failure of Sewerage Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 5.4 Hydropower and Multipurpose Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 6.1 Examples of Decentralization Projects in the Water Sector . . . . . . . . . . . . . . . . 68 iv | Water and Development 6.2 Potential Benefits of Decentralization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 6.3 Data on Water Availability Help Build Consensus . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.4 IWRM in Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 6.5 The Nile Basin Initiative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 6.6 The Gulf of Aqaba Environmental Action Project. . . . . . . . . . . . . . . . . . . . . . . . . . 74 6.7 The Inland Waterways and Ports Project in the Mekong River Delta . . . . . . . 75 Figures 2.1 Water-Related Projects Approved and Funds Committed by Fiscal Year . . . . 9 2.2 Size of the Average Loan in the Water Portfolio and Bank-wide . . . . . . . . . . . . 9 2.3 Projects with Water-Related Activities by Implementing Sector Board . . . . . 10 2.4 Water Projects and Commitments by Region, 1997­2007 . . . . . . . . . . . . . . . . . 11 2.5 Outcomes of Water Projects by Focal Area and Subperiod . . . . . . . . . . . . . . . . 14 2.6 Outcomes of Water Projects by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.7 WSS Projects by Region and Implementing Sector Board . . . . . . . . . . . . . . . . . 15 2.8 Outcome, Sustainability, and Institutional Development Impact Ratings for Projects Supporting WSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.9 Outcome Ratings of Water Projects by Implementing Sector Board . . . . . . . 16 2.10 Shares of Ongoing Projects Addressing Selected Themes . . . . . . . . . . . . . . . . . 17 2.11 Ongoing Groundwater Projects and Dam and Hydropower Projects by Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.12 Water Poverty Indexes and World Bank Water Commitments by Country. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.1 Performance of Watershed Management Projects Using a Livelihood-Focused Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.2 Ongoing Groundwater Projects Focusing on Extraction and Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.3 The 10 Most Successful Activities Dealing with Groundwater . . . . . . . . . . . . . 26 3.4 The 10 Least Successful Activities Dealing with Groundwater . . . . . . . . . . . . . 27 3.5 Selected Results of Work with River Basin Organizations in Bank-Financed Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.6 Hydrometeorological Monitoring Systems by Level of Supervision. . . . . . . . 30 3.7 Water Demand Management Activities by Activity Type . . . . . . . . . . . . . . . . . 32 3.8 Success Rates for Demand-Side Management Interventions in Agricultural Water Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.9 Completed Water-Efficiency Projects Reporting an Economic Rate of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 4.1 Loan Commitments to Drought-Related Projects by Approval Year . . . . . . . 40 4.2 Ongoing Environmental Flow Projects by Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4.3 Ongoing Projects That Monitor Water Quality by Year . . . . . . . . . . . . . . . . . . . . . 44 4.4 Projects Addressing Wetlands and Mangroves by Year . . . . . . . . . . . . . . . . . . . . 47 5.1 Bank Commitments for Water Supply, Sanitation, Wastewater Treatment, and Sewerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 5.2 Completed Project Activities for Urban Water Services . . . . . . . . . . . . . . . . . . . . 53 Table of Contents | v 5.3 Share of Urban Water Projects Rated Satisfactory by Region . . . . . . . . . . . . . . 54 5.4 Share of the Rural Population with Access to an Improved Water Source by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 5.5 Expected and Actual Beneficiaries of Sewerage Works . . . . . . . . . . . . . . . . . . . . 58 5.6 Water Supply Projects Reporting Economic Rates of Return . . . . . . . . . . . . . . 59 5.7 Projects Calculating Economic or Financial Rates of Return . . . . . . . . . . . . . . . 59 6.1 Activities of Completed Decentralization Projects . . . . . . . . . . . . . . . . . . . . . . . . 67 6.2 Success of Decentralization by Decentralization Type . . . . . . . . . . . . . . . . . . . . . 69 6.3 Transboundary Projects and Their Total Lending by Region . . . . . . . . . . . . . . . 72 Tables 2.1 The Water Portfolio and Its Dedicated Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.2 Water Projects by Focal Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.3 The Top 10 Borrowers for Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.4 The 10 Largest Water Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.5 The 10 Largest IDA Water Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.1 Water Efficiency Projects by Subsector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 4.1 The Costs and Benefits of Selected Environmental Flow Assessments . . . . . 42 5.1 The Top 10 Activities for Water Supply and Sanitation Projects . . . . . . . . . . . . 53 5.2 Countries with 100 Percent Satisfactory IEG Outcome Ratings for Urban Water Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 6.1 Classification of the Success of Decentralization . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Volume 2: Appendixes Find volume 2 online at: http://www.worldbank.org/ieg/ Abbreviations Appendix A: Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix B: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix C: Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix D: Taxonomy of Water Activities in the Portfolio . . . . . . . . . . . . . . . . . . . . . Appendix E: Highly Satisfactory and Highly Unsatisfactory Projects . . . . . . . . . . . . Appendix F: Water in Country Assistance Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix G: Environmental Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix H: Dams and Hydropower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix I: Experience with Private Sector Involvement in the WSS Sector . . . . . Appendix J: Supplemental Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography vi | Water and Development Abbreviations BP Bank Procedure BWO Basin water offices CDD Community-driven development DFID Department for International Development (U.K.) DPL Development Policy Loan/Lending DSM Demand-side management EFA Environmental flow assessment ERR Economic rate of return ET Evapotranspiration GEF Global Environment Facility GW Gigawatt IBNET International Benchmarking Network for Water and Sanitation Utilities IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association IEG Independent Evaluation Group IFC International Finance Corporation IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change IWMI International Water Management Institute IWRM Integrated water resources management MARPOL International Convention for the Prevention of Pollution from Ships MCIPR Mid-Cycle Implementation Progress Report MDG Millennium Development Goal MIGA Multilateral Investment Guarantee Agency MNA Middle East and North Africa MPA Marine protected area NBI Nile Basin Initiative NILE-COM Nile Council of Ministers O&M Operation and maintenance OP Operational Policy PSP Private sector participation RBO River basin organization SMT Social mobilization UfW Unaccounted-for water UN United Nations UNDP United Nations Development Programme UNEP United Nations Environment Programme UNICEF United Nations Children's Fund WHO World Health Organization WPI Water Poverty Index WSS Water supply and sanitation WUA Water user association Abbreviations | vii Acknowledgments This evaluation of the World Bank's experience with the early guidance and their patient and detailed review of multiple aspects of water was done by the Independent drafts of this report, and the Lincoln Institute and Gregory Evaluation Group­World Bank at the request of the Bank's K. Ingram for making their facilities available to us for our Board of Executive Directors. first Advisory Panel meeting. The statement of the Advisory Panel is included in this volume. The evaluation was conducted under the leadership of Ron- ald S. Parker, and this report was written by Ronald Parker We also gratefully acknowledge the financial support pro- with research support from Anna Amato, Gunhild Berg, vided by our partner, the Swiss Agency for Development Carola Borja, Ahmad Hamidov, Elizabeth Eggleston Hel- and Cooperation (SDC), which made possible a consider- ton, Silke Heuser, Kristin Little, and Emily O'Sullivan. Silke able amount of the background research upon which this Heuser provided methodological and data analysis support evaluation is based. We also thank Abel Mejia for continual to the team. Gunhild Berg, Silke Heuser, and Kristin Little advice and encouragement. The study carried out several summarized the background documents and wrote sections field missions. The authors thank Bakyt Arystanov, Ga- of this report. William Hurlbut edited the report and pro- briel Azevedo, Alain Barbu, Sabah Bencheqroun, Francis vided editorial support for the preparation of background Ato Brown, Rafik Fatehali Hirjim, Ospan Karimsakov, papers and case studies. Michael Treadway and Caroline Jerson Kelman, Nurlan Kemelbekov, Dilshod Khidirov, McEuen edited the volumes for print and Web publication. Hassan Lamrani, Washington Mutayoba, Phillipo Patrick Marie Charles provided administrative support. Antoine Mwakabengele, Mohamed Oubelkace, Jennifer Sara, Tauno Boussard assisted with the fieldwork for the country case Skytta, and Huong Thu Vu for their support and valuable studies. Keith Pitman provided comments on selected back- insights during these missions. A database of project infor- ground papers. Peer reviewers Keith Oblitas and Meike van mation created by Anna Amato for this evaluation brought Ginneken provided valuable comments on earlier drafts of together for the first time all the available information on the report. The authors gratefully acknowledge the mem- every Bank project that had water-related activities. This bers of the External Advisory Panel--Mohamed Ait Kadi, database will be turned over to the Water Anchor for use Mary Anderson, Judith Rees, and Peter Rogers--for their by Bank water staff. Director-General, Evaluation: Vinod Thomas Director, Independent Evaluation Group­World Bank: Cheryl W. Gray Manager, IEG Sector Evaluation: Monika Huppi Task Manager: Ronald Parker viii | Water and Development Foreword Only 1 percent of the world's freshwater is available for The Bank's strategy for water, together with countries and human use, and the amount of available water has been partners, has made an important difference. However, the constant for millennia. Meanwhile, the planet has added approach taken thus far has underemphasized some of the 6 billion people. Vastly uneven distribution of freshwater most difficult challenges, which in turn has left some crucial resources, combined with changes due to climate change, is needs unmet. Moreover, the Bank's involvement in water will already deepening water-related problems. face heightened challenges due to climate change, migration of people to coastal zones, and the declining quality of the Development patterns, increasing population pressure, and water resources available to most major cities and industry. the demand for better livelihoods across the globe will all These will require important adjustments to the approach contribute to the global water crisis. Addressing that crisis followed. Growing water scarcity is a reality, which the Bank will require maintaining a sustainable relationship between and its partners need to confront by putting more emphasis water and development, one that balances current needs on the challenging areas of groundwater conservation, pol- against the prospects for future generations. Photo courtesy of Curt Carnemark/World Bank. Water has been a major focal area for World Bank lending to lution reduction, and effective demand management. New developing countries. Almost a third of all Bank projects ap- ways need to be found to help the most water stressed coun- proved since 1997 have been water related. Water loan com- tries make water sustainability a cornerstone of their devel- mitments grew 55 percent during fiscal 1997 to end-2007. opment plans. The development community also needs to During those 11 years, project performance improved help countries shift more attention to sanitation. steadily against stated objectives, led by a notable project Ever more powerful storms and rising sea levels threaten performance improvement in Africa. Water also has been increasingly densely settled coasts. This situation calls for integrated into many other sectors. The Bank has contrib- more strategic development planning and more effective di- uted to improving access to clean water, especially in urban saster risk reduction for low-lying coastal areas. Finally, data areas. On the institutional side, it has balanced investments collection and use need to be enhanced in a number of areas. in infrastructure with improvements in the institutions that In all of these activities, strong partnerships and knowledge manage and allocate water. creation and sharing will continue to be essential. Vinod Thomas Director-General, Evaluation Foreword | ix Executive Summary The amount of available water has been constant for mil- Bank work with clients to shift more attention to sanitation. lennia, but over time the planet has added 6 billion people. Demand management must be a theme of Bank support if Water is essential to human life and enterprise, and the in- the challenges of increasingly scarce water are to be tackled creasing strains on available water resources threaten the successfully, and the Bank and its borrowers need to take a mission of institutions dedicated to economic develop- clear stand on cost recovery. Finally, data collection and use ment. The ultimate goal is to achieve a sustainable balance need to be enhanced in a number of areas. In all of these between the resources available and the societal require- activities, strong partnerships and knowledge creation and ment for water. sharing will continue to be essential. In this evaluation the Independent Evaluation Group (IEG) Only 3 percent of the world's water supply is freshwater, and examines all the water-related projects financed by the two-thirds of that is locked in glacier ice or buried in deep World Bank between fiscal 1997 and the end of calendar underground aquifers, leaving only 1 percent readily avail- 2007. Bank activities related to water are large, growing, able for human use. Water is not only limited, but unevenly and integrated. They include water resources management, distributed. In more arid regions, water shortages are al- water supply and sanitation, and activities related to agri- ways a threat. Moreover, the scientific consensus is that cultural water, industrial water, energy generation, and wa- climate change will worsen these water-related challenges ter in the environment. in the coming years. These changes are already disrupting rainfall patterns, feeding ever more powerful windstorms, Changes over the decade in the Bank's portfolio of water and creating droughts of unprecedented severity and fre- projects have been broadly positive. In 1997 only 47 coun- quency. About 700 million people in 43 countries are under tries borrowed for water, but by 2007 there were 79 bor- water stress. rowers, and lending for water had increased by over 50 percent. Water projects have had good success rates relative Development patterns, increasing population pressure, to their goals, and this performance improved in the latter and the demand for better livelihoods in many parts of half of the evaluation period--with a particularly notable the globe all contribute to a steadily deepening global wa- 23-percentage-point improvement in Africa. Within the ter crisis. Development redirects, consumes, and pollutes Bank, water-related activities have been supported by insti- water. It also causes changes in the state of natural water tutional changes, and there has been progress in integrating reservoirs--directly, by draining aquifers, and indirectly, water into the work of other sectors. by melting glaciers and the polar ice caps. Maintaining a sustainable relationship between water and development At the same time, against emerging problems and pres- requires that current needs be balanced against the needs sures, crucial needs remain unmet. In the complex area of of future generations. water resources management, it has often been easier to underemphasize the most difficult problems, such as fight- The development community has transformed and broad- ing pollution or restoring the environment, compared with ened its approach to water since the 1980s. As stresses on such tasks as purchasing equipment or building infrastruc- the quality and availability of water have increased, do- ture. Limited success with full cost recovery for water ser- nors have begun to move toward more comprehensive ap- vices has caused the Bank to moderate its approach, but the proaches that seek to integrate water into development in question of who will pay for uncovered costs remains to be other sectors. resolved. Through both lending and grants, the World Bank (the In- With borrowers facing increasingly difficult challenges in ternational Development Association and the International water management, business as usual is not an option. The Bank for Reconstruction and Development) has supported evaluation suggests that the Bank and its partners should countries in many water-related sectors. This evaluation find ways to support systematically the countries that face examines the full scope of that support over the period the most water stress. It recommends that more attention from fiscal 1997 to the end of calendar 2007. More than 30 be given to critical concerns of groundwater conservation, background studies prepared for the evaluation have ana- pollution reduction, and coastal management and that the lyzed Bank lending by thematic area and by activity type. x | Water and Development The evaluation is by definition retrospective, but it identi- The Bank engaged 142 countries in lending for water dur- fies changes that will be necessary going forward, including ing the evaluation period. Of these, the top 10 accounted those related to strengthening country-level institutions for 579 projects (31 percent) covering 56 percent of total and increasing financial sustainability. Bank commitments for projects with water-related activi- ties (nearly 5 percentage points more than those countries' Water and the World Bank share of Bank lending as a whole). China, the single larg- est borrower for water projects, accounted for 16 percent The Bank's 1993 Water Resources Management Policy Pa- of water-related lending, but only 7 percent of total Bank per moved the institution away from its previous focus on lending. infrastructure development for the water sector. The paper also shifted the Bank's planning process from one based on discrete investments within the sector to a multisectoral Main Findings approach, embracing the concept of integrated water re- Increased Lending and Improving Project sources management (IWRM). IWRM promotes the coor- Performance dinated development and management of water, land, and The Bank increased its lending for water and the number related resources in order to maximize economic and so- of countries served during the period evaluated. Although cial welfare in an equitable manner without compromising the number of countries that borrow for water projects has the sustainability of vital ecosystems. Under IWRM, each varied from year to year, 79 countries were served in 2007, water-related activity in a project or program is considered compared with 47 in 1997. Lending for water increased by carefully in light of other competing uses and its social, eco- over 50 percent during the period. nomic, and environmental consequences. The integration of water practice across Bank sectors ap- In 2003 the Bank adopted a new water resources strat- pears to be well under way. Integration of the Bank's water egy (World Bank 2003b) that looked more closely at water practice was an important goal of the 2003 water strategy, management and the connections between resource use and during the period evaluated, the majority of water- and service delivery. It also reintroduced infrastructure in- focused projects were overseen by sector boards other than vestments as an important aspect of Bank support in the the Water Supply and Sanitation Sector Board. sector. The 1993 and 2003 strategy papers are complemen- Water projects in the aggregate have good success rates tary, and together with the Bank's mandate to reduce pov- when measured against objectives. IEG performance rat- erty, they have helped inform issues of supply and improve ings show steady improvement in the sector's performance the performance of utilities and user associations. The 2003 measured against project objectives. During the most re- strategy committed the institution to facing the most press- cent five-year period, water was the most improved ma- ing challenges that were constraining the achievement of jor sector by this criterion, with a particularly noteworthy goals set in 1993. 23-percentage-point improvement in the share of satisfac- tory projects undertaken by the Africa Region. Within the The Water Portfolio portfolio, 77 percent of the 857 completed projects had an A large part of what the Bank finances has something to do aggregate outcome rating of moderately satisfactory or bet- with water: 31 percent of all Bank projects approved since ter, slightly above the Bank-wide average of 75 percent. The 1997 are related to water. Between fiscal 1997 and the end trend continued in 2008, in which year water sector proj- of calendar 2007 the Bank approved or completed 1,864 ects attained a 90 percent satisfactory rate. projects with at least one water-related activity. Together, The focus of Bank activity within the water sector has these projects represented Bank financing of about $118.5 shifted over time. The Bank has lent heavily for irrigation billion, of which $54.3 billion was directed to water. The and water supply, and dams and hydropower have become average loan was for $67 million (exclusive of grants and more important in the last few years. But some activities nonlending activities). that are of growing importance as water stress increases Many of the Bank's water-related activities are integrated have become less prominent in the Bank's portfolio; no- into projects doing other things, such as developing water tably, these include coastal zone management, pollution supply in an urban services project or drafting water policy control, and to a lesser degree groundwater conservation. within a larger environmental policy framework. The larg- Although the portfolio has performed well when measured est activity categories by number of projects are those deal- against projects' stated objectives, the Bank and the bor- ing with wastewater treatment and irrigation. The largest rowing countries have not yet sufficiently tackled several amounts of money have gone to projects that involve irriga- tough but vital issues, among them broadening access to tion and hydropower or dam activities. sanitation, fighting pollution, restoring degraded aquatic Executive Summary | xi environments, monitoring and data collection, and cost re- is not easily available, and, perhaps more important, the covery. Where it has lent for hydrological and meteorologi- economic implications of water constraints are not widely cal monitoring, the Bank has focused on providing technol- appreciated. Meanwhile, there are indications that the Bank ogy for data collection and relatively less on gathering and is paying less attention to data collection--an essential pre- interpreting information for which there is an identified requisite for successful IWRM implementation, because demand. Such aggregate findings, however, mask Regional countries have less motivation to confront a situation with and country-specific variations and needs. For example, the unknown parameters. East Asia and Pacific and Africa Regions have responded Where IWRM has been successful, it has most often been more actively than other Regions to the sanitation chal- in a particular location at a time of necessity. Some coun- lenge. These issues are covered in greater detail below. tries have made progress with water resources management Water Resources Management after natural disasters, for example. Such shocks often do Effective demand management is one of several criti- not affect entire countries, however, nor are they a desirable cal challenges worldwide in the face of increasing water route to IWRM. The way to open the window of oppor- scarcity. Demand for water can be affected by three broad tunity without waiting for a calamity is to support moni- sets of measures: pricing, quotas, and measures to improve toring processes that deliver information to relevant public water use efficiency. and private stakeholders. The example of Brazil shows that Efforts to improve the efficiency of water use and limit making water data publicly available over the Internet helps demand in the agriculture sector, the largest consumer of increase stakeholder concern, which in turn helps to mo- water, have had limited success. Efficiency-enhancing tech- bilize the political will necessary to confront entrenched nologies alone do not necessarily reduce the use of water water problems. on farms, and efforts to manage demand by charging ag- The number of projects dealing with groundwater is- ricultural users for water have had limited success, partly sues has been declining, although within that problem- because of the low price elasticity of that demand. Fixing atic trend the portfolio has also witnessed a positive shift and enforcing quotas for water use is a relatively recent ap- away from a focus on extraction. This shift is important proach and deserves careful evaluation after more projects given falling water levels in critical aquifers in many Bank featuring this approach have been completed. Cost recov- borrowers. ery in Bank-supported projects has rarely been successful: only 15 percent of projects that attempted cost recovery Within the groundwater portfolio, activities aiming to achieved their goal. Those that have succeeded have gen- increase water supply were, as a group, the most success- erally improved the efficiency of water institutions at col- ful, whereas activities related to reducing pressure on lecting fees. This limited success has caused the Bank to groundwater, and to conservation, generally proved more moderate its approach, but as it has yet to clearly identify challenging. Yet such activities will need to become more alternative sources to finance the recovery shortfall, the prominent in the portfolio, if the Bank is to effectively help sustainability of investments is threatened. the growing number of water-stressed countries address increasing groundwater scarcity. In the Republic of Yemen, In the area of water supply, reducing unaccounted-for water for example, improved tube well technology and generous (UfW) has been the main activity directed at improving wa- subsidies on diesel fuel have led to rapidly rising consump- ter use efficiency. About half of projects that attempted to tion of water for irrigation, with the result that irrigation address UfW managed to reduce it by at least 1 percent. now extracts over 150 percent of the country's renewable Finding effective ways to improve water use efficiency and water resources. manage demand for water will be critical if the Bank wants Watershed management projects that take a livelihood- to maintain a leading role in this area. focused approach perform better than those that do Integrated water resources management, the focus of not. Projects combining livelihood interventions (that two consecutive water strategies, has gained traction is, the creation of income-generating opportunities) with within the Bank, but has made limited progress in most environmental restoration enjoyed high success rates, but client countries. Within the Bank there has been consider- the effects on downstream communities (such as reduced able progress in integrating water into the work of other flooding and improved water availability) and the social sectors and in consolidating institutional structures to car- benefits in both upstream and downstream communities ry out water-related activities. However, outside the Bank, were often not measured. Hydrological monitoring (with even in countries where IWRM is now well integrated into or without remote sensing) and watershed modeling could the legal framework, it is known mainly in the water sec- help improve impact assessment and thus make it easier to tor. The information necessary to inform decision making estimate the cost-benefit ratio of such interventions. xii | Water and Development Environment and Water projects are generally not met, and IEG has seen a number of Environmental restoration has been underemphasized in treatment plants functioning below design capacity because the Bank's water portfolio, possibly because its immedi- households have not connected to the systems, in part be- ate and long-term financial importance is unclear. More cause willingness to pay has been overestimated and facilities attention to cost-benefit calculations could help the Bank have been overdesigned. This report highlights the particu- and its clients evaluate trade-offs and get better results. lar weakness of sanitation institutions, which will continue to constrain progress until their capacities improve. Most Bank water projects focus on infrastructure, even though in some cases environmental restoration is more strategically important. It is not always necessary to re- store the water-related environment to a pristine state in order to obtain major social, economic, and environmen- Photo courtesy of Curt Carnemark/World Bank. tal benefits and reduce vulnerability. Priority improve- ments to degraded environments, even when small, can have big impacts. A coastal wetlands protection project in Vietnam, for example, successfully balanced reforestation with livelihood needs. The project successfully reforested critical areas and led to a substantial reduction in coastal zone erosion. Countries and donors will need to focus more on coastal management, because some 75 percent of the world's population will soon be living near the coast, putting them at heightened risk from the consequences of cli- mate change. Approvals of Bank projects in this area have dwindled over time, and the reasons for this should be considered in the Mid-Cycle Implementation Progress Hydropower projects have performed well, and sig- Report. nificant untapped potential remains for appropriate Many projects contain funding for water quality man- development, particularly in Africa. After a peak in the agement, but few countries measure water quality. The mid-1990s, dam construction in the developing world number of projects that actually measure water quality is slowed. The Bank has recently increased its financing for declining. Evidence of improved water quality is rare, as are dam construction, in many cases for multipurpose dams indications of the improved health of project beneficiaries. that provide hydropower and often also support irrigation, The data that are generated need better quality control. Wa- flood protection, or industrial use. Almost a third (66) of ter quality in the top five borrowing countries is declining, the 211 Bank-financed dam and hydropower projects cov- and fewer than half of projects that set out to monitor water ered in the evaluation rightly focused on dam rehabilita- quality were able to show any improvement. tion, as many dams have experienced gradual deterioration Water Use and Service Delivery brought about by lack of maintenance, and a number have The Bank has increasingly focused on water service de- been shut down because of salinity, sedimentation, and livery, but there has been a declining emphasis on moni- other problems. A new hydropower development business toring economic returns, water quality, and health out- plan, "Directions in Hydropower" (World Bank 2009), was comes. Only a third of wastewater treatment and sanitation completed in 2009 and supports feasibility studies so that projects calculated economic benefits. projects will be technically, economically, and environmen- tally appropriate. Indeed, it will be vital to take on board the Sanitation needs greater attention. Population growth in experience with hydropower projects, including their scale, developing countries has been rapid, as has urbanization. An socioeconomic, and environmental impacts. expansion of piped water services and increased household water use will accelerate demand for adequate sanitation. The Institutions and Water evaluation recognizes that even if the Millennium Develop- Water services are delivered by public providers in most ment Goals (MDGs) for clean water supply are achieved, 800 countries, although private sector participation has million people will still lack access to safe drinking water in made some progress. Where international private firms 2015, but many more--1.8 billion--will still lack access to have been successful at providing water services in urban basic sanitation. Within sanitation projects, more emphasis areas, they have contributed significant investments to in- is needed on household connections. Connection targets in frastructure and in some cities have managed to increase Executive Summary | xiii the efficiency of water utilities' operations. In some Bank- rich countries, nor is increasing lending to water-stressed financed projects in rural areas, in contrast, the local pri- countries the only or even necessarily the best solution. The vate sector manages the operation of water systems but has failure to meet human needs for water and sanitation has invested little and shared little of the financial risk. Where its roots in political, economic, social, and environmental governments want private involvement, a well-functioning, issues. These are becoming more entwined and cannot be well-maintained regulatory system is necessary for its sus- solved unless a broader range of actors gets involved. tainable participation in utility operations. In many cases The most water-stressed group consists of 45 countries (35 such a system has remained elusive, and this has limited of them in Africa) that are not only water poor but also private sector involvement. economically poor. Country Water Resource Assistance Water projects operating in a decentralized environment Strategies have helped to place water resource discussions have had difficulty meeting expectations, but when the more firmly in the context of economic development in the budget and authority accorded to the lower level of govern- countries where they have been done. Including ministries ment have matched the responsibility assigned to it, proj- of planning and finance in the dialogue is another critical ects have had positive achievements. Half of projects that step, as is expanding the calculation of economic benefits aimed to strengthen local capacity and two-fifths of projects to increase countries' understanding of the economic im- that supported institutional reforms were successful. Other portance of water. positive outcomes usually associated with decentralization-- Collaboration with other partners is particularly impor- increased accountability, ownership, empowerment, and so- tant, and it is likely to increase in importance as the Bank cial cohesion--were achieved in a minority of cases. helps countries tackle water crises. This is true not only Support for institutional reform and capacity building for water supply and sanitation but also for water resources has had limited success in the water sector. Institutional management in national and transboundary basins. Many reform, institutional strengthening, and capacity building of the problems described in this report are far too big for have been the activities most frequently funded by Bank the Bank to tackle on its own. water-related lending. Yet these interventions have often Successful implementation of the Bank's Water Resources been less than fully effective, and weak institutions have of- Sector Strategy will require a great deal of data on water ten been responsible for project shortcomings. resources, and therefore data gathering must become a The Bank has been actively engaged in addressing trans- higher priority. Data on all aspects of water and on rele- boundary water issues. Priority has been given to projects vant socioeconomic conditions need to be more systemati- serving waterways shared by a large number of countries. cally collected and monitored. Data need to be used better Here the Bank has been more successful in helping to ad- within projects. For example, the collection and analysis of dress disputes than in strengthening transboundary institu- up-to-date groundwater data are more important now than tions. Its work with borrowers on transboundary aquifers is ever and need to be taken on board more commonly than in its early stages. they have been. Strategic Issues The Bank's complementary strategies for the water sector Recommendations have been broadly appropriate. However, their application · Work with clients and partners to ensure that critical thus far has underemphasized some of the most difficult water issues are adequately addressed. challenges set by the 2003 strategy, and this has left some ­ Seek ways to support the countries that face the needs unmet. The Bank's approach to water will face height- greatest water stress. The Mid-Cycle Implementa- ened challenges brought about by climate change, migra- tion Progress Report should suggest a way to pack- tion to coastal zones, and the declining quality of the water age tailored measures to help the Bank and other resources available to most major cities and industry in the donors work with these clients to address the most coming decades. These will require some shifts in emphasis. urgent needs, which will be far more challenging as Water stress needs to be confronted systematically. At water supply becomes increasingly constrained in present there is no statistical relationship between Bank arid areas. water-related lending to countries and the degree of water ­ Ensure that projects pay adequate attention to con- stress in those countries. The issue for the Bank is how to serving groundwater and ensuring that the quantity find an entry point and help the most water-stressed coun- extracted is sustainable. tries put the pieces together so that water needs can become more central to their development strategy. This is not to ­ Find effective ways to help countries address coastal say that the Bank should stop providing support to water- management issues. xiv | Water and Development ­ Help countries strengthen attention to sanitation. ­ Systematically analyze whether environmental res- toration will be essential for water-related objectives · Strengthen the supply and use of data on water to better to be met in a particular setting. understand the linkages among water, economic devel- opment, and project achievement. · Monitor demand-management approaches to identify which aspects are working or not working, and build on ­ In project appraisal documents, routinely quan- these lessons of experience. tify the benefits of wastewater treatment, health im- provements, and environmental restoration. ­ Clarify how to cover the cost of water service deliv- ery in the absence of full cost recovery. To the extent ­ Support more frequent and more thorough water that borrowers must cover the cost of water services monitoring of all sorts in client countries, particu- out of general revenue, share the lessons of inter- larly the most vulnerable ones, and help ensure that national experience with them so they can allocate countries treat monitoring data as a public good costs most effectively. and make them broadly available. ­ Identify ways to more effectively use fees and tariffs ­ In the design of water resources management proj- to reduce water consumption. ects that support hydrological and meteorological monitoring systems, pay close attention to stakehold- ­ Carefully monitor and evaluate the experience with er participation, maintenance, and the appropriate quotas as a means to moderate agricultural water choice of monitoring equipment and facilities. use. Executive Summary | xv Management Response Management welcomes this evaluation of World Bank sup- Management's specific responses to IEG's recommenda- port for water, covering the period 1997 through 2007, by tions, with which it generally agrees, are noted in the at- the Independent Evaluation Group (IEG). This evaluation tached Management Action Record. is timely against the backdrop of the 2003 Water Resources Sector Strategy Mid-Cycle Implementation Progress Report Management Comments under preparation; it is also relevant in view of the large and Evidence shows that achieving full cost recovery in water increasing volume of water lending, which now represents services delivery is an ultimate goal, which although desir- 10 percent of the World Bank's portfolio. able economically is difficult and rarely achieved in prac- IEG's comprehensive review shows that the World Bank has tice. Underpricing of water supply services is widespread, been engaged in IDA and IBRD countries across the whole even in upper-middle-income countries and high-income spectrum of water issues--from floods and droughts to riv- countries. Globally, estimates show that 39 percent of water ers, lakes, wetlands, and groundwater aquifers; from access utilities have average tariffs that are set too low to cover ba- to hydropower energy to the achievement of the water sup- sic operation and maintenance (O&M) costs. A further 30 ply and sanitation Millennium Development Goals; from percent have tariffs that are set below the level required to effective demand management to irrigation and drainage, make any contribution toward the recovery of capital costs. and on to cooperation through water-sharing arrangements Even in high-income countries, only 50 percent of water among riparian states. Notwithstanding the achievements utilities charge tariffs high enough to cover O&M costs and in these areas noted by IEG, the challenges in the sector are partial capital recovery. Some degree of general subsidy is still significant: poor governance, financial under-recovery, thus the norm, even in high-income countries. In Bank intermittent supplies, growing water scarcity, and deterio- client countries, low tariffs (that is, below full cost-recov- rating water quality are some of the issues that are tackled as ery levels) ensure that water services are affordable to the part of the Bank's regular design of water projects. Water is population. While raising tariffs to recover a greater share a complex sector; it is political in nature, and it impacts on of costs in order to mobilize private financing, or simply many vital sectors of the economy, including agriculture, reducing the use of scarce fiscal resources by utilities, may energy and environment, and health. be economically sound, political constituencies have often prevented tariffs from being increased. Some estimates sug- Management welcomes the overall positive findings from the gest that water tariffs may have to increase by 90 percent in review. Among the important elements of this evaluation are some developing countries to achieve full cost recovery. In (a) its emphasis on the centrality of water for the sustainable the discussion about affordability, there is also a particular development agenda; (b) the assessment that the strategies concern for the poor, who are disproportionately impacted outlined in the 2003 Bank Water Resources Sector Strategy by increased tariffs. and the 1993 Bank Water Resource Management Policy Pa- per have been broadly appropriate; (c) the recognition that Cost Recovery in Bank Water Projects achievements have been made under each of the objectives of Cost recovery continues to be central to the design of Bank these strategies; and (d) the need, as the strategies are further water services projects. Through a series of projects, the implemented, for the development community and client Bank has supported government efforts to move water util- countries to heighten attention to certain areas, such as coast- ities through the continuum of cost recovery, starting with al management, groundwater, sanitation, and data collection. covering O&M costs. Other options to reduce the costs of services delivery are also considered in Bank projects, in- That said, management is of the view that the IEG review cluding the use of alternative technologies, differentiated might have gone further, in terms of widening the cover- service levels, and flexibility in standards. age of water-related activities beyond project financing and providing more specificity to its recommendations. Man- Other Initiatives to Address the Sustainability of Water agement would also like to clarify its position vis-à-vis cost Service Delivery. The Bank is continuing to work on several recovery versus full cost recovery, where there may be dif- fronts toward finding a sustainable solution to water servic- ferences with IEG. The comments below on the analysis of es delivery, while increasing water coverage. The Bank has the review reflect this differing view. proactively examined ways to address the question of who xvi | Water and Development will pay for uncovered costs. The water sector now features more lending for water in relative terms. When looking at prominently in Public Expenditure Reviews, with a view the level of water stress in IDA and IBRD countries, man- to identifying ways to increase the effectiveness of overall agement notes that water-stressed countries receive propor- public spending as well as water-specific public spending. tionately more financing for water than non-water-stressed More attention is also devoted to the transparency of wa- countries--in water-stressed countries, water constitutes ter sector financing through a mix of user fees and subsi- 14 percent of total IBRD and IDA lending; in nonwater- dies. When requested, the Bank has also supported pub- stressed countries, water constitutes 9 percent of total IBRD lic-private partnerships in urban and rural water utilities, and IDA lending. which have proved a valid option to turn around poorly Financing, Knowledge, and Reputation. Finally, manage- performing water utilities and improve service quality and ment notes that project financing is only one way to ad- efficiency.1 This approach fosters a virtuous circle whereby dress issues in the water sector. Several other mechanisms the utility improves its financial situation and gradually be- are used by the Bank to achieve its strategic vision of water comes able to finance a larger share of its investment needs. for sustainable development. The Bank uses economic and Experience shows that although concessions have worked sector work, policy dialogue, trust funds, and its reputa- in a few places, contractual arrangements that combine pri- tion as an "honest broker" to engage client countries in vate operation with public financing of investment appear complex water issues. For example, the World Bank Group to be the most suitable option in many countries (Marin has been engaged with McKinsey in looking at innovative 2009). Finally, work is ongoing to assess the effectiveness of tools to identify supply-side and demand-side measures consumer subsidies in reaching and distributing resources that could constitute a more cost-effective approach to to the poor; with evidence suggesting that connection sub- closing the water resource gap in countries and may even sidies may be a more effective way to target the poor than achieve budget savings in some components of the water quantity-based subsidies (World Bank 2005b). sector. It is the combination of all these instruments that Water Charges in Irrigation. Evidence shows that irrigation enables the Bank to provide assistance to countries that demand is inelastic until prices rise to several multiples of face the greatest water stress today and to address future the cost of providing the services. In practice, it has proven water needs. politically difficult to increase bulk water and irrigation prices sufficiently to move to the elastic part of the demand IEG Recommendations curve. As the most immediate demand management op- Management welcomes and agrees with the IEG recom- tion, the Bank has thus favored the setting of water rights mendations. These recommendations fit well with what the for surface and groundwater. Bank is currently doing and can be accommodated within Prioritization of Water Lending. Management notes that the framework of the existing water strategies, as the Wa- although IBRD countries may borrow more for water in ab- ter Resources Sector Strategy Mid-Cycle Implementation solute terms given their country sizes, IDA countries receive Progress Report will show. Management Response | xvii Management Action Record IEG Recommendation Management Response 1. Work with clients and partners to ensure that critical water Ongoing/Agreed. issues are adequately addressed. Management agrees with the recommendation, which is at the · Seek ways to support those countries that face the greatest core of the 2003 Water Resources Sector Strategy. The Bank has been water stress. The mid-term strategy implementation review responsive to government priorities on water in the most water- should suggest a way to package tailored measures to help the stressed countries and in those that will face problems in the future. Bank and other donors work with these clients to address the Using a range of instruments (finance, knowledge, and reputation), most urgent needs, which will be far more challenging as water the Bank has worked toward ensuring that its assistance adds value, supply becomes increasingly constrained in arid areas. especially vis-à-vis other development banks and donors. · Ensure that projects pay adequate attention to conserving groundwater and ensuring that the quantity extracted is sus- The Water Resources Sector Strategy Mid-Cycle Implementation tainable. Progress Report will highlight (i) how the World Bank has addressed · Find effective ways to help countries address coastal manage- client needs, differentiating by income group; (ii) the growing ment issues. importance of addressing water issues at the river-basin level; · Help countries strengthen attention to sanitation. (iii) areas of the 2003 strategy where the Bank has sequenced its approach, starting with studies, technical assistance, capacity build- ing, and pilot projects to address complex issues, such as sustain- able groundwater management and coastal management; and (iv) how the development community has been actively working toward meeting the sanitation MDG targets. 2. Strengthen the supply and use of data on water to better un- Ongoing/Agreed. derstand the linkages between water, economic development, Management agrees with the recommendation, and the principle and project achievement. that more and better data would help to support efforts to improve · In project appraisal documents, routinely quantify the benefits the performance and accountability of the water sector, the results of wastewater treatment, health improvements, and environ- of Bank-financed water projects, and the impact of alternative water mental restoration. policies. Several global initiatives are under way (for example, IBNET, · In project appraisal documents, routinely quantify the benefits Hydrological Expert Facility), and efforts are ongoing as part of the of wastewater treatment, health improvements, and environ- standard evaluation analysis of projects to quantify the costs and mental restoration. benefits (and externalities). Better management and use of data will · Support more frequent and more thorough water monitoring of take place when the investment lending reforms are implemented. all sorts in client countries, particularly the most vulnerable ones, and help ensure that countries treat monitoring data as a public More specifically: good and make them broadly available. · The Water Anchor will develop further core indicators for water · In the design of WRM projects that support hydrological and projects (for example, sanitation/sewage, irrigation/drainage). meteorological monitoring systems, pay close attention to stake- · Regions will pilot new approaches to take advantage of new holder participation, maintenance, and the appropriate choice sources of information (such as remote sensing), tackling these of monitoring equipment and facilities. with existing data sources. · Systematically analyze if environmental restoration will be · Regions will scale up projects, building detailed information essential for water-related objectives to be met in a particular systems and benchmarking systems. setting. · The Water Anchor and Water Sanitation Program will conduct an impact evaluation of sanitation and hygiene interventions at scale in achieving health and income outcomes. · As part of the development impact evaluation initiative, in col- laboration with the Development Economics Department, the water sector will conduct further impact evaluations on health impacts of water and wastewater interventions. The Water Resources Sector Strategy Mid-Cycle Implementation Progress Report will outline how progress toward strengthening the supply and use of data will be monitored. xviii | Water and Development Management Action Record (continued) IEG Recommendation Management Response 3. Monitor demand-management approaches to identify the Ongoing/Agreed. aspects that are working or not working and to build on these · Regions and the Water Anchor will examine financing of ser- lessons of experience going forward. vices delivery as part of Public Expenditure Reviews and other · Clarify how to cover the cost of water service delivery in the country-specific economic and sector work. absence of full cost recovery. To the extent that borrowers must · The Water Anchor and Regions will conduct a study on lessons cover the cost of water services out of general revenues, share learned about government payment for water services. the lessons of international experience with them so they can · Regions will continue to explore fees, tariffs, and other options allocate partial costs most effectively. (metering, water rights, and the like) for demand management · Identify ways to more effectively use fees and tariffs to reduce in Bank projects. water consumption. · Regions will pilot evapotranspiration (ET)-based rights and · Carefully monitor and evaluate the experience with quotas as a community-based approaches to water resource management. means to modulate agricultural water use. A key priority of the Thematic Group on Water Resource Manage- ment, with the support of the Water Anchor, will be to document lessons learned on demand-management approaches. Management Response | xix Chairperson's Comments: Committee on Development Effectiveness (CODE) On December 16, 2009, the Committee on Development have been a World Bank Group review of water assistance. IEG Effectiveness (CODE) discussed the document entitled Water noted that IFC's investments in water have been small, only about and Development: World Bank Support, 1997­2007, prepared by 1 percent of IBRD/IDA lending. Others asked about aspects not the Independent Evaluation Group (IEG), and the Draft Man- covered in the evaluation report, such as the impact of the matrix agement Response. management structure, the contribution of development policy lending (DPL), ongoing work related to innovative financing sup- Summary port, and key findings that were contained in the evaluation, but not explicitly referred to in the recommendations. Finally, com- The Committee welcomed the timely report, which will ments and suggestions were made on the upcoming MCIPR of serve as an input to management's Water Resources Sector the Water Resources Sector Strategy. Strategy Mid-Cycle Implementation Progress Report (MCIPR). It also positively noted the constructive discussion between IEG and management on this evaluation. Members noted the contin- Recommendations and Next Steps ued relevance of the Bank's 1993 Water Resources Management Management is expected to present the Water Resources Policy Paper and the 2003 Water Resources Sector Strategy. Sector Strategy MCIPR to the Committee in spring of 2010. They commended the turnaround in portfolio performance Management confirmed that the MCIPR will cover the World in the water sector and encouraged continued efforts, particu- Bank Group water sector activities, even though the 2003 Water larly to further enhance project sustainability and focus on proj- Resources Sector Strategy covered IBRD and IDA only. This IEG ects in Sub-Saharan Africa. evaluation report and Management Response will be publicly One area eliciting comments from almost all speakers was disclosed. the sensitive and challenging issue of pricing and full cost recovery of water services. In this regard, different views were Main Issues Discussed expressed on the roles of the public and private sectors in the pro- Pricing and Cost Recovery. The Committee noted the vision of water, the potential for a market-based approach, and the complexities of water pricing and the political sensitivities importance of ensuring affordable water to the poor. More- around full cost recovery. In general, members supported over, the discussions touched on issues of subsidies and trans- the Bank's "principled, but pragmatic" approach in water fers mechanisms, the coverage of operations and maintenance pricing, though several speakers, mindful of the difficulties (O&M) costs, and the experience of Organisation for Economic of a full market-based approach, indicated that the exis- Co-operation and Development countries in full cost recovery. tence of price-cost gaps requires it to be fully quantified In general, members supported the Bank's "pragmatic, but prin- jointly with the fiscal resources needed to ensure full cost cipled" approach to water pricing, outlined in the 2003 Water recovery. They took note of management's clarifications on Resources Sector Strategy. the definition of cost recovery and the difficulty of achiev- Members also intervened on specific topics such as the ing full cost recovery even in high-income countries that regulatory framework and institutions; the assistance to wa- have the political will to embrace this goal. Some members ter-stressed countries/areas; the Bank's role in sanitation and commented that this matter needs to be considered as part groundwater management; links between water and climate of a comprehensive and coherent set of interventions, in- change, and demography; and data collection and monitoring. cluding consideration of social issues. IEG pointed out that The committee welcomed the comments from the regional staff less than one-fifth of water supply and sanitation projects who shared their country- and regional-level experiences. Some that set out to recover costs either partially or fully have speakers expressed the view that the IEG evaluation could succeeded, and that it is important to clarify how to cover xx | Water and Development the costs of water service delivery in the absence of full cost indicator that would measure the efficiency in use of water recovery. Noting the importance of ensuring affordable ac- resources. cess to water, especially for the poor, a member cautioned Water-Stressed Countries. While supportive of IEG's about pursuing a market-based approach to water supply findings on the need to adequately address critical wa- and sanitation and the continued important role of govern- ter issues in water-stressed countries, a few members raised ment. Some others, however, commented on the potential the issue of how these countries are defined and the com- of the private sector to provide efficient services, if accom- plexity of this subject. IEG clarified that the Water Poverty panied by appropriate legal frameworks and regulatory in- Index was based on five components--resources, access, stitutions. Some specific comments were made about how capacity, use, and environment. Others encouraged man- to cover O&M costs in the absence of sufficient revenue agement to attend to the water supply and sanitation needs collection and fiscal space, and on the use of subsidies or of the poor, while integrating institutional, financial, and direct transfer to provide affordable access to water for the social dimensions into the Bank's interventions. poor, on the relatively low number of projects where eco- Mid-Cycle Implementation Progress Report. Mem- nomic rate of return is considered, and the potential of im- bers made a number of requests for consideration in proving cost recovery by reducing unaccounted-for water the MCIPR, including the Bank's role in strengthening in- usage. stitutions, knowledge sharing, use of DPLs, safeguards is- Data. There was general agreement on the impor- sues, matrix management structure, and use of incentives. tance of data for project design and monitoring and Management was encouraged to keep in mind the impact evaluation in light of IEG's findings that few projects that of climate change on water resources and their use, as well plan to collect data actually follow through. One member as the nexus between demography and water. Management raised a concern regarding balancing data sharing with na- said that it would review the World Bank Group opera- tional security concerns, emphasizing that data provision tions, in response to interest expressed for a broader cov- should not be a condition for a project. In this respect, the erage to include private sector issues. Management briefly significant effort by the international water community to commented on the Bank's interventions in the water sector collect data, which could be utilized, was noted. Stressing encompassing not only investment lending but also DPLs the importance of measuring the outcomes, a suggestion and analytical work. Management spoke on the new Water was made to benchmark the impact of the Bank's opera- Sector Board and the highly cross-sectoral nature of its in- tions against the Millennium Development Goal and an tervention in the water sector. Giovanni Majnoni, Chairperson Chairperson's Comments | xxi Statement of the Advisory Panel The members of the External Advisory Panel acknowledge not suffice. Instead the Advisory Panel urges Bank man- the colossal amount of work achieved by the Independent agement to develop a longer-term, more comprehensive, Evaluation Group team in preparing this report on the multisectoral and process-focused approach to its water World Bank's support to water and development. Thirty- support. The evaluation provides numerous examples from one percent of all Bank projects approved since fiscal 1997 the Bank's own experience showing not only that such an have at least one water activity, so that the portfolio exam- approach is doable, but that its results are more lasting and ined by this evaluation consists of 1,864 projects financed significant for more people than those of separate projects between fiscal 1997 and the end of calendar 2007, for a total with shorter timelines. The Panel would also wish the Bank of over $118 billion. That the evaluation team took on this to take a more proactive approach to its lending and to as- range of activities and examined it through multiple lens- sess whether some of the current lending trends will be es--25 separate Issues Papers were researched and writ- appropriate in the future, given changing socioeconomic ten for this study--is a testament to their seriousness and and environmental conditions; for example, the dwindling thoroughness. The Advisory Panel appreciates the care with number of project approvals for coastal management work which this team sorted, analyzed, and reanalyzed the data could be reviewed in the context of demographic and po- gathered, and we urge Bank management to apply similar tential climate change. rigor in addressing the recommendations that come from As the report says, the ultimate goal is to balance the re- this impressive work. sources available with societal requirements. We underline The basic message of this report is a message of urgency. this statement by noting that this goal is not just for some Water is a limited resource on which life and development countries, but for all countries, and not just for some peo- depend. As climate changes and population grows, business ple, but for all people. This goal requires a long-term, stra- as usual is not an option. The social, economic, and political tegic engagement of Bank management and Bank staff with consequences of water shortages, exacerbated by distribu- counterparts in other agencies and around the world to ad- tional unevenness, are real, as are the effects of water-relat- dress usage and wastage, retention and pollution, balancing ed hazards. Few institutions are as well positioned as the today's needs with those of future generations. World Bank to assemble the resources and the partnerships A careful reading of the findings of this thorough report required to address such global concerns. provides strong guidance for Bank management on how to It is important to recognize that World Bank water proj- develop and pursue such a strategic engagement. ects over all have recently shown improved success rates. Members of the Advisory Panel especially urge attention to However, there is no room for complacency, because, as the the following findings and opportunities: evaluation points out, much of the work has been concen- trated on regions and on problems that are somewhat easier 1. Integrated water resources management is an ongoing to deal with. As the report says, "The Bank and the coun- process, not an ad hoc program, and as such deserves tries have not yet sufficiently tackled several tough but vital constant reinforcement through technical and politi- issues, among them sanitation, fighting pollution, restoring cal requirements. Working with borrowers, Bank staff degraded aquatic environments, monitoring and data col- must assiduously advise and encourage an integrated, lection, and cost recovery." multisectoral analysis of water problems and the devel- opment of water solutions that recognize the relation- One particularly difficult problem concerns the sustain- ships between water and the economic development ability of investments over time; the use of inappropriate and poverty reduction objectives of governments. technologies, failure to secure institutional changes and es- tablish clear postproject accountabilities, and lack of atten- 2. In spite of its comparative advantage, the Bank appears tion paid to cost recovery are just some of the reasons why to have reduced the emphasis given to the economic sustainability may not be achieved. To ensure that invest- analysis of water projects. Data collection is inadequate ments yield long-term benefits in terms of economic and (especially as it deals with the social and developmen- social development, it may well be that a project focus will tal impacts of water efforts), monitoring is inconsistent, xxii | Water and Development and cost recovery systems are too often assumed rather of water surpluses and shortages has both economic con- than rigorously pursued. Concerns over the sustainabil- sequences and political and social consequences. These ity of projects, but even more important over the sus- cannot be ignored. A fuller focus on the developmental tainability of access to water, require that such analysis impacts of water--its shortages or its accessibility--would be reinstated and followed closely. suggest greater attention to integrating water programs with other sectors in countries with the greatest water 3. Having urged more attention to cost recovery and the stress and the fewest resources for addressing this stress. financial sustainability of projects, the Advisory Panel nonetheless urges the Bank to develop strategies that will This IEG report has come at a critical time, and we are bring poorer countries that face greater water crises into grateful for the opportunity to have worked with the IEG the lending portfolio. More-innovative funding packages, evaluation team in considering the implications of its find- developed in conjunction with partners, need to be con- ings. The report provides a strong, well-researched basis for sidered for the poorest countries facing the greatest water the Bank's development of a more integrated, far-looking stress. As noted above, the unevenness of the distribution approach to one of the world's most urgent challenges. Signed: Mohamed Ait Kadi Chair of the Global Water Program Technical Committee President of the General Council of Agricultural Development, Ministry of Agriculture, Rural Development and Fisheries, Morocco Mary B. Anderson Executive Director of CDA Collaborative Learning Projects Judith Rees Professor of Environmental and Resources Management Director of the Grantham Research Institute on Climate Change and the Environment London School of Economics Peter Rogers Gordon McKay Professor of Environmental Engineering in the School of Engineering and Applied Sciences at Harvard University Senior Advisor to the Global Water Partnership Fellow of the American Association for the Advancement of Science Member of the Third World Academy of Sciences Statement of the Advisory Panel | xxiii Chapter 1 EVALUATION HIGHLIGHTS · The supply of water is unevenly distributed and subject to new demands. · Water shortages contribute to conflicts, and the lack of clean water and sanitation has huge health costs. · In the 1980s the Bank focused on water servic- es infrastructure, and in the 1990s on improv- ing management; since 2001 the Millennium Development Goals have been a focal point. · With a view to contributing to greater effec- tiveness, the evaluation covers water resources management, water and environmental sus- tainability, and water service delivery, as well Photo courtesy of Arne Hoel/World Bank. as the institutions that coordinate work within and among those areas. Evolution of the World Bank's Gender Policy | 1 Water and the World Bank Global Context The amount of water in the world's ecosystem has been roughly constant for millennia, but over that time the planet has added 6 billion people. Moreover, the usable supply of water is limited: only 3 percent of the world's supply is freshwater, and two-thirds of that is locked in glacier ice or buried in deep underground aquifers, leaving just 1 percent readily available for human use. What water is available is unevenly distributed. Water Extended droughts already have hit the southeastern Unit- shortages are an ever-present threat in the world's more arid ed States, northern China, Ukraine, Europe's Mediterra- regions. About 700 million people in 43 countries face wa- nean belt, the Jordan River region, the Republic of Yemen, ter stress, unable to obtain the 1,700 cubic meters of water parts of the Sub-Sahara, and Australia's Murray-Darling per person per year that is considered a minimum supply Basin--the source of a third of that country's food supply. (UNDP 2006, p. 14), based on estimates of water require- Drought is pushing food prices higher in many countries ments in the household, agricultural, industrial, and energy and has caused some to hoard farm exports. Six hundred sectors and the needs of the environment. million subsistence farmers have no access to irrigation water and remain trapped in poverty, according to World Development patterns, increasing population pressure, Development Report 2007 (World Bank 2007b). and the demand for better livelihoods in many parts of the globe all contribute to a steadily deepening global water Competition for and contamination of water resources have crisis that will severely constrain future economic prog- local and regional political impacts and create the poten- ress.1 Major rivers such as the Nile, the Jordan, the Yangtze, tial for conflict. For example, drought has pushed compet- and the Ganges are overtaxed and regularly shrink for long ing herders and farmers into conflict in Chad and Sudan, periods during the year. Underground aquifers below New contributing to the misery in Sudan's war-ravaged Darfur Delhi, Beijing, and many other quickly growing population region (Borger 2007). centers are falling rapidly. Other water basins in trouble in- clude the Balsas and the Grande de Santiago in Mexico, the Competition for water contributes to Limpopo in southern Africa, the Hai Ho and the Hong in conflicts. China, the Chao Phraya in Southeast Asia, and the Brah- mani and eight other rivers in India (Revenga and others A host of environmental issues affect water resource avail- 2000). ability: deforestation, watershed degradation, encroach- Water crises can also lead to sudden massive destruction. ment on recharge areas, pollution from point and nonpoint Over the period 1973­2006, about 3.5 billion people were sources, infestation by aquatic weeds, inadequate environ- affected by floods and heavy rains from tropical storms,2 mental flows, and drought and floods, among others. To disasters that are increasing in number at an annual aver- some officials and commentators, the water crisis is about age rate of at least 5 percent. To this must be added the in- absolute shortages of supply. But the United Nations' Hu- creasing likelihood of climate changes, which are already man Development Report 2006 (UNDP 2006) rejected that disrupting rainfall patterns, feeding ever more powerful view, arguing instead "that the roots of the crisis in water windstorms, and creating droughts of unprecedented sever- can be traced to poverty, inequality and unequal power rela- ity and frequency. There is scientific consensus that, under tionships, as well as flawed water management policies that business as usual, these challenges will worsen dramatically exacerbate scarcity" (UNDP 2006, p. v). (Gleditsch, Nordàs, and Salehyan 2007, p. 2). Hundreds of millions of the world's poorest do not share even minimal access to safe drinking water and basic sani- Water is limited in supply, unevenly tation services. Each day millions of women and young girls distributed, and under growing pressure. collect water for their families--a ritual that reinforces gen- 2 | Water and Development der inequalities in employment and education, the UN Hu- posed by misuse of water and its resulting inequalities. The man Development Report noted (UNDP 2006, p. v). years 2005­15 were designated the Water for Life Decade by the United Nations. In line with this, during the 2007 Spring The health impacts of the pervasive lack of water supply and Meetings of the World Bank Group and the International sanitation services are staggering. Each year almost 2 mil- Monetary Fund, the World Bank Group committed itself lion children in the developing world die from lack of clean to partnering with the United Nations Development Pro- water and little or no sanitation. About one-third of people gramme (UNDP), DFID (the United Kingdom's Depart- who lack access to drinking water live on less than $2 a day, ment for International Development), and other donors to the United Nations reports. Some 385 million people must confront the crisis in water supply and sanitation. try to survive on $1 a day or less. There is little hope that these households can pay for water connections (UNDP 2006, p. 48). Evolution of the World Bank's Strategic Approach to Water The health impacts of the lack of water In the 1980s the World Bank focused on water services in- supply and sanitation are staggering. frastructure development as part of its core business. The decade saw large gains in the number of families served by Water Milestones and the a safe water supply (mostly in Asia), although little prog- Bank's Commitments ress was made in sanitation. Irrigated areas were expanded, and dams helped to offset the results of climate variability The 1992 Rio Earth Summit--and the International Con- and contributed to energy supplies (Parker and Skytta 2000, ference on Water and the Environment, where the Dublin p. 3). However, the exclusive focus on infrastructure posed Principles3 were adopted earlier that same year--raised serious environmental, social, and financial sustainability awareness of growing water scarcity. Then, in 2000, at the issues. Second World Water Forum in The Hague, the Netherlands, the Global Water Partnership called for stronger interna- During the 1990s the Bank's focus shifted toward improving tional dialogue, better capacity building, and additional fi- the management of water utilities, irrigation, rural water nancial resources. That same year the international commu- systems, water resources, and land use. The Bank's 1993 Wa- nity adopted the Millennium Development Goals (MDGs) ter Resources Management Policy Paper (evaluated by IEG at the United Nations Millennium Conference.4 The MDGs in 2002) moved the institution away from infrastructure for poverty, hunger, and health relate indirectly to water, but development. The paper also shifted the Bank's planning the environmental goal addresses water directly, seeking to process from one based on discrete investments within the halve the number of people without access to safe drinking sector to a multisectoral approach. The paper focused hu- water and basic sanitation by 2015. man and financial resources on three complementary roles: designing projects that would develop a stock of infrastruc- In response to the MDGs, and following up on the Sec- ture for multiple water uses; establishing or strengthening ond World Water Forum, the World Water Council and river and lake basin management institutions; and helping the Global Water Partnership issued a report for the Third to craft policies for the rational management and use of World Water Forum in 2003 in Japan. The report, Financing transboundary water. Water for All: Report of the World Panel on Financing Water Infrastructure (World Panel on Financing Water Infrastruc- The 1993 Water Resources Management ture 2003), stressed that attaining the MDGs would require a doubling of the resources allocated to the task, as well as Policy Paper moved the Bank toward a improvement of governance, better cost recovery, and some multisectoral approach to water planning. national public funding. With the turn of the century, the Bank's approach again More recently, the United Nations has called upon the de- shifted, to one of balancing infrastructure and manage- velopment community to respond to the myriad challenges ment-focused investments. In 2001 the World Bank Group Water and the World Bank | 3 committed itself to achieving the MDGs. With the 2001 vironmental flows and water quality as global public goods, Environment Strategy, the 2003 Water Resources Sector and water services delivery includes irrigation and drain- Strategy, the 2003 Infrastructure Action Plan, and the 2003 age, water supply and sanitation, and hydropower. Interac- Water Supply and Sanitation Business Strategy, water was tions within and among the three areas are influenced by given more prominence. The 2003 Water Resources Sec- the institutions that coordinate development. tor Strategy focused on putting the 1993 principles into The evaluation covers so broad an area because most ac- practice, emphasizing the importance of infrastructure fi- tors in the development community have transformed and nance.5 A main message of the 2003 strategy was that the broadened their approach to water. As stresses on the qual- Bank needed to continue its efforts toward integrated water ity and availability of water have increased, the donor com- resources management (IWRM; see box 1.1). The strategy munity has moved steadily toward considering each water- was also the first to highlight the impact of climate change related activity in light of other competing uses. on the sector. The evaluation analyzes the full universe of Bank-financed After 2001 the Bank's focus shifted to or Bank-administered water activities approved or closed meeting the MDG targets. Its 2003 sector from July 1, 1996 (the beginning of the Bank's fiscal 1997), to January 1, 2008. IEG identified 1,864 projects approved strategy called for continued efforts toward or completed over the 11.5-year period (including those IWRM. approved or completed by the Global Environment Facil- ity, GEF) that include at least one water-related activity. The 1993 and 2003 sector strategy papers are complemen- For each water-related issue evaluated, all relevant projects tary, and together with the Bank's poverty reduction man- were included in the analysis. date they have helped inform issues of supply and improve the performance of utilities and user associations. Appen- The study analyzed the full universe of dix table C.1 compares the main provisions of these strate- Bank-supported water activities from fiscal gic documents. 1997 through the end of calendar 2007, a total of 1,864 projects. Scope and Purpose of the Evaluation Water has always been central to World Bank Group work, Given the scope of the topic, the evaluation is also a meta- and the International Development Association (IDA) and evaluation. It draws on recent IEG evaluations on water- the International Bank for Reconstruction and Develop- related themes as well as relevant findings from recent ment (IBRD; the two are jointly referred to here as the Bank) studies by the Bank's development partners. It also draws in particular have supported countries in many water-relat- on sectoral and thematic evaluations and impact studies ed activities. This evaluation covers water resources man- carried out by bilateral and multilateral donors, nongov- agement and development, water-related environmental ernmental organizations, and others, as well as work con- sustainability, and water services delivery. Water resources ducted by Bank Operations as part of their self-evaluation management includes the management of the demand for (see appendix B on the evaluation methodology and the water, environmental sustainability includes managing en- Bibliography). BOX 1.1 BANK STRATEGY AND INTEGRATED WATER RESOURCES MANAGEMENT IWRM calls for the integration of actions affecting drinking water and sanitation supply, agriculture, irrigation, hydropower and other energy production, and maintenance of environmental water flows to protect habitats and sustain groundwater supplies. Under IWRM, the results of water management programs are monitored to permit ongoing adjustments to strategies and practices. IWRM leads toward the recognition that water policy is bound up together with government policies on security, economic development, food production, public health, and other essential governance missions. It is best conceived of as a framework to guide thinking about the management of water resources so that the approach taken varies appropriately according to geography, climate, and institutions. It is inherently an approach that countries themselves should be encouraged to take-- not one that applies only to the Bank's own work. Source: World Bank (2003a). 4 | Water and Development IEG carried out more than 30 background and case studies Structure of This Report of 6 countries and 1 water basin study (these are listed in This report provides only a broad overview of the sub- appendix B). These efforts analyzed Bank activities by the- stantial research generated by the evaluation. Organizing matic area and by type of activity. All the papers looked at this wealth of material presents considerable challenges, as the same universe of projects. In thematic areas where there there are many disparate parts, some of which may seem is little strategic guidance, the evaluation analyzed what was only loosely related to all the other parts. actually being done, so as to distill the institution's revealed Any framework for organizing this material is necessarily and evolving preferences. The evaluation is by definition artificial and excludes some important work. The report's retrospective, but it identifies changes that will be neces- structure hews closely to the three large areas identified sary in the future, including those related to institutional earlier--water resources management, environmental sus- and financial sustainability. tainability, and water services delivery--which are con- Since the commitment to water resources management nected through the institutional context that is necessary to and water services is largely a concern for IDA and IBRD, coordinate work in all three of those areas. they were the focus of the evaluation. The evaluation did The report begins by establishing the characteristics of the not conduct a comprehensive review of investments by the full set of Bank lending activities in water and its perfor- International Finance Corporation, also a member of the mance (chapter 2). It then more closely examines the Bank's World Bank Group, in this area. work related to water resources management (chapter 3), en- The evaluation addressed basic questions: What is the Bank vironmental sustainability (chapter 4), water services deliv- doing in the water sector? Where is it doing those things? ery (chapter 5), and institutions and coordination (chapter How has the Bank's approach changed over time (and in 6). The report concludes with a summary of the findings and light of strategy documents and other commitments)? with conclusions and recommendations intended to inform What activities have tended to achieve their objectives most the Bank's ongoing Mid-Cycle Implementation Progress Re- consistently? port and future updates of the Bank's water strategy. Water and the World Bank | 5 Chapter 2 EVALUATION HIGHLIGHTS · Bank lending for water has increased since 1997 by over 50 percent. · Over the 11-year evaluation period, 31 percent of Bank projects have been related to water. · Bank-financed water work is concentrated in a subset of countries, although the number of borrowing countries has grown steadily over time. · Performance of the water portfolio has im- proved considerably in the last five years. · Of the 550 projects dealing with water sup- ply and sanitation, a little more than half were implemented by sector boards other than that for water and sanitation, indicating consider- able integration. Photo courtesy of Bill Lyons/World Bank. · During the period studied, projects imple- mented by the Water Supply and Sanitation Sector Board improved from 63 percent mod- erately satisfactory or higher to 89 percent. The Bank's Water-Related Activities and Their Performance A large part of what the Bank finances has something to do with water. Between the Bank's fiscal year 1997 and the end of calendar 2007, the Bank approved or completed 1,864 projects and grants that included at least one water-related activity. Total funding for these projects and grants was $118.4 bil- Since 1997, 31 percent of Bank projects and lion, of which direct Bank support to water was about $54.3 billion. The average loan (exclusive of grants and other non- 28 percent of all lending commitments have lending support) was $67 million. As might be expected, di- been related to water, but the average rect support is so much smaller than total lending and grants project has been getting smaller. because, although the portfolio includes many projects com- pletely focused on water-related activities, it also includes Although the Bank today funds more water projects than ever projects in which those activities were only subcomponents before, the average project is somewhat smaller than in the late of a larger project whose main focus was not on water. Over- 1990s, in keeping with the overall Bank trend away from larger all, 424 distinct water-related activities had defined and loans and toward less variability in lending (figure 2.2).3 measurable results (see appendix D). But the scale of these activities varies, and some of the projects are among the larg- IEG reviewed the objectives of all projects and identified those est infrastructure loans to the Bank's largest borrowers. that had half or more of their objectives focused on water. Six hundred and sixty-two projects, about 35 percent of the 1,864 Overview of the Water Portfolio projects in the portfolio, fit this description and will be re- ferred to as dedicated projects in this evaluation (table 2.1). Lending for water grew 55 percent in commitments dur- ing the period from fiscal 1997 to the end of calendar 2007. About 35 percent of the water-related Lending for most water subsectors dipped to a low point projects had at least half their objectives in fiscal 2002, but the rhythm of project approvals subse- quently picked up as part of the overall increase in Bank devoted to water. infrastructure lending (figure 2.1). Table 2.1 also shows the number and commitment amount of Bank lending for water has increased since projects overseen by the Water Supply and Sanitation (WSS) Sector Board (renamed the Water Sector Board in 2007; see 1997: 1,864 projects worth $118.4 billion appendix D). The majority of the dedicated projects (56 per- have been approved or completed. cent of the 662 projects) were under the purview of sector boards other than WSS. Examples include irrigation projects From fiscal 1997 to end-2007, 1,317 water-related projects done under the Rural Sector Board, lake restoration projects were approved, representing a total Bank commitment of done under the Environment Sector Board, and flood emer- $70 billion. For comparison, the Bank approved a total of gency projects done under the Urban Sector Board. 4,204 projects and grants worth $248 billion during the same period. Water-related projects thus represented 31 This pattern held for the portfolio as a whole and for non- percent of all Bank projects approved and 28 percent of all lending services. The WSS Sector Board was responsible for Bank funding commitments over the evaluated period. The fewer than half of the water-related projects that had fewer Bank was also involved in 238 GEF water projects, all but 34 than half of their objectives focused on water. A recent review of them associated with a Bank loan or credit. In addition, of Bank analytical and advisory activities from fiscal 2003 to 40 projects were carbon offset, Montreal Protocol, or rain- 2009 done during preparation of the Water Mid-Cycle Imple- forest projects.1 Between 1984 and 1996, 547 water projects mentation Progress Report found that analytical work is be- were approved that closed after 1997. Since 1997, 960 water ing mainstreamed effectively: only 84 of 606 pieces of water- projects and grants have been completed (including those related analytical and advisory activity funded in the Bank's approved before 1997).2 budget were completed by staff mapped to the water sector. 8 | Water and Development gure 2.1 FIGURE 2.1 Water-Related Projects Approved and Funds Committed by Fiscal Year 10,000 180 160 8,000 140 Number of projects 120 US$ millions 6,000 100 80 4,000 60 2,000 40 20 0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Number Commitment amount Source: IEG water database. Note: Total commitment amounts given for all projects. Years are fiscal years. The total number of projects approved was 1,317; the 1,864 projects covered in the evaluation include projects that closed during the evaluation period but were approved earlier. Trends in the Water Portfolio tant (figure 2.3). The Rural Sector Board, responsible for the Lending by Sector largest share of Bank lending, has overseen the most water- Because water is a crosscutting theme and the integration related projects: 24 percent of the portfolio. Many agricul- of water was a key element of the Bank's water strategy, the tural projects have routinely included irrigation, drainage, degree to which it has appeared in the work managed by or flood mitigation alongside other water-related activities sector boards other than the WSS Sector Board is impor- such as watershed management, forestry, and drought miti- gure 2.1 FIGURE 2.2 Size of the Average Loan in the Water Portfolio and Bank-wide 120 100 US$ millions 80 Bank average 60 Water portfolio average 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008a Year Source: IEG water database. Note: Includes only loans (including Development Policy Loans) approved during the period. a. Includes small number of 2008 water projects. The Bank's Water-Related Activities and Their Performance | 9 TABLE 2.1 The Water Portfolio and Its Dedicated the subject of in-depth research for this evaluation; for oth- Projects ers the counts were compiled using Bank database codes or word searches. Many of the focal areas overlap, leading to Number of Commitments double counting, but each provides a filter through which projects (US$ millions) to look at water issues. Entire portfolio 1,864 118,420 Overseen by WSS Sector Boarda 293 20,615 The largest subsets of projects are in irriga- Projects with mainly tion, wastewater treatment, and dams and water objectives hydropower. (dedicated projects) 662 41,214 Source: IEG water database. The two largest focal areas by number of projects were a. Appendix figures J.1­J.3 provide an analysis of ratings for the WSS wastewater treatment and irrigation. However, the largest Sector Board­supervised portfolio. amounts of money went to projects involving irrigation and hydropower or dam activities. (Because dams can support gation. Other sector boards that have been highly involved irrigation, the two categories are not mutually exclusive.)4 are Environment (18 percent of the portfolio), Energy and Lending by Region Mining (12 percent), and Urban Development (11 percent). Analysis of lending and patterns of practice by Bank Region This analysis suggests that the integration of water practice shows that the Africa and Latin America Regions led in envisioned in the Bank's water strategy is well under way. numbers of projects approved, with 456 and 407 projects, respectively (figure 2.4). The distribution of water projects among the various sector boards suggests that the However, because projects tended to be larger in East Asia, that Region led in aggregate borrowing. Africa ranked integration of water practice is well under fourth in amount of money committed, indicating that way. projects in Africa tended to be small, a reflection of the lim- ited IDA lending envelope for individual African countries Lending by Focal Area and the countries' limited absorptive capacity. The Bank works with its borrowers to achieve many differ- ent water objectives, and it follows a variety of approaches Attention to the various focal areas listed in table 2.2 varies to meet those objectives. Table 2.2 lists, within three broad considerably by Region, as detailed in appendix J. subsets of the water portfolio, the focal areas with the largest Concentrations in Lending Patterns number of projects. The list gives an idea of the breakdown A total of 142 countries turned to the Bank for water lend- of the overall portfolio. Some of these focal areas have been ing during the evaluation period; the top 10 accounted for 579 projects (31 percent of the total; see appendix table J.1 Figure 2.3 Projects with Water-Related Activities for a ranking by number of projects). Although the num- by Implementing Sector Board ber of countries that borrow for water has varied from year to year, the trend has been upward: in 1997 a total of 47 Other Private Sector countries were served, but by 2007 there were 79 borrow- 155 Development 39 ers. Large IBRD or blend (IBRD/IDA) borrowers made up Rural most of the list; among countries eligible to borrow only 463 Transport 76 from IDA, only Vietnam was among the top 10 borrowers Social for water (table 2.3).5 Protection 91 The top 10 borrowers for water accounted Urban Development for 31 percent of projects and 56 percent of 199 commitments. Environment 335 Energy and Mining The concentration of Bank-financed water work in a few Water Supply 213 and countries was even more apparent in commitments: 56 per- Sanitation cent of all Bank commitments for water went to the top 10 293 borrowers (table 2.3). To a large degree, this pattern mir- Source: IEG water database. rored Bank lending generally: Bank-wide, the top 10 bor- rowers (not the same 10 countries as for water) accounted 10 | Water and Development TABLE 2.2 Water Projects by Focal Area Subset and Number of Total commitmentb focal area projectsa (US$ millions) Water and land Irrigation 311 26,490 Groundwaterc 229 20,508 Hydropower or dams 211 21,800 Floods 177 15,509 Droughts 110 9,960 Water supply and sanitation Urban water supply 229 15,522 Rural water supply 218 13,871 Wastewater treatment 312 13,460 Urban sanitation and sewerage 190 15,609 Rural sanitation and sewerage 108 5,894 Environment Watershed management 218 13,100 Rivers and lakes 174 14,780 Coastal zones 121 4,660 Inland waterways and ports 104 7,632 Fisheries 87 5,034 Source: IEG water database. a. Includes both dedicated and nondedicated projects. b. Total commitments refer to loan amounts for all projects that include the indicated activity. c. Includes 89 projects focusing on aquifer conservation or protection. gure 2.1 FIGURE 2.4 Water Projects and Commitments by Region, 1997­2007 35,000 500 Commitment amount (US$ millions) 450 30,000 400 Number of projects 25,000 350 20,000 300 250 15,000 200 10,000 150 100 5,000 50 0 0 EAP LAC SAR AFR ECA MNA Region Commitment amount Number of projects Source: IEG water database. Note: AFR = Sub-Saharan Africa, EAP = East Asia and Pacific, ECA = Europe and Central Asia, LAC = Latin American and the Caribbean, MNA = Middle East and North Africa, SAR = South Asia. The Bank's Water-Related Activities and Their Performance | 11 for about 52 percent of commitments. The largest borrower The water portfolio as a whole is for water, in terms of both number of projects and com- mitments, was China, with 133 projects and almost $19 performing on par with other Bank billion--16 percent of total commitments--in the evalu- projects. ated portfolio. Bank lending to China for all sectors was somewhat less concentrated, at about 7 percent of the total. In the aggregate, ratings by focal area indicate that the best Brazil was second in number of water projects but third in performers have been projects for waterways and ports and commitments, where it was preceded by India. for flood reconstruction (appendix figure J.6). Urban water supply, sewerage, and sanitation projects performed worse An Indian irrigation project was the largest of the water- on average than other water-related projects. This may re- dedicated projects in the portfolio and one of two Indian flect the generally below-average performance of the water projects was in the top 10 (table 2.4); China had 5 projects sector during fiscal 1997 to end-2002. At 66 percent sat- among the top 10. All of the top 10 projects were IBRD loans isfactory (11 percentage points below the sector average), (table 2.5 lists the top 10 water projects funded by IDA), urban dedicated water projects were rated satisfactory less and all but two were approved in the 1990s, confirming the often than all others. Except for those in sanitation, projects observed recent trend toward smaller projects. Hydropow- with water-related activities in rural environments gener- er projects dominate the list, even though the Bank was not ally performed better than those in urban areas. funding hydropower in the early part of this decade. Urban water supply, sewerage, and sanita- The largest projects tended to be in hydro- tion projects tended to perform worse than power, although the Bank was not priori- other water-related projects. tizing that sector in the early part of the 2000s. When the evaluation period is divided into two subperiods, 1997­2002 and 2002­07, the picture changes considerably. The outcome ratings of almost all types of water projects Portfolio Performance: improved in the second five years over the first. Figure 2.5 Ratings against Objectives compares the ratings of water-dedicated projects by focal Over the evaluation period, of the set of 857 completed area in the two subperiods. The most improved areas were projects (dedicated and nondedicated), 77 percent had rural sanitation and sewerage and rural water supply, which an aggregate IEG outcome rating of moderately satisfac- also had the highest ratings in the more recent period. The tory or higher (hereafter referred to as satisfactory) when only focal area exhibiting a decrease in the percent of sat- isfactory outcomes was inland waterways and ports. Also measured against stated objectives.6 This was just above the among those receiving the highest recent ratings were proj- Bank-wide average of 75 percent satisfactory during the ects involving floods, groundwater, and coastal zones. same period.7 When only dedicated water projects are con- sidered, the aggregate IEG outcome rating over the evalua- In the aggregate, ratings by Bank Region (figure 2.6) indicate tion period was 75 percent satisfactory. that the poorest-performing Region was Africa, where the TABLE 2.3 The Top 10 Borrowers for Water Total amount in water portfolio Water portfolio Entire Bank Country (US$ millions) ranking portfolio ranking China 18,840 1 2 India 13,993 2 1 Brazil 7,153 3 3 Indonesia 5,637 4 7 Mexico 5,556 5 6 Pakistan 3,931 6 10 Argentina 3,199 7 5 Russian Federation 2,984 8 8 Vietnam 2,740 9 11 Turkey 2,211 10 4 Source: IEG water database. 12 | Water and Development TABLE 2.4 The 10 Largest Water Projects Total amount Country (US$ millions) Project name Approval year India 485 Tamil Nadu Irrigated Agriculture Modernization and Water Bodies Restoration and Management Project 2007 China 460 Xiaolangdi Multipurpose 1994 China 430 Xiaolangdi Multipurpose II 1997 China 400 Ertan II Hydroelectric Project 1996 China 400 Wanjiazhai Water 1997 Mexico 400 Irrigation Sector 1992 India 394 Madhya Pradesh Water Sector Restructuring 2005 China 380 Ertan Hydroelectric Project 1992 Turkey 369 Emergency Flood Recovery 1999 Mexico 350 Second Water Supply & Sanitation Project 1994 Source: IEG water database. Bank financed 456 water-related projects (appendix figure gions except Europe and Central Asia, although the differ- J.7). Of these, 194 are closed, and outcomes for 62 (32 percent) ence was not always statistically significant. Performance in were rated unsatisfactory. Africa also had the largest number Africa improved by 23 percentage points (figure 2.6). of highly unsatisfactory projects (6), although the Middle East and North Africa, with 5 highly unsatisfactory projects Integrating Water out of a smaller set of water projects, performed worse in percentage terms. (Appendix E provides more information There are two basic ways in which the Bank's water-related on the analysis of highly satisfactory and highly unsatisfac- activities can be integrated. One is thematic integration tory projects.) Africa was also the worst-performing Region within the water sector itself. The other is integration of in sustainability ratings, with only 56 percent of completed water into the work of other sectors. Both are of concern projects classed as resilient to foreseeable risks. for IWRM. In reviewing the integration of water into the projects of Performance of the water portfolio im- other sectors, the evaluation gave special attention to the proved substantially in the last five years more traditional water activities: water supply, sanitation, of the period. Africa posted the strongest and sewerage (WSS). As noted earlier, of the 550 projects improvement. dealing with WSS, 273 were supervised by the WSS Sector Board and 277 by other sector boards. An updated review When broken into subperiods, however, performance of all projects approved through fiscal 2009 shows that this shows a clear improvement in the last five years in all Re- trend is continuing, with fewer than a fourth of all active TABLE 2.5 The 10 Largest IDA Water Projects Total amount Country (US$ millions) Project name Approval year Pakistan 285 National Drainage Program 1998 India 283 Tamil Nadu Water Resources Consolidation 1995 China 200 Forest Resource Development 1994 Bangladesh 200 Emergency Flood Recovery Project 1999 Tanzania 200 TZ-Water Sector Support SIL 2007 Nigeria 200 Second National Urban Water Sector Reform 2006 China 188 Irrigation Agriculture Intensification 1991 India 181 Mahar Rural Water Supply and Sanitation 2004 India 160 Upper Krishna Phase 1989 India 160 Maharashtra Irrigation I 1986 Source: IEG water database. The Bank's Water-Related Activities and Their Performance | 13 gure 2.1 FIGURE 2.5 Outcomes of Water Projects by Focal Area and Subperiod Rural sanitation and seweragea Rural water supplya Urban water supplya Dams/hydroa Watershed management Groundwatera Wastewater treatment Fisheries Urban sanitation and sewerage Floods Coastal zones Irrigation Rivers/lakes Inland waterways/ports 0 10 20 30 40 50 60 70 80 90 100 Percentage satisfactory 2003­07 1997­2002 Source: IEG water database. Note: Focal areas are ranked in descending order by percentage improved. a. The difference between periods was statistically significant at the 95 percent confidence level. gure 2.1 FIGURE 2.6 Outcomes of Water Projects by Region Africa 80 57 South Asia 76 66 Latin America/Caribbean 83 76 East Asia/Pacific 84 77 Middle East/North Africa 74 70 Europe/Central Asia 81 91 0 10 20 30 40 50 60 70 80 90 100 Percentage satisfactory 2003­07 1997­2002 Source: IEG data. Note: Regions are ranked in descending order by percentage improved. The difference in outcome ratings between periods is statistically signifi- cant at the 95 percent confidence level only for Africa. 14 | Water and Development water projects under the supervision of the Water Sector The lower performance of projects managed by the WSS Board. Sector Board is due to the lower performance that charac- terized the WSS sector portfolio in the 1990s. Since then, The WSS Sector Board managed the majority of WSS proj- the sector board has stepped up its work on underlying in- ects in the East Asia and Pacific, Europe and Central Asia, stitutions, but financial structures, in-depth technical sup- and Middle East and North Africa Regions; in the Africa port, and training continue to present major challenges. and Latin America Regions, other sectors supported more Thus, the lower outcome ratings may in part reflect the projects (figure 2.7). Only in the South Asia Region were more difficult challenges of water sector institutional devel- the numbers for both groups virtually the same. opment, which multipurpose projects that integrate WSS A total of 253 projects dealing with WSS or with WSS may not address. components were completed and rated in this period. The ratings on all three IEG scales--project outcome, sustain- The ratings of projects implemented by the ability, and institutional development--were not as good WSS Sector Board have been improving for WSS Sector Board projects on average as for projects substantially. (dedicated or nondedicated) implemented by other sectors (figure 2.8). Whether the difference in ratings means that IEG's 2008 Annual Review of Development Effectiveness WSS activities in projects managed by other sectors pro- compares the performance of sector board project portfo- duce better results than those in projects managed by the lios.8 From 1990 to 2000, projects implemented by the WSS WSS Sector Board remains an open question, however, as Sector Board had lower ratings on average than most other overall outcome ratings of projects managed by other sec- sectors. In recent years, however, the WSS Sector Board's tors may be driven by objectives and activities unrelated to ratings have shown marked improvement. In the period WSS when WSS is only a small aspect of a project. 1998­2002, 63 percent of water sector projects (weighted by disbursement) had satisfactory outcome ratings, com- WSS projects implemented by the WSS pared with a Bank average of about 71 percent. For the Sector Board were generally rated lower more recent period of 2003­07, the water sector jumped than those implemented by other sector to 89 percent satisfactory, bettering the Bank average by a boards, but ratings for the latter may be large margin. In fact, water was the most improved sector during that period (IEG 2008a, p. 10ff ). driven by non-water-related objectives. gure 2.1 FIGURE 2.7 WSS Projects by Region and Implementing Sector Board 80 70 60 Number of projects 50 40 30 20 10 0 AFR EAP ECA LAC MNA SAR Region Other sectors Water sector Source: IEG water database. Note: AFR = Africa, EAP = East Asia and Pacific, ECA = Europe and Central Asia, LAC = Latin American and the Caribbean, MNA = Middle East and North Africa, SAR = South Asia. The Bank's Water-Related Activities and Their Performance | 15 Figure 2.8 Outcome, Sustainability, and Changes in Portfolio Focus Institutional Development Impact The portfolio of 1,864 projects was analyzed in two different Ratings for Projects Supporting WSS ways to discern the emerging priorities. First, the database was examined for the most common themes covered in the projects. These are shown in figure 2.10 (which omits 396 Satisfactory projects that fit best in smaller groupings not covered by outcome the graphic).10 Next, the percentage of ongoing projects ad- dressing each theme as of 2007 was calculated, and these percentages were then averaged. This exercise compares the Likely sustainability degree to which the most recent projects focus on each of the various themes. The portfolios for which this percentage Substantial exceeds the average (43 percent) are considered emerging institutional priorities, and those that fall below the average are consid- development ered lower or diminishing priorities. For example, in 2007 impact attention to coastal management was 5 percentage points 0 25 50 75 100 below the all-themes average. Percent Other sectors Water sector Groundwater and coastal zone management account for a declining share of the portfo- Source: IEG ratings database. lio, while that of dams and hydropower has Note: Differences for sustainability and institutional development impact are statistically significant at the 95 percent confidence level; been rapidly increasing. the difference for outcome was significant at 90 percent. Another way of looking at the prioritization of lending is to see how many ongoing projects address each theme in each A closer look at the more recent trend reveals that projects year of the study period. Analysis of the various subsets (both dedicated and nondedicated) supervised by the WSS of data reveals that attention to coastal zone management Sector Board steadily improved: satisfactory outcomes rose declined from 73 ongoing projects in 1998 to 51 in 2007. to 93 percent in 2005 from 63 percent in 2002; after a drop Other issues such as groundwater (top panel of figure 2.11) to 75 percent in 2006, the satisfactory share continued to have also been declining in the portfolio. The 2003 strategy climb, reaching 90 percent in 2007.9 WSS Sector Board­ called for greater attention to major hydraulic infrastruc- supervised projects had a higher percentage satisfactory ture, and the bottom panel of figure 2.11 shows how that than did water projects implemented by all other sectors in change in emphasis is reflected in ongoing projects year by three of the last five years (figure 2.9). year: since 2003 the number of dam and hydropower proj- gure 2.1 FIGURE 2.9 Outcome Ratings of Water Projects by Implementing Sector Board 100 90 Satisfactory outcomes (%) 80 70 60 50 40 30 20 10 0 2002 2003 2004 2005 2006 Exit years WSS Sector Board Other sector boards Source: IEG ratings database. Note: Dedicated projects only; only in 2003 is the difference statistically significant at the 90 percent level. 16 | Water and Development ects has been steadily increasing. These major themes are The comparison shows no clear relationship between Bank covered in chapters 3­6 of this report. water lending and water stress: the correlation coefficient is about 0.2. Similarly, when each country's allocation for wa- Prioritizing Water ter within its overall borrowing is compared with its water poverty ranking, no relationship is found.12 This is not to Countries eligible to borrow from IDA borrow proportion- say that the Bank should stop providing support to water- ately somewhat more for water (35 percent of their total rich countries. And, of course, a single large hydropower borrowing from the Bank) than do IBRD countries (23 per- project would quickly change the picture for a given coun- cent). However, as noted earlier, lending for water has been try. (Country-by-country data on water borrowing can be concentrated, with the largest share going to large IBRD found in appendix table J.11.) borrowers: overall, 61 percent of water lending went to IBRD borrowers, and 39 percent to IDA borrowers. The big Bank lending for water is not correlated borrowers--Brazil, China, India, Indonesia, and others-- typically are familiar with Bank procedures and have rela- with the Water Poverty Index. tively high absorptive capacity. A relevant question, then, The Bank's water strategy covers all countries without pri- is whether countries that have the most precarious water oritization. The Bank's 2003 strategy paper says: situation borrow the most for water. · In all countries there is a major need for more effective To answer this question, the evaluation used the Water Pov- erty Index (WPI) constructed by the United Kingdom's Nat- management of water resources.... ural Environment Research Council, Centre for Ecology and · In all countries there is a need for greater attention to Hydrology, using data gathered by the World Resources In- water allocation, demand management, water rights and stitute. The WPI measures, for a given country, the impact on the use of pricing and other economic instruments.... human populations of water scarcity and the current level of · In all countries there is a need for improving the bene- water provision.11 Each WPI is an average score for the coun- fits from existing infrastructure and for developing in- try as a whole and conceals intracountry variation, which can stitutional and financial arrangements for sustainable be substantial. The WPI ranges between 0 and 100, where a rehabilitation and maintenance [World Bank 2003b, low score indicates water poverty and a high score indicates p. 41]. good water provision. The WPI for each Bank borrower was then compared with the amount per capita of Bank lending One way the Bank might help borrower countries (espe- for water to that country (figure 2.12). cially IDA borrowers) would be to make a greater effort at gure 2.1 FIGURE 2.10 Shares of Ongoing Projects Addressing Selected Themes Groundwater 28 Irrigation 32 Coastal management 38 Wastewater treatment 40 Hygiene education 45 Urban 45 WSS 46 Rivers and lakes 47 Hydrological and meteorological 47 monitoring Dams and hydro 49 Watershed management 56 Environmental flows 62 Water portfolio average 43 0 10 20 30 40 50 60 70 Percent ongoing Source: IEG water database. The Bank's Water-Related Activities and Their Performance | 17 gure 2.1 FIGURE 2.11 Ongoing Groundwater Projects and Dam and Hydropower Projects by Year Groundwater Projects 140 130 122 121 119 119 120 111 101 100 100 91 85 Number of projects 79 80 60 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Dam and Hydropower Projects 120 99 101 100 95 89 91 91 83 80 81 79 Number of projects 80 76 60 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: IEG water database. the design stage to find the country-specific institutional Summary arrangements, policies, and investments that will make a A large part of what the Bank finances has something to do difference. All of these need to be compatible. The Bank with water. Between 1997 and 2007 the Bank approved or could help by producing more Country Water Resource completed 1,864 projects and grants with at least one water- Assistance Strategies that review the different develop- related activity. Water-related projects represent 31 percent mental, economic, and social returns to various alloca- of all Bank projects approved since 1997, and 28 percent of tion scenarios in more countries--for example, and by Bank commitments. Water lending grew in both commit- helping countries under water stress integrate this chal- ments and number of projects during the period. lenge even more fully into their national development strategy. The integration of water practice across Bank sectors--an important goal of the Bank's water strategy--appears to be The Bank's water strategy does not single well under way. The majority of water-focused projects are out water-stressed countries. overseen by sector boards other than that for water. The Ru- 18 | Water and Development 19 | The Bank's Water-Related Activities and Their Performance Water Poverty Index 0 10 20 30 40 50 60 70 80 Eth iop H ia gure 2.1 Niaiti Eri ger Dj tre ib Ma outa l i Beawi n Rw a Ch in Bu andd r a Ca Anund pe go i Ce Bu Ve la nt r rd ra Sierkina Mae lA l fri ra LeFasoi ca Le o n R so ne e t Water-poor countries Copubho m li Ni oroc Ye Ugger s me a ia n Sources: World Resources Institute and IEG data. Mo n, Reda za Gh p. mb an Co a ng C Senique o, am eg De bo al Cô m d te . R ia d'I ep v J oi . Moordare ro n c G T co Gu am Keogo ine bia ny Ma a-B , Tha da iss e Ta gascau n Mozanar ld ia Ma Alg ova ur er ita ia Z a ni m a C bia T hin So Gunis a ut uin ia h VieAfriea tn ca Zim Inam ba dia Water Poverty Index Ba Arm bw n e e Caglad nia m es Pa Laerooh pu oP n a N Mo Ne DR ew ng pal Gu olia El Bh inea FIGURE 2.12 Water Poverty Indexes and World Bank Water Commitments by Country Sa ut Lelvadan Pa ban or ra on P gua Co Sri Lolan y Eg ngo ankd yp , R a t, A Tu ep ra rke . b Ka JamRepy za a . kh ica Do st mi Nic Mex an nic P ara ico an ak gu i a GuRep stan at ub Roemalic Ta ma la jik ni Ira i a n, H Geostan Isl on rg am du ia Maic Rras u e N ri p. Bank water commitments per capita in U.S. dollars Ar amtius ge ibi n a Cz Bel tina ec h R Barus ep razi PhHunubli l ilip ga c Uz p ry be in ki es Ru Gastan ssi an B Bolbon Ky Fe ul ivi rg de ga a yz ra ria Re ti pu on Ve bl ne Tha Peric zu Ind ila u ela on nd , R es .B. ia Co Bel de Co lom ize st b Eca Ri ia Pauadca Water-rich countries Ur nam r o ug a Tu Cro uay rkm ati enChila Guistae ya n na 0 20 40 60 80 100 120 140 160 180 200 Bank water commitments per capita in U.S. dollars ral Sector Board is responsible for the largest share of water- been waterways and ports and flood reconstruction. Ur- related lending and has supervised the most projects. ban water supply, sewerage, and sanitation performed worse on average than other water-related projects. Dur- Performance of Bank-funded water projects is on par ing the first half of the evaluation period, projects man- with the rest of the Bank's portfolio and has been on an aged by the WSS Sector Board had lower ratings, on av- improving trend. In general, the best performers have erage, than did projects in most other sectors. In recent years, however, ratings of WSS Sector Board­managed projects have shown marked improvement. The sector board has stepped up its work on underlying institutions Photo courtesy of Curt Carnemark/World Bank. and financial structures, in-depth technical support, and studies and training, although, as will be seen in subse- quent chapters, much remains to be done on institutional development. There is no apparent correlation between a country's water stress and Bank lending for water to that country. To en- sure that water issues are adequately addressed in countries facing severe water stress, the Bank should look for entry points to help countries make water use more sustainable, even if the Bank may not necessarily be able to finance all the work that is needed to resolve the most pressing water issues. 20 | Water and Development Chapter 3 EVALUATION HIGHLIGHTS · Combining livelihood improvements with environmental restoration in watershed man- agement projects generally produced good results. · Despite the seriousness of groundwater deple- tion, the extent of the groundwater problem is poorly understood, and few projects protect or restore aquifers. · The Bank has usually succeeded in establish- ing river basin management organizations, but their sustainability has been an issue. · Monitoring has been supply driven, and proj- ects often did not identify who would use the data collected. · Limited success with full cost recovery has caused the Bank to moderate its approach. · Water efficiency initiatives are undertaken most often in water supply and irrigation and drainage projects, where they commonly promote the use of improved technology, reduction of losses, and institutions for better management. · As groundwater has become increasingly scarce, ongoing Bank projects have shifted away from investments in extraction. Managing Water Resources The Bank helps developing countries manage their water resources through loans, credits, and grants that build infrastructure for or support the management of water- sheds, river basins, and groundwater, or that support hydrometeorological monitoring. This chapter explores the variety of ways in which the Bank ment improvements that affect surface water. The size of has promoted water resource use that takes into account the the treated watershed varied considerably across projects currently available supply and the likely future demand. As (appendix table J.12). Eighty-five projects (39 percent) used this is largely a story about sustainability, the chapter also the approach promoted in the Bank's 2003 Water Resources discusses the ways in which Bank-financed projects have Sector Strategy, combining livelihood improvements with tried to manage the demand for water. environmental restoration. Projects that took a livelihood- focused approach to watershed management performed far Watershed Management better (90 percent had satisfactory outcomes) than those that did not (69 percent; figure 3.1). By using the drainage basin or catchment area as the unit of intervention, the watershed management approach usually Across all completed watershed manage- aims to help improve upland natural resources management in order to protect downstream resources and infrastructure. ment projects, those that took a livelihood- A watershed can be thought of as a geographical area that focused approach performed better than drains into a single river system, and a river basin as the river average. itself and all its tributaries. Hence, watershed management is more concerned with how water affects the land on its way to To better understand these results, IEG analyzed the 31 a body of water, whereas basin management has more to do completed projects that focused on livelihoods. In the 25 with how the water is used once it reaches that body of water. projects with data on beneficiaries, a total of about 9 million The Bank defines watershed management as "the integrated farmers--most living in extreme poverty--benefited from use of land, vegetation and water in a geographically dis- the project (appendix table J.12). Families and communities crete drainage area for the benefit of its residents, with the received wells, water storage facilities, rural roads, improved objective of protecting or conserving the hydrologic ser- houses, rural electrification, and social infrastructure. In vices that the watershed provides and of reducing or avoid- return for the benefits associated with the construction of ing negative downstream or groundwater impacts" (World infrastructure (such as irrigation systems), local communi- Bank 2008e, p. xi). ties had to commit to environmental restoration activities (box 3.1). Seventy-four percent of livelihood-focused proj- Therefore, watershed management projects are designed ects paid special attention to women, because their activi- to overcome obstacles to environmentally sensitive natu- ties were more closely involved with natural resources man- ral resources management by incorporating the interests agement.2 Forty-eight percent of projects also focused on of stakeholders (and often the provision of alternative minorities and tribal areas, such as Bedouin families in the livelihoods--a practice termed the "livelihood-focused ap- Arab Republic of Egypt. proach") in technological solutions to the typical problems of watersheds.1 The problem these projects often face is that Three-quarters of livelihood-focused in most watersheds, people making a living from degraded projects paid special attention to women. lands generally contribute to the degradation with their daily activities, and the people causing the damage have to To increase the incomes of the local population, produc- become part of any solution. tive capacity was improved through market gardens, live- IEG identified 218 projects in its water database with at least stock improvement, veterinary outreach, small irrigation one watershed management activity; these projects had to- schemes, grain storage facilities, and mills. These income- tal commitments of $13.1 billion over the 10-year evalua- enhancing activities proved successful in all but two cases tion period. Most projects concentrated on land manage- (Brazil and Uruguay). In those cases, circumstances exter- 22 | Water and Development gure 2.1 FIGURE 3.1 Performance of Watershed Management Projects Using a Livelihood-Focused Approach 100 90 90 80 80 75 69 71 68 70 66 59 Percent 60 47 50 40 30 20 10 0 Outcome Sustainability Institutional development Livelihood-focused approach Other watershed management Bank-wide Source: IEG water database, based on the full universes of relevant projects. nal to the project (drought and macroeconomic conditions) high success rates (appendix figure J.9), project completion best explain the disappointing results. reporting often described the benefit-cost ratios as low, both because environmental benefits were not taken into account Watershed management projects that in- and because there was a time lag between action and down- cluded livelihood interventions were often stream benefit in some watersheds. The Morocco case study claimed to have a low benefit-cost ratio carried out for this evaluation provides an example (appen- dix box J.1). Effects on downstream communities, such as because environmental benefits were not reduced siltation of reservoirs, reduced flooding, and im- quantified. proved water quality and availability were rarely measured, nor were the social and organizational benefits from avert- Although watershed management projects combining liveli- ing potential conflicts between upstream and downstream hood interventions with environmental restoration enjoyed communities taken into account. Hydrological monitoring BOX 3.1 IMPROVED WATER MANAGEMENT PRACTICES In the Integrated Watershed Development (Plains) Project (P009860, completed in 1999), Indian farmers on private lands benefited directly from water-controlling and -harvesting structures built in natural drainage lines in lower parts of the watersheds. Earthen runoff structures, usually constructed at the downstream end of gullies, were very popular among farmers in all project areas. These structures not only provided additional drinking water to animals during dry spells but have assisted in the recharge of groundwater, increased the soil moisture of downstream fields, provided water for supplemental irrigation on private land, and controlled runoff water and soil erosion. Concrete and rock diversion structures were also constructed on natural drainage lines and seasonal streams. This resulted in an increased agricultural water supply for adjacent fields, leading to improved harvests of rice and other field crops, vegetables, and fruits. Source: ICR for the India: Integrated Watershed Development (Plains) Project. Managing Water Resources | 23 (with or without remote sensing) and watershed modeling might have helped improve impact assessment and thus have better captured the true benefit-cost ratio of such in- terventions. One GEF project visited by IEG demonstrated how this approach could work (box 3.2). Groundwater Management Groundwater is increasingly threatened by overexploita- tion, inadequate environmental flows, and contamination. Throughout the world, water from rivers and reservoirs has been committed to household consumption and to economic uses without adequately considering the need to replenish groundwater or sustain aquifers or to protect water quality by safely returning used water to the environ- ment (Clarke and King 2004, p. 52). Groundwater depletion is most severe in the Middle East, North Africa, and South Asia (box 3.3). In some coastal areas so much freshwater has Photo courtesy of Dominic Sansoni/World Bank. been withdrawn from aquifers that salt water has started to intrude, threatening the usability of what remains. This problem was encountered in the Morocco, Tanzania, and Vietnam case studies and is discussed further in the section on coastal zones. As groundwater has become increasingly scarce, ongoing Bank projects have shifted away from investments in extraction. Over the evaluation period as a whole, extractive activities, such as construction of groundwater supply schemes or well construction for irrigation, dominated Bank-supported BOX 3.2 A GEF PROJECT THAT WORKS BOTH UPSTREAM AND DOWNSTREAM The Brazil case study carried out for this evaluation found that a 2008 GEF project, the Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233), is providing a start-up fund for a series of expected environmental transfers between water users in different economic sectors to both protect the upstream forests and ensure downstream water supply in the city of Vitória. Sometime in the past, upstream forests were cut down to create pasture area for cattle farms located on steep slopes adjacent to the riverbanks. This deforestation, although legal and undertaken for productive purposes, has increased sediment runoff into the river. This runoff has collected at the site of a major dam that supplies power to the surrounding communities, reducing the river's flow rate and the supply of energy and water to metropolitan Vitória. Currently, the private power company that owns the dam is responsible for sediment dredging and removal--a textbook case of negative externalities, where one party is economically harmed by the actions of another without receiving compensation. The GEF-funded environmental transfers program will allow the dam owner to pay the cattle rancher not to farm--a simple transaction that economic theory predicts would happen on its own if property rights were well defined and if it cost the power company less to pay the farmer than to remove the sediment. Other positive externalities for both the city of Vitória and the state of Espirito Santo are expected from this transfer: forests will grow back, habitat and biodiversity will be protected, sediment runoff will decrease, water quality will improve, and the city will receive increased electric power and water for both consumption and production. In theory, this solution is Pareto improving: with the transfer, no party is made worse off economically, and many are made better off. Source: IEG Brazil case study research. 24 | Water and Development BOX 3.3 GROUNDWATER IS DEPLETING RAPIDLY IN THE REPUBLIC OF YEMEN The Republic of Yemen has no significant perennial sources of surface water. Instead it relies almost exclusively on exploitation of groundwater. Water is taken from the shallow aquifers, which are rechargeable, and increasingly from deeper aquifers, which are generally considered not rechargeable, although some recharging has been accomplished with significant difficulty and expense. In large parts of the country, water from the shallow aquifers is extracted at well over the recharge rate from the country's limited rainfall. Thus, as water from these aquifers is exhausted, pumping relies on the deep (fossil) aquifers that are also depleting. Because these aquifers cannot be readily recharged, pumping is essentially a mining operation. Groundwater tables are declining inexorably in many locations, sometimes at dramatic rates. In the Sana'a Basin, the groundwater table is falling by as much as 6 meters per year in the more populated areas, and rural and urban tube wells are constantly being deepened. The rate of groundwater depletion has accelerated over the past three decades for several reasons. One has been the explosion in agricultural use resulting from the introduction and rapid spread of mechanized tube wells. Farmers, using shallow dug wells, had traditionally extracted water at about the rate of natural recharge from rainfall, but this changed when the tube well technology and pump-sets were introduced in the early 1970s. This enabled much higher levels of groundwater abstraction as well as pumping from the deep aquifers. Agricultural use of water increased by about 5 percent per year in the 1990s. In 1990 agricultural consumption (for irrigation) was 130 percent of the country's renewable water resources; it has since increased to 150 percent. Source: IEG Republic of Yemen case study research. groundwater projects (appendix figures J.9 and J.10). Howev- The number of projects dealing with groundwater conser- er, as groundwater has become increasingly scarce, ongoing vation also declined somewhat after 2001. This set of proj- Bank projects have shifted away from investments in extrac- ects briefly witnessed a small positive shift toward increased tion (figure 3.2). For example, the number of projects financ- sustainability and conservation before dropping below its ing new drilling for irrigation has declined. The Morocco original level (figure 3.2). Relevant activities include moni- case study research found, however, that in the absence of a toring of groundwater quality, landfill site improvements to regulatory system and systematic enforcement, many small- reduce leachate, and the reduction of infiltration of contami- scale private providers step in to provide--often illegally-- nated surface water into groundwater (appendix table J.13). access to groundwater for those with the capacity to pay. As box 3.4 reports, aquifer recharge, a proven technology,3 gure 2.1 FIGURE 3.2 Ongoing Groundwater Projects Focusing on Extraction and Conservation 100 90 80 Number of projects (%) 70 60 50 Extraction 40 Conservation 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: World Bank data. Managing Water Resources | 25 BOX 3.4 ARTIFICIAL RECHARGE OF THE SOUSS AQUIFER, MOROCCO The water table is falling dramatically in the Souss Aquifer near Agadir in southern Morocco. In recent decades farmers have had to deepen wells every two years, because water tables were falling by 1.5 to 3 meters per year. Under the Water Resources Management Project (P005521), five weirs were reconstructed and one new one built to prevent dam overflow from being lost to the sea. Contrary to expectations, water does not infiltrate the entire aquifer, although it is detectable quite far from the insertion point--in this case it could still be measured more than 80 kilometers from the dam. The weir does not help communities that have to tap into its groundwater from farther away, but the objective of mobilizing additional groundwater by artificially recharging the Souss aquifer was met in the limited area where it was attempted. Source: IEG Morocco case study research. helps restore partially depleted aquifers, but there are only a to complete the task. Several activities in the bottom 10 are handful of Bank-financed efforts of this type worldwide. To related to reducing pressure on groundwater and to conser- what extent this technology is more consistently supported vation: expanding or establishing surface water sources in by other donors is not clear. place of groundwater; groundwater recharge schemes; and activities for the development of alternative sources, such as Analysis of the successes and failures of various groundwa- rainwater harvesting. ter-related activities in completed projects found that five activities had success rates at the 90 percent level or above Several findings stand out when comparing the most and (figure 3.3). Construction of groundwater supply schemes least successful groundwater-related activities. First, the not only was attempted most frequently, but achieved the more successful activities tend to be not particularly chal- intended goal most often. In general, activities whose objec- lenging by nature. They are focused on the construction of tive was increasing water supply were the most successful. infrastructure and the extraction of groundwater. In con- trast, the least successful projects address environmental This result is most likely a function of the simplicity of the and resource protection issues critically important to the goal--get more water--as well as of strong stakeholder de- safe, longer-term use of groundwater resources. Although mand and concomitant close oversight. the more successful activities include those related to The least successful activity in the groundwater portfolio groundwater monitoring, two of the least successful ac- was the development of management frameworks or plans: tivities are related to improvement in the quality of water only 20 percent of projects attempting this activity were able through pollution abatement. Particularly troublesome is gure 2.1 FIGURE 3.3 The 10 Most Successful Activities Dealing with Groundwater Construct groundwater supply schemes (WS) Subsurface drainage Rehabilitate water supply schemes Rehabilitation of well network, irrigation structures Lining of canals or watercourses (flood, drainage) Well or borehole construction for irrigation Monitor groundwater level Monitor groundwater quality Studies Acquire monitoring equipment 50 60 70 80 90 100 Percent Source: IEG water database. Note: Each bar reports the success rate in attaining groundwater-related goals within the indicated activity. 26 | Water and Development gure 2.1 FIGURE 3.4 The 10 Least Successful Activities Dealing with Groundwater Treatment plants, equipment Conjunctive use (irrigation) Landfill site improvement, solid waste collection Pump out saline water (reduce waterlogging) Establish/expand surface water system Groundwater exploration (WS) Groundwater exploration (irrigation) Groundwater recharge Develop alternative sources (rainwater) Develop management framework, plan 0 10 20 30 40 50 Percent Source: IEG water database. Note: Each bar reports the success rate in attaining groundwater-related goals within the indicated activity. that the least successful activity of all--the development of less often publicly available. Research into the condition groundwater management frameworks and plans--is criti- of groundwater supplies has had a low priority, and many cal to sustainability. countries do not have enough information at hand to make long-term plans. Within the set of projects examined by Bank projects need to be more ambitious in this evaluation, it was quite common for project appraisals addressing issues critical to the long-term to state an intention to monitor groundwater quality and use of groundwater. level, but these intentions often had not been carried out by the time the loans closed. With many areas experienc- The extent of groundwater depletion is poorly understood ing changing rainfall patterns and climate, the hydrological because groundwater data are rarely collected and even record has been a poor predictor of the future. This means Photo courtesy of Curt Carnemark/World Bank. Managing Water Resources | 27 that the collection and analysis of groundwater data are ports this stance. Sound river basin management requires more important now than ever and need to be taken on an understanding of how much water can be consumed board more commonly than they have been. To this end, while still meeting environmental flow requirements (with- the Bank has recently established a Groundwater Manage- out overexploitation of groundwater). How best to apply the ment Advisory Team, cofinanced by DFID and the Bank- Dublin Principles depends, of course, on the location. Netherlands Water Partnership Program. One way to support an integrated approach to river basin man- agement is through river basin organizations (RBOs). These are The extent of the groundwater problem is part of government, but if they are to have authority to make poorly understood because data are rarely allocative decisions and reduce water stress, they need signifi- collected or shared. cant political support. Basin management is anchored in the subsidiarity principle--tasks should be undertaken by the most localized entity competent to do so--but its actual application River Basin Management often encounters resistance from groups slated to lose power or Increased stresses on a river basin's natural resource base privilege (World Bank 2005a, 2006b). are felt well beyond the immediate area of a particular An RBO's form and role need to reflect the historical con- intervention. Conversely, even small river basin improve- text and interaction patterns among critical stakeholders; ments can have big payoffs (Dyson and others 2003, p. 17). this varies by basin, as can be seen in appendix table J.14. Even small river basin improvements can Generally, however, the key characteristics of an effective RBO include the following (World Bank 2006b): have big payoffs. · Basin-wide planning The 1992 Dublin Principles suggest that independent man- · Balancing of all user needs for water resources agement of water resources by different water-using sectors in a river basin is suboptimal, because there is no one to take · Protection from water-related hazards the water resource needs of all users into account and to bal- · Wide public and stakeholder participation, with atten- ance them in a sustainable manner. The Bank's strategy sup- tion to gender and minority group issues. BOX 3.5 RIVER BASIN MANAGEMENT IN TANZANIA Water security remains elusive in Tanzania, despite an endowment of freshwater resources that is relatively large by global standards. Water insecurity is characterized by the vulnerability of people and the economy to frequent cycles of drought and flood, increasing conflicts over water, and increasing degradation of water resources. Recently, scarcity and conflict among users have been exacerbated by a few years of below-average rainfall, coupled with the expansion of irrigation and an increase in demand for hydropower and water for urban uses. Along with local conflicts within an irrigation network have come conflicts over the upstream versus downstream uses of rivers. After consultations with the World Bank and a rapid water resources assessment undertaken by Tanzanian water experts, the government decided to improve water resources management through the establishment of basin organizations and the adoption of an IWRM approach. Although promulgated by law in 1981, the new organizations, called basin water offices (BWOs), became operational only in the 1990s, the first one being the Pangani Basin Water Office in 1991, followed by the Rufiji Basin Water Office in 1993. The River Basin Management and Smallholder Irrigation Improvement Project (P038570) provided ongoing support to the fledgling organizations. The project provided financing for the necessary premises, computer devices, gauging stations, and vehicles. As of 2008 these two BWOs were substantially operational, while the other seven are being supported under an ongoing Water Sector Support Project (P087154). One of IWRM's objectives for river basin management is to ensure that each entity using water (irrigators, herders, industries, hydropower, fisheries, national parks, mining, urban and rural water supply and sanitation, and environment) is represented in decision making. During a 2008 IEG workshop with representatives of the Pangani BWO, participants acknowledged that the basin office had so far neglected the needs of herders and the environment. A promising recent development is that the Pangani BWO has completed a basin-wide environmental flow assessment that takes a more inclusive look at all stakeholder needs and maps out a road to a better environmental outcome. Source: IEG Tanzania case study research. 28 | Water and Development RBOs oversee such concerns as water allocation, water reg- creation proceeded as planned.4 Nevertheless, nine projects ulation, resource management and planning, education of stated an intention to strengthen basin organizations, but basin communities, development of natural resources man- only two reported positive results. In five other cases the agement strategies, and programs to remediate degraded basin management agencies were reported to be too weak lands and waterways. They may also contribute to consen- to function as intended, and by project closing the RBOs sus building and conflict management, as was found in the still had limited access to financial sources and technical as- evaluation's case study research in Tanzania (box 3.5). sistance. Completion reports for two projects reported that The review of the portfolio found that 30 projects worked the basin agencies established were on the verge of collapse with basin management institutions. Some of these estab- for lack of sufficiently skilled and motivated staff. lished new RBOs, while others tried to strengthen existing ones. (For details see appendix table J.14.) Eleven basin Hydrological and Meteorological Monitoring management projects closed during the period studied and were analyzed for their results. Figure 3.5 shows, for several Bank-supported hydrological and meteoro- identified RBO activities, the share of projects that achieved logical monitoring projects show a shift in positive results and the share that did not. emphasis toward more local and regional Bank support to help establish new RBOs networks. was generally successful, but their Hydrological and meteorological monitoring systems pro- sustainability remains in question. vide weather and water-level data on rivers, lakes, reser- voirs, and groundwater. This information can help to pre- The results suggest that the Bank has generally succeeded vent natural catastrophes, determine the volume of water in helping to establish new RBOs, but the sustainability of flows, and assist in water resources management decisions. these organizations often remains in question. It is quite Technological advances in sensor technology and the inte- common in development for donor priorities and funding gration of electronics and data communication have made to induce stakeholders to create new organizations. If the the automation of meteorological and hydrological net- objective calls for the creation of such an organization, the works increasingly affordable and attractive to policy mak- fact of its creation can be labeled a success. But institutional ers and planners (Kokko and Vaisala 2005). sustainability is an important parallel issue. In the absence of postproject government support and the retention of The set of Bank interventions concerned with hydrologi- carefully trained staff, such organizations often wither. The cal and meteorological monitoring consists of 55 projects. review found that in seven out of eight cases institutional Over the period studied, the Bank helped countries to in- gure 2.1 FIGURE 3.5 Selected Results of Work with River Basin Organizations in Bank-Financed Projects 22% 78% Strengthen basin institutions 50% 50% Legalize basin water resource planning 86% 14% Establish basin-level institutions 67% 33% Form basin management committee 100% Law on water use charges 50% 50% Involve donor community 100% Introduce basin management concept 0 2 4 6 8 10 Number of projects Percent positive results Percent no/negative results Source: IEG water database. Managing Water Resources | 29 BOX 3.6 EARLY WARNING SYSTEM USED FOR MONITORING LAKE SAREZ IN TAJIKISTAN In Tajikistan nearly two-thirds of the population rely on agriculture, but many live in areas particularly vulnerable to natural disasters. In the mountainous province of Gorno Badakhshan, although many small, remote villages are prone to earthquakes and seasonal flooding, the greatest danger is posed by Lake Sarez. The lake was formed in 1911 after an earthquake when a 2.2-billion-cubic-meter landslide blocked the Murghab River Valley. The landslide buried the village and the inhabitants of Usoi, giving the landslide dam its name. Reports on the Usoi dam describe it as being of questionable stability. These reports suggest that if a strong earthquake should occur in the vicinity of the lake, another landslide could fall into the lake, generating an enormous wave that could overtop the natural dam, possibly washing it away. The resulting flood could affect up to 5 million people living in surrounding areas. The Bank-financed Lake Sarez Risk Mitigation Project (fiscal 2000) was designed to prepare and protect vulnerable settlements in the event of such a flood; the project also includes activities related to the mudslides, rock falls, avalanches, and seasonal flooding that are common in the project area. The project installed a monitoring system and an early warning system essential to prevent a catastrophe. The installed monitoring system at Lake Sarez allows for the collection of hydrological, meteorological, and seismological data in the lake area and enables the monitoring of the most rockslide-prone bank and of the Usoi dam itself. The major advantage of the system is its automaticity, which reduces response time and allows appropriate decisions and timely alerts in case of emergencies. Sources: World Bank project documents (ICR for project P067610). vest in four types of monitoring systems: early warning sys- been a shift in emphasis, however, with the Bank now fi- tems (21 projects; box 3.6),5 combined hydrological-mete- nancing more local and regional networks. Projects financ- orological monitoring systems (21 projects), free-standing ing transboundary monitoring systems have also increased hydrological monitoring systems (18 projects), and free- in number. standing meteorological monitoring systems (19 projects). Some projects involved more than one type of system. A sizeable percentage of monitoring projects did not tailor systems to meet An activities analysis (appendix table J.16) found that de- veloping monitoring systems at the national level has been beneficiary needs. the most common approach to area coverage: the 23 na- tional systems projects (15 closed, 8 active) accounted for The achievements of monitoring activities were analyzed 42 percent of the total of 55 projects (figure 3.6). There has for the 28 closed projects that had supported hydrological gure 2.1 FIGURE 3.6 Hydrometeorological Monitoring Systems by Level of Supervision 25 20 Number of projects 15 10 5 0 National Regional Local Transboundary Closed projects Active projects Source: IEG water database. 30 | Water and Development monitoring (appendix table J.18). In general, this type of the equipment, and not so much on how to interpret and monitoring has been supply driven. The evaluation found present the data. Failure to fill key positions and staff size that 43 percent of projects clearly did not manage to tailor restrictions were reported in 18 percent of projects; these, systems to meet beneficiary needs, and most of the rest did too, are obstacles for the O&M of monitoring systems and not address the issue of who is to use the data. Instances programs. Finally, because of a worldwide shortage of spe- where the project files indicate that systems benefited stake- cialists, demand for monitoring skills in the private sector holders and improved decision making in water resources led to difficulties in acquiring and retaining staff during or management and natural disaster mitigation were not after project closure. common. Over half of the projects (54 percent) that used monitoring data for disaster prevention and mitigation suc- Managing Efficiency of Use and Demand for ceeded in getting the information into the hands of people Water whose job involved mitigating natural disasters and reduc- ing damage. But in 43 percent of projects there were no Because the supply of water is finite and pressures on that clear links between collecting the data and using it to take supply are increasing rapidly, managing the demand for wa- corrective action, make changes in practice, or inform pol- ter will be critical to future development. Demand for water icy. In the absence of practical utility, a sustainable process can be affected by three broad sets of interventions: pricing, was rarely established (box 3.7). Weaknesses in monitoring quotas, and measures to improve water use efficiency. De- systems were usually due to deficiencies in project design, mand-side management (DSM) is defined as any attempt to especially with regard to stakeholder participation, main- encourage water users to control their use. Increasing water tenance, and the appropriate choice of monitoring equip- prices (or tariffs) in line with marginal costs can help to re- ment and facilities. In a fast-changing world, not having the duce water demand and encourage use of the resource com- information at hand to adapt to a rapidly changing climate mensurate with its scarcity. Pricing interventions may be ef- will make water management situations increasingly prob- fective in reducing water use for domestic water supply and lematic. energy generation but are less so for reducing agricultural water use, which responds less to changes in price. For this Training for O&M has been hindered by reason the Bank has started to encourage borrowers to in- its short-term nature, by hiring freezes and troduce quotas to manage agricultural water consumption. staff size restrictions, and by a worldwide Measures to enhance the efficiency of water use range from shortage of hydrological specialists. investments in technology (such as water-efficient toilets) to reductions in unaccounted-for water (UfW). Demand The provision of equipment and operation and mainte- management and water pricing interventions have to go nance (O&M) training were the two most frequently imple- hand in hand with infrastructure developments in respond- mented activities in hydrological and meteorological moni- ing to water demand. In addition, consciousness raising for toring projects (see appendix table J.17), but the training service providers (agencies and water user associations, or given often focused on teaching how to install and operate WUAs) is needed to increase their motivation to provide BOX 3.7 SUSTAINABLE MONITORING IS DIFFICULT TO ESTABLISH As of 2008, Tanzania did not have a functional network for monitoring water resources and flows. The existing system did not systematically collect, integrate, and analyze hydrological data at the central level. Political support for data collection was low--priority was given instead to providing a supply of potable water--and during the IEG visit each of the two agencies responsible for the system attributed its dire condition to the other. The IEG team found that the electronic data processing equipment that had been procured required skills that the operators did not possess, and spare parts for fragile equipment damaged accidentally were not locally available. The monitoring system set up for Morocco's Oum-er-R'bia Basin provides an interesting contrast with Tanzania's approach. Morocco decided not to use a real-time data gathering system, because set-up and operating costs were too high. But whereas Tanzania's higher-tech system ultimately did not work, Morocco's approach resulted in a robust system and an impressive database (but no real-time data). The contrast highlights the importance of tailoring each monitoring system to local conditions and purposes. Sources: Tanzania and Morocco case study research. Managing Water Resources | 31 water users with better service, even when this involves the Efforts to improve efficiency of water use among farmers imposition and enforcement of consumption quotas. are common, which is understandable considering that ag- riculture is the biggest user of water. These efforts are usual- Although the promotion of DSM is not a specific concern of ly focused on increasing the value of agriculture production either the 1993 or the 2003 water resources strategy, about a per unit of water consumed through increasing yields and quarter of all water projects in the evaluation (539 of 1,864) reducing nonbeneficial water use (such as losses from seep- deal with some aspect of DSM:6 321 projects undertook dis- age). Alternatively, projects may promote alternative crops crete activities to increase the efficiency of water use (figure to irrigators to reduce demand on the irrigation system. 3.7); 143 aimed to increase water tariffs to encourage us- Ninety-seven irrigation and drainage projects made some ers to reduce water use; and 141 projects planned to reduce attempt to increase water efficiency. The most common ap- UfW. After a peak in the late 1990s, the number of annual proaches were as follows: approvals of DSM projects declined (appendix figure J.12). 1. Improvements in the efficiency of irrigation systems Improving Water Efficiency through rehabilitation and better management systems Water efficiency initiatives are found most for water delivery often in water supply and irrigation and 2. Adoption of specific irrigation techniques (drip trickle, bubbler, sprinkler) drainage projects. 3. Increases in canal flow capacity to reduce water lost The evaluation analyzed the water portfolio subsector by through evaporation subsector, identifying those that promote water efficiency 4. Improvements in watercourse efficiency achieved by lin- (see table 3.1). The largest group was implemented under ing and other methods to reduce losses from infiltration the rubric of water supply (27 percent). The next most ef- and seepage ficiency-concerned subsector was irrigation and drainage (18 percent). 5. Training in equipment maintenance Water Use Efficiency in Agriculture 6. Studies of water use. Success with efficiency improvements in agricultural use Irrigation and drainage projects commonly has been variable. Of 60 completed projects pursuing such promote the use of improved technology, improvements, 48 reported having succeeded in improving reduction of water losses, or the creation of water use efficiency to some degree. Further, not all projects that resulted in efficiency improvements led to decreased institutions for better management. water consumption. gure 2.1 FIGURE 3.7 Water Demand Management Activities by Activity Type Increase water tariffs, pricing Reduce unaccounted-for water Improve water conservation Promote irrigation efficiency Improve efficiency of groundwater use Promote water-efficient toilets Increase efficiency in water supply Create financial and policy incentives Develop water institutions to conserve water Introduce water quota system 0 25 50 75 100 125 150 Number of projects Source: IEG water database. 32 | Water and Development use efficiency often lead to increases in planted areas, ul- TABLE 3.1 Water Efficiency Projects by Subsector timately increasing consumption (Scheierling, Young, and Cardon 2006). Percentage of projects Number of that promoted water Where efforts to improve efficiency were tied to financial Subsector projects use efficiency charges as an incentive to conserve water, the fees were not Water supply 147 27.3 always collected and the desired conservation was often not Irrigation and drainage 96 18 achieved. Water management and flood protection 35 6.5 Reducing Unaccounted-for Water Sewerage 30 5.6 Central government About half of projects that addressed administration 28 5.2 unaccounted-for water succeeded in reduc- Source: IEG water database. ing it by at least 1 percent. Note: Only the most frequently occurring categories are listed. The total number of DSM projects was 539. Within the water supply subsector, reducing UfW was the main activity directed at improving water efficiency. UfW A positive example is the North China Plain Water Con- is defined as the share of non-revenue-generating water servation Project (P056516). This project combined invest- in total water production. Non-revenue-generating water ments to improve irrigation infrastructure with agricultural has two components: it can be real, that is, physically lost support services and forestry and environmental monitor- by the system, or it can be apparent, indicative of a com- ing of the project's impacts on soil and water. Its efforts sup- mercial failure such as inaccurate billing. Addressing UfW ported integrated improvements to over 100,000 hectares mostly involves installing new piped systems or fixing leaks of irrigated land worked by 257,000 farm households in the and breaks. The review of the evaluation databases found provinces of Hebei and Liaoning and in the municipalities that of the 1,864 projects that dealt with water, 141 projects of Beijing and Qingdao. The value of agricultural produc- addressed UfW. Results of these projects were mixed. Out tion per unit of water consumed increased by 60 to 80 per- of the 103 closed projects that intended to reduce UfW, 55 cent, and nonbeneficial water use was reduced by a sixth. actually managed to reduce it by at least 1 percent. A com- Groundwater overdraft was reduced by 30 percent. mon problem was that attempts to improve service often Figure 3.8 shows the distribution of success rates across involved increases in water pressure, which, absent a thor- major areas of intervention. Increasing canal flow capacity ough leak control program, resulted in increased losses. was the most successful intervention. The adoption of ir- Economic Analysis rigation technologies with improved efficiency of water use Of the 539 projects that dealt with water efficiency activi- has not necessarily resulted in reduced water consumption. ties, the evaluation reviewed the economic analysis under- The literature suggests that technologies that increase water taken by the 373 completed projects.7 It found that within gure 2.1 FIGURE 3.8 Success Rates for Demand-Side Management Interventions in Agricultural Water Use Increased canal flow capacity Training in equipment maintenance Improved watercourse efficiency Rehabilitation and management of systems Research to increase water use efficiency User charges to increase efficiency Technologies to increase efficiency 0 20 40 60 80 100 Percent Percent positive results Percent no/negative results Source: IEG water database. Managing Water Resources | 33 this subset, economic rates of return (ERRs) were estimated A review of Bank projects that dealt with cost recovery in during project appraisal for fewer than half (179). Of these, WSS found a low success rate. The group of projects consists 136 also provided an ERR at completion; the remaining 43 of 133 projects (93 completed, 40 ongoing). The most com- projects did not. Eight projects calculated ERRs at project mon strategy used to foster cost recovery is increasing tar- completion even though they had not done so at appraisal. iffs or water charges (89 percent of the portfolio). Only 15 percent of projects that attempted any cost recovery actu- Of the 136 projects that calculated ERRs at ally achieved what they set out to do, and only 9 percent of appraisal and completion, 59 achieved or projects that attempted full cost recovery were successful. A subset of 17 completed projects (19 percent) explicitly mod- exceeded the ERR target at completion. ified the cost recovery approach during implementation, Of the 136 projects that provided ERR calculations at both most frequently opting for a less ambitious approach (less than full recovery) or even dropping the attempt to recover appraisal and completion, 59 achieved or exceeded the ERR costs altogether. For the projects that achieved full cost re- target at completion. The remaining 77 projects (about 57 covery, the factor that contributed most to success was im- percent) did not attain their expected ERRs, at least partly proving collection. Most often this involved increasing the because they did not fully attain the anticipated efficiency capacity and willingness of water institutions to collect fees gains (figure 3.9).8 from beneficiaries. Also, when borrowers were successful Using Water Prices to Manage Demand in increasing water tariffs as planned, it had a discernible Until recently, cost recovery has been a core element of the impact on overall project results. Bank's strategy toward water sector projects.9 In the WSS sector, the Bank advocated full cost recovery on the basis Only 15 percent of projects that attempted that covering just the O&M costs has no economic basis cost recovery achieved their targets. and in the long term would result in insufficient investment in the sector. The same pattern holds in the agriculture sec- Achieving full cost recovery is challenging for many rea- tor (discussed in chapter 5) (World Bank 2003b, p. 3). sons, which differ sharply between urban and rural sectors. gure 2.1 FIGURE 3.9 Completed Water-Efficiency Projects Reporting an Economic Rate of Return 200 179 180 160 136 140 Number of projects 120 100 77 80 59 60 40 20 0 Completed fiscal 1997­2007 Projects with ERR values at appraisal Projects with ERR values at appraisal and at completion Number of projects that achieved or exceeded ERR target at completion Number of projects that did not achieve intended economic returns Source: IEG data. Note: The total number of completed water-efficiency­related projects was 373. 34 | Water and Development Although it is often easier to levy and collect tariffs for wa- ter in urban areas, rapid population growth often keeps the unserved population steady and leads to illegal connections. Further complicating the task, interventions need to deal with the challenges of informal settlements and slums, which may lack roads, street addresses, and public space where pipes can run. In rural areas, the problems include high costs Photo courtesy of Edwin Huffman/World Bank. per capita for building, overseeing, and maintaining systems that serve large, sparsely settled areas. Experience has also taught that some people will not be able to afford the full cost of services and that subsidies (possibly including cross- subsidies of some users by others) are often required to in- crease the access of the poor to services (box 3.8). The Bank has shifted its stance on cost recovery and now considers it a long-term goal. The limited success with cost recovery has raised con- cerns about sustainability in WSS projects. Of 191 com- pleted interventions, 32 allocated inadequate funds to the current approach states that the Bank "supports coun- cover the O&M costs of the facilities, and the long-term tries to design and implement tariff levels and structures. sustainability of these systems was deemed unlikely. In This assistance to countries is supported by operational re- some cases, by project closing the borrower had not even search to test existing and new approaches to pricing and designated the agency that was supposed to manage and subsidies. The World Bank now considers cost recovery for operate the systems. Project completion reports repeat- WSS services as a long term goal, but there is flexibility in edly cited low tariffs or the failure to collect user charges determining the period of time to obtain this goal. Reve- as the main reasons for suboptimal system functioning nues recovered from users within the near term are to cover and the principal risks to continued operation. The ab- the utility's operations and maintenance costs."10 sence of adequate resources to cover the O&M costs of The 2006 IEG evaluation Water Management in Agriculture this infrastructure constructed at such great expense is concluded that "cost-recovery targets have been wildly am- another issue for the sector and the broader donor com- bitious and unrealistic because of inadequate social assess- munity to face. ment" (IEG 2006b, p. xix). It also found that expectations The limited progress on cost recovery has led the Bank to regarding cost recovery following the handover of irrigation moderate its approach. A recent policy note that spells out infrastructure to user groups were unrealistic. And it rec- BOX 3.8 PAYING FOR WATER IS WELL ACCEPTED IN TANZANIA The IEG mission to Tanzania visited Kiroka village, close to the city of Morogoro, where the Bank had financed a 2002 Rural Water Supply and Sanitation Project (P047762). The village wells were functioning and structures were well maintained. There was wide acceptance among the local water users group and its chair of paying for water use, especially for reasonably good service. But the poor seemed to be subject to a plethora of water-related fees. Although utilities tend to have a system of cross-subsidies, which allows them to provide water for free to the poorest families in their communities, donor agencies (with a commendable commitment to sustainability) have started to ask for a range of user fees. Especially in the Wami Ruvu Basin, where Kiroka is located, the IEG mission was informed that CARE and the World Wildlife Fund had raised watershed service fees, that WUAs were collecting fees for water supply, and now that the Wami Ruvu Basin Water Office was collecting additional fees for purposes little understood by the communities. The fees charged by the water office came on top of fees for education and health services. A concern was often voiced that even though donors were trying to promote ownership of infrastructure by beneficiary families, the poor were becoming overtaxed by their benefactors. Source: IEG Tanzania case study research. Managing Water Resources | 35 ommended that simple cost recovery strategies be broad- water resources have tended to perform less well than the ened into strategies for improving water use efficiency. extractive projects. The report noted that astonishingly few appraisal docu- Several countries have established RBOs with Bank sup- ments offered a clearly articulated strategy for water use port. Efforts to strengthen existing RBOs have had limited efficiency, whether through some form of volumetric pric- success, and the sustainability and effectiveness of newly es- ing, an area- or crop-based approach, a lower-cost proxy, or tablished RBOs are often in question upon project closure. a restricted supply approach, and it pointed out the sharp Basin management often encounters resistance from groups contrast between the vast literature on water pricing and slated to lose power or privileges. In consequence, projects efficiency and actual practice. The literature finds that ir- rigation demand is inelastic until prices rise to several mul- and policies related to basin management often find it dif- tiples of service cost, a level that is politically problematic to ficult to fully achieve their potential benefits. introduce (Molle and Berkoff 2007; Scheierling, Young, and A relatively small share of Bank-supported projects have Cardon 2006). Therefore the Bank and other donors have helped countries establish systems to collect, analyze, and started to support quotas that limit (primarily) agricultural use hydrological and meteorological data. When monitor- water consumption. Out of the 11 projects identified by the ing was undertaken, it was often supply driven. More than current evaluation that dealt with quotas, 10 dealt with ir- two-fifths of projects that included hydrological or meteo- rigation, 1 of which has been completed. In that project, the quotas were effective in reducing water use. rological monitoring did not tailor systems to meet benefi- ciary needs, and most of the rest failed to address the issue Summary of who was to use the data. On the positive side, over half of the projects that used monitoring data for disaster pre- Demands on the world's limited water resources from de- vention and mitigation succeeded in getting the informa- velopment and population pressures are increasing and are tion into the hands of people whose job involved mitigating likely to accelerate. Hence, it is critically important to strike natural disasters and reducing damage. a balance between making good use of water and ensur- ing sustainability. The Bank has used a variety of methods Effective demand management is one of several critical ap- to help countries manage water resource use in ways that proaches in the face of increasing water scarcity. Efforts to take into account the available supply and the likely future improve the efficiency of water use and limit demand in the demands on those resources. agriculture sector, the largest consumer of water, have had Surface water management is intended to help preserve limited success. Efficiency-enhancing technologies alone do natural resources, improve soil quality, and provide enough not necessarily reduce on-farm water use. Efforts to modulate water. The 218 projects with at least one watershed man- demand through water charges have encountered limited suc- agement activity performed better than the Bank average cess; fixing and enforcing quotas for water use is relatively re- on measures of outcomes, sustainability, and institutional cent and deserves careful evaluation once more projects have development. Projects that used a livelihood-focused ap- closed. In the water supply subsector, reducing UfW was the proach to watershed management outperformed those that main activity directed at improving water efficiency. About used other approaches, but are considered too costly. How- half of the projects that attempted to address UfW managed ever, the full environmental benefits of this approach are to reduce it by at least 1 percent. seldom accounted for because of lack of data. Groundwater is increasingly threatened by overexploita- Cost recovery in Bank-supported projects has proved chal- tion, inadequate environmental flows, and contamination, lenging. The successful projects have generally improved but the extent of groundwater depletion is poorly under- the efficiency of water institutions in collecting fees. Lim- stood because data are rarely collected or shared. The num- ited success has caused the Bank to moderate its approach, ber of Bank-financed projects dealing with groundwater but the question of who will pay for uncovered costs re- has declined since the late 1990s, as projects have rightly mains to be resolved. shifted away from groundwater extraction. However, the ERRs are not routinely calculated even for projects that deal number of projects focusing on sustainability and ground- water conservation has also declined somewhat since 2001, with water efficiency activities. Only about half of projects although the 2003 Water Resources Sector Strategy foresaw that aimed at improving efficiency and calculated ERRs an increase in attention to groundwater. Projects address- upon completion attained their expected returns, at least ing environmental and resource protection issues that are in part because they did not fully achieve the anticipated critically important to the safe, longer-term use of ground- efficiency gains. 36 | Water and Development Chapter 4 EVALUATION HIGHLIGHTS · The focus on infrastructure rehabilitation in flood-related projects suggests that much flood management infrastructure is not hold- ing up during floods. · Environmental flow assessments can have sig- nificant benefits but still constitute a relatively small percentage of the water portfolio. · Eighty percent of Bank borrowers have received water quality management support, but few projects measure water quality. · River and lake projects generally restore physical assets but rarely deal with water conservation or quality improvement. · Although migration to coastal areas is increas- ing, annual Bank commitments for coastal and marine management projects have been declining. · Attention to wetlands in Bank projects has increased since the late 1990s. Photo courtesy of Tran Thi Hoa/World Bank. Water and Environment This chapter reviews Bank-supported efforts to address floods and droughts and to improve water quality or increase environmental sustainability, particularly around rivers and lakes, wetlands, and coastal zones. Coping with Water Disasters In those parts of the world's temperate zones where rain falls year round in amounts that are generally manageable, Photo courtesy of Scott Wallace/World Bank. the relationship between human settlements and water is a relatively easy one. In contrast, settlements where rain falls in short seasons with significant annual variability have a much harder time. The most severe shortages and excesses of water--droughts and floods--are a source of risk and vul- nerability, and their most pernicious effects are felt mainly by the poor. Severe water crises can be regional, national, or local, and with continued climate change they can be expected to continue to escalate and to eventually cover much wider geographic areas. Food shortages, localized restrictions on trade in food, and population displacements due to water crises are already happening. As a group, weather hazards-- projects that focused wholly on flooding performed well: drought, extreme temperatures, floods, mudslides, waves outcomes were rated satisfactory or better for 83 percent. and surges, and windstorms (commonly referred to as hy- drometeorological events)--affect far more people than all The most common activity financed by the Bank in re- other hazards combined (see appendix figures J.13 to J.16). sponse to flood disasters was road rehabilitation. Gener- Over the period 1972­2006, more than 5.2 billion people ally, flash floods and slope instability are the main causes were affected by hydrometeorological disasters, compared of poor road sustainability. In other words, even rains that with about 11.5 million affected by all other disasters (in- are not unusually heavy rains can lead to road loss when cluding earthquakes, insect infestations, volcanic eruptions, adequate drainage and sufficiently dimensioned culverts and wildfires).1 Of course, some countries rarely experi- are not present or road alignments have not been designed enced such events, while others were buffeted repeatedly in to provide maximum slope stability. Top Bank borrowers the same year, leading to double and triple counting. for floods borrow repeatedly: some borrowed more than 20 times over the evaluation period for flooding issues.2 Flood Management Project evaluations show that among the contributors to Floods are often rapid-onset hazards. Although usually trig- this problem are lack of maintenance, inadequate design, gered by heavy rainfall, their causes also include the silting and poorly considered siting. up of rivers, the reduced absorptive capacity of soil, flawed infrastructure planning, and inadequate maintenance of existing drainage and flood control facilities. Loss of forest The strong emphasis on infrastructure cover and reforestation with inappropriate species contrib- reconstruction in flood-related projects ute heavily to soil erosion, the deposition of silt in rivers, suggests that infrastructure is not holding and overly rapid water runoff. up when flooding occurs. Much public infrastructure does not hold up when flooding occurs. As a result, the Bank finances a great deal of post- A first-order cause for concern is the lack of resiliency of flooding rehabilitation. A total of 433 flood-related projects flood control investments. A total of 221 projects that re- were identified in the water database. As a group, the 164 sponded to flooding built flood control structures--both 38 | Water and Development preventative and curative. These structures regularly suffer able pattern argues for increased consciousness raising to significant damage from the very type of disaster they are promote investments in noninfrastructural protective solu- designed to ameliorate: in 23 percent of projects, structures tions. These can consist of technological solutions, the res- built by the project to protect against flooding were dam- toration of natural protections, or the relocation of settle- aged by flooding (IEG 2007). ments and facilities to less risky areas (see box 4.1). The damage almost always was reparable and did not lead Bank projects that aim to reduce vulnerability to the total loss of the structures in question, but repeated repairs are a costly drain on public finances. often focus mostly on infrastructure recon- struction, even when environmental restora- A similar pattern holds for storm drainage. The evaluation database identified a total of 114 Bank-financed projects tion may be more strategically appropriate. that supported the construction and maintenance of storm drains. Small to medium-size cities have been the most Drought Management common beneficiaries (IEG 2007). Storm drains can help Intense and persistent droughts can have serious lessen urban flooding, but with even seemingly minor im- economic, environmental, and social impacts (Gleick perfections in conception and design they can end up exac- and others 2009, p. 93). They can cause heavy crop erbating the problem. damage and livestock losses, disrupt energy production,3 and hurt ecosystems across whole regions or countries. Although the Bank has been lending for investments that The results can include famine, loss of life, mass migra- reduce vulnerability to flooding, such investments have tion, and conflict, wiping out development gains and ac- mostly focused on the construction of infrastructure--such cumulated wealth, especially among the poorest (Unit- as flood control structures or storm drains--even when ed Nations 2008a, p. 32). Persistent drought can lead to strategic planning or environmental restoration may have devastating and difficult-to-reverse desertification that been more strategically appropriate (IEG 2007). threatens agriculture and the climatic and biological di- More troublesome, when infrastructure has been the cho- versity of ecosystems. It has been predicted that world- sen solution, as is often the case for flooding, what the bor- wide, as a result of prolonged drought, about 12 million rowers chose to build with Bank financing often failed to hectares of land now used for cultivation will be perma- make a significant step forward, possibly because the bor- nently lost to agriculture, threatening the livelihoods of rowers lacked the institutions necessary to take charge of over 1.2 billion people. Moreover, the land area of the the maintenance and management that would make the planet given over to desert climates is expected to in- infrastructure sustainable. This common but unsustain- crease by more than 15 percent over the coming years.4 BOX 4.1 NONSTRUCTURAL FLOOD CONTROL YIELDS HIGH RETURNS IN THE YANGTZE BASIN In the Yangtze Basin Water Resources Project in China (P003596, closed in 2003), several grants were provided to finance risk assessments and a support system to improve decision making for Yangtze River flood operations. A flood risk model was also developed by local staff and international consultants to predict flood levels under the project. The first real test of the Yangtze flood model occurred during the major floods of 1996. As it turned out, the model accurately predicted flood levels, and the decisions based on this model averted flood damage estimated at $15 million. During floods in 1998 and 1999, the system allowed decision makers to avert millions of dollars more in flood damage. According to people involved in the project, the expenditure of $5 million on nonstructural flood prevention brought a return estimated at more than tenfold and led to an important technology transfer. Source: ICR for the China--Yangtze Basin Water Resources Project (P003596). Water and Environment | 39 Like the occurrence of droughts themselves, Bank lending Drought projects tended to be less for droughts has been cyclical (figure 4.1). A flatter pattern would indicate a more proactive stance on both the Bank successful than flood-related projects, and the borrower side. (The high number of loan approvals partly because drought mitigation in the late 1990s was due to the El Niño-caused droughts of involves substantial behavioral change. that period.) That there should be a flurry of activity every time a major drought occurs needs to be seriously recon- Drought projects were less successful on average at attain- sidered, given the increasing length and severity of drought ing their objectives than flood-related projects, in part events in many countries (box 4.2). because there was little or no rebuilding, but also because mitigation involves a great degree of behavioral change. Bank lending for droughts tends to be reac- There were 50 dedicated, drought-focused projects, 72 tive rather than proactive, and projects in percent of which achieved a rating of satisfactory. drought-prone areas often do not anticipate The successful drought projects relied on very straight- drought risk. forward activities to achieve their objectives--essentially components for which success could be declared as long as disbursement took place. These included purchasing Three main subgroups of projects deal with drought. The first equipment and underwriting the cost of publications de- consists of projects that react to drought in emergency situa- velopment. Activities that achieved 20 percent or less of tions (21 projects). The second consists of projects that seek appraisal expectations tended to be complex and to focus to mitigate chronic droughts and plan to reduce the finan- more on results than on outputs. Examples include im- cial and social impacts of foreseeable as opposed to ongo- proving agricultural practices, promoting technologies ing events (89 projects; see box 4.2 for an example). Within for more efficient water use in irrigation and water sup- the first two subgroups, Sub-Saharan Africa had the largest ply, and water conservation (appendix table J.21). number of projects (49) and South Asia the highest total loan commitments (over $3.5 billion). The third subgroup con- A common lesson from project self-evaluations (Imple- sists of drought-affected projects: those that, despite imple- mentation Completion Reports, or ICRs) and independent menting a broad range of interventions, failed to proactively evaluations (Project Performance Assessment Reports) was identify drought as a risk to implementation and were forced that it is impossible to transition to improved and more to conclude in their completion report that drought had an water-efficient farming technologies under emergency adverse affect on the attainment of project goals (84 projects; drought conditions, and success is further constrained by these are not included in figure 4.1). Many irrigation projects the discontinuity of outreach and other activities during the deal with chronic water scarcity rather than cyclical drought, project cycle. Other issues that challenged drought projects and are therefore not included in this number. included the following: gure 2.1 FIGURE 4.1 Loan Commitments to Drought-Related Projects by Approval Year 1,600 Total loan commitments (US$ million) 1,400 1,200 1,000 800 600 400 200 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Approval year Source: IEG water database. 40 | Water and Development BOX 4.2 COUNTERBALANCING CYCLICAL DROUGHT EVENTS THROUGH LONG-TERM MONITORING AND EARLY ACTION The objectives of the 2003 Malawi Emergency Drought Recovery Project (P080368) were to avert famine, help restore the productive capacity of the country, and support longer-term disaster management. Although seed distribution commenced in time for the cropping season, the nongovernmental organizations involved in the distribution had not received the required fertilizer by then. This delay reduced crop production. This less than fully successful project provided several drought-related lessons: · Food crises can be prevented by early interventions. In drought-prone areas, governments and the Bank have to be alert to the first signs that farmers are selling herds and consuming seeds, and quickly intervene to prevent the drought from triggering a full-fledged food crisis. · An effective emergency operation can be designed only in the presence of sound statistics and credible policy. Although the Malawi project accorded priority to developing a database, progress putting it in place was slow. At the time of the emergency, critical economic and agricultural data to enable assessment of the crisis and provide the basis for project design were either lacking or, if available, poor in quality and inconsistent. Moreover, the available data were widely dispersed among government and nongovernmental institutions. This detracted from optimal planning. Especially for emergency relief operations, an efficient monitoring and evaluation system needs to be developed and implemented in a very short time. Developing a blueprint for a simple and standardized system is recommended when lending for recovery from an emergency. Source: 2003 Malawi Emergency Drought Recovery Project. · Getting the support of stakeholders Water and Environmental Sustainability · Disseminating new or improved agricultural technolo- Most water that is consumed is surface water. Water re- gies (drought mitigation) sources found above ground have both quality and quantity dimensions that are of critical importance to the environ- · Cost recovery for agricultural water. ment. Addressing environmentally related land use ques- Completion reports attributed lack of success to: tions when preparing water projects can help to protect wa- ter quality in bodies of water still in good condition. In less · Inadequate borrower planning for the impacts of fore- fortunate areas, improving degraded bodies of water to the seeable events point where the water they provide is safe and economical · Unanticipated difficulties in managing employment to use requires environmental restoration, an area in which creation and income-generating activities industrialized countries have valuable experience. But even if the quality of water is good, there has to be enough of · Failure to monitor and supervise planned activities in a it to maintain ecosystems and biodiversity. Critical to ac- timely manner complishing either of these environmental goals is an un- · Failure to give due importance to public awareness and derstanding of how much of the water sitting in a lake or community outreach flowing in a river needs to be left there--in other words, how much should be allocated to the natural environment. · Failure to reach or deliver benefits to the most vulner- able target groups. Preserving Water Flows for the Environment According to the Bank's 2003 Water Resources Sector Strat- Experience shows that a transition to more egy, the maintenance of water flows essential to the envi- water-efficient farming technology ronment needs to be addressed in the design of infrastruc- ture and the recalibration of operating rules in river basins. cannot be achieved under emergency From 5 to 35 percent of a river's natural flow (depending drought conditions. on the river) can be removed while leaving fragile aquatic environments in good condition (Dyson and others 2003, In some circumstances, water insecurity can be managed p. 17). The term "environmental flow" encompasses the with the help of dams and reservoirs. The Bank increasingly flow necessary to sustain an ecosystem and considers the funds dams that not only serve water security purposes but flow's effect on nearby inhabitants and the local economy. also provide hydropower, as discussed in chapter 5. The definition states that environmental flow analyses "de- Water and Environment | 41 scribe the quantity, timing, and quality of water flows re- ure 4.2). To date, over $1.8 billion in Bank-supported proj- quired to sustain freshwater and estuarine ecosystems and ects (1.5 percent of the water portfolio), most of them in the the human livelihoods and well-being that depend on these rural sector, have benefited from some kind of EFA. Expe- ecosystems."5 rience has shown that the reach and potential benefits of EFAs can be substantial (table 4.1 and appendix table J.23). Bank support for environmental flow Water Quality Management assessment is relatively recent, but the reach Projects were identified as addressing water quality if they and benefits of such assessments can be sought to improve water quality parameters, pursued a goal substantial. (such as public health or mosquito control) that required adding chemicals to water, or dealt with water pollution The Bank's 1993 Water Resources Management Policy Paper likely to be caused by project-funded activities. signaled a major shift in water sector investments, stating, "The water supply needs of rivers, wetlands, and fisheries More than 80 percent of Bank borrowers will be considered in decisions concerning the operations have water quality management projects, of reservoirs and the allocation of water" (Hirji and Panella with a wide variety of activities. 2003). Until the mid-1990s such assessments were rarely done, either globally or in the Bank's work. The evaluation identified 731 projects--about 40 percent of the In the evaluation portfolio, 39 projects were identified that water portfolio--that addressed water quality and found that 80 at least considered environmental flows. Of those, 18 un- percent of the Bank's borrowers have had projects that fit this derwent either a full environmental flow assessment (EFA) loose description (most of them addressing point sources of or a similar analysis.6 Attention to environmental flow in pollution; box 4.3). They cover a wide range of activities (see ap- ongoing projects rose steadily over a seven-year period (fig- pendix table J.24) that reflect the Bank's Water Resources Sector TABLE 4.1 The Costs and Benefits of Selected Environmental Flow Assessments Location Cost Benefits China Hai Basin $0.858 million Determining minimum flows and their scheduling: (ongoing project) (World Bank), · Helps ensure that the Bohai Sea, with its globally important ecological resources, will $2.1 million (total) continue to provide significant fishery benefits to China, the Korean peninsula, and Japan · Allows minimum flows to be factored into the planning process · Helps develop priorities for follow-up actions · Helps maintain ecological functions · Helps reduce pollution to preserve environmental uses of water · Helps in the effort to control toxic pollutant loads · Helps avoid overuse of surface water · Aids in the arrest of the decline and deterioration of water resources and damage to freshwater in coastal environments in the Hai Basin · Preserves the Bohai ecosystem and fishery resource · Preserves this seasonal spawning and nursery ground for the larger and more productive Yellow Sea Lower Mekong Basin modeling · Provides "unifying framework" for assessing ecosystem needs as part of river basin Basin and institutional management knowledge base, · Helps avoid changes in flows and salinity from deforestation, dams, and increased $9.9 million abstraction for irrigation · Helps protect the Tonle Sap fishery, which supplies fish to Cambodia and neighboring countries and provides jobs to 1.2 million Cambodians · Helps avoid increased flood frequency and peaks in the rainy season · Helps avoid exacerbated drought conditions, and therefore promotes rice production Source: "Understanding the Dynamic Links Between Ecosystems and Water in the Mekong Basin" (www-esd.worldbank.org/bnwpp/ documents/3/EnvironmentalFlowCaseStudy.pdf. 42 | Water and Development gure 2.1 FIGURE 4.2 Ongoing Environmental Flow Projects by Year 30 25 Number of projects 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: IEG water database. Strategy. The bulk of the lending (in terms of number of loans) monitoring has decreased (figure 4.3). Hence, many projects for water quality management has been allocated for technical that should be monitoring water quality are not doing so, and assistance to strengthen the water resources management ca- data on water quality produced by Bank-financed projects pacities of public agencies and to assist them with planning. continue to be in short supply. Furthermore, the quality of data that are collected is often questionable. Although 79 Water quality continues to worsen for the percent of the 61 closed projects that set out to monitor water top five borrowers for water. quality actually did so to some degree, only 66 percent moni- tored what would be considered technically appropriate pa- Water quality in the top five borrowers for water contin- rameters. It might have been expected that projects requiring ues to worsen, despite the support they have received.7 The a full environmental assessment would be leading other types reason is partly that when lending has a water quality fo- of projects in conducting water quality monitoring activities. cus, the most frequently pursued strategies do not directly Yet this proved not to be the case (appendix tables J.27 to J.29 confront the physical causes of water pollution--the Bank and figure J.18). Recent evaluations by other donor organiza- tions show that they do not necessarily do any better.9 quite infrequently finances attempts to directly improve water quality within bodies of water.8 But it also indicates Many projects are not monitoring water that this problem is far too big for the Bank to solve on its own. quality. Water Quality Monitoring Despite the large share of projects dealing with water qual- Although 40 percent of the water portfolio deals with water ity, little improvement can be demonstrated thus far. More quality issues, relatively few ongoing projects actually mea- than half of projects designed to monitor water quality (see sure water quality parameters, and the incidence of such appendix table J.28) cannot show that it is improving, either BOX 4.3 POINT AND NONPOINT SOURCE POLLUTION Pollutants make their way into fresh and salty water from point and nonpoint sources. Typical point sources include residential sewerage and industrial end-of-pipe discharges such as effluents leaving wastewater treatment plants. Nonpoint sources are more diffused and harder to identify and therefore more difficult to mitigate. Examples include urban and agricultural runoff and drainage systems. Over two-thirds of Bank projects that deal with water quality management deal with point source rather than nonpoint source pollution, which is common practice, even in highly industrialized countries, because of the difficulty of identifying and mitigating nonpoint pollution. Source: IEG water database. Water and Environment | 43 gure 2.1 FIGURE 4.3 Ongoing Projects That Monitor Water Quality by Year 90 80 70 Number of ongoing projects 60 50 40 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: IEG water database. Note: Over the period as a whole, 102 of 731 water quality management projects monitored water quality. because it is not, or because water quality data are lacking. tivities that do not adequately protect bodies of water. These Longer-term improvements in water quality are necessary, problems are also a product of lax regulation, insufficient but achievements will remain hard to identify unless more water quality monitoring, and, perhaps most important, a frequent and thorough monitoring is conducted and results general lack of understanding of the economic importance are made transparently available to the general public and of clean surface water. the most concerned stakeholders. The portfolio review found that the Bank has financed 174 Fewer than half of projects designed to projects dealing with river and lake issues.11 The majority of these projects (140) were related to rivers only, 30 projects ad- monitor water quality can show that quality dressed lake-related activities only, and 4 dealt with both. To- is improving. tal (approved) lending associated with these efforts was $14.8 billion. These operations generally financed activities such as Rivers, Lakes, Coastal Zones, and Wetlands stabilizing riverbanks, increasing access to water for economic uses, rehabilitating drainage and wastewater facilities, restor- The majority of the world's population lives near a major ing forests in catchment areas, and managing watersheds (see water source, be it a river, lake, or coast (UNEP 1999). appendix figures J.20 and J.21 for objectives and activities; wa- The quantity and quality of freshwater in these zones are tershed and basin management is discussed in chapter 3). increasingly challenged by growing demands for human use. Wetlands, which occur near many water sources and Since fiscal 2000, about a quarter of projects protect them, have few human uses but important environ- around rivers and lakes have focused on mental functions, and they are rapidly disappearing. Many bodies of water are shared between countries,10 making preventing pollution. management all the more difficult. The evaluation portfo- lio contains about 300 projects dealing with water resources Projects' aims and purposes evolved over the period stud- management linked to rivers, lakes, and coastal systems. ied. In the mid-1990s, the Bank mainly financed irrigation, Rivers and Lakes aquaculture, industrial use, and water for livestock using Fundamentally, the problems facing rivers and lakes are fresh surface water. However, population densification and caused by a lack of adequate attention to the environment. industrial development have increased awareness of the im- Eutrophication (the presence of excessive nutrients), the portance of water quality; this is reflected in related lending. presence of invasive species and waterborne disease vec- Starting from fiscal 2000, 26 percent of all Bank-financed tors, changes in land use that alter evapotranspiration rates, projects around rivers and lakes focused on preventing pol- sediment flows, and other problems result from human ac- lution, mainly from point sources but also from nonpoint 44 | Water and Development have had little success in conserving water. Nearly all (32 projects, according to self-evaluation reports) attributed the poor results to an absence of financial incentives to conserve water and a failure to meet water pricing targets. Failure to Photo courtesy of Tran Thi Hoa/World Bank. reduce water losses during transportation was the second most common problem in water conservation projects. Of the 102 completed river and lake projects, 35 addressed the supply of water for economic uses. In 14 completed projects, water availability was increased and access to water supply was improved. Despite efforts to increase the avail- ability of irrigation water from rivers and lakes, 9 projects still reported that appraisal targets were not met (box 4.4). Coastal Zones Migration from inland areas to the coast is increasing worldwide, and the United Nations projects that by 2030 sources. (For more detail on what these projects did and about 75 percent of humanity will reside in coastal areas what worked and what did not, see appendix table J.31.) (UNEP 1999). Coastal zones throughout the world have Bank-financed projects around rivers and lakes were good historically been heavily exploited because of their abun- at restoring physical assets, particularly flood-damaged dance of natural resources. infrastructure. But water conservation and water quality Between 1997 and 2007 the Bank provided $1.6 billion for improvement were not often attempted, and when they 121 water projects that included some coastal zone man- were, the relevant objectives were achieved less than half agement activities. (This figure excludes projects that did the time. The lack of success was often due either to overly not explicitly address coastal zone management but did ambitious objectives or to lack of sufficient data to confirm have an impact on coastal zones.) The majority (91 proj- that the desired changes had taken place. ects) were totally focused on coastal zone management. Projects were good at restoring physical However, the number of project approvals and annual Bank commitments for coastal and marine management projects assets, but water conservation and quality declined significantly over the period evaluated, and this improvement were rarely attempted. type of project does not figure largely among ongoing proj- ects (see appendix figure J.23). An in-depth review of individual completed projects found that those that aimed at controlling excessive water extrac- Annual Bank commitments for coastal and tion from freshwater bodies have had suboptimal results. marine management projects have been on Although water conservation is a key factor in managing and protecting rivers and lakes, Bank-supported projects the decline. BOX 4.4 HOW THE FAILURE OF IRRIGATION SYSTEM REHABILITATION LED CHINESE FARMERS TO IRRIGATE WITH GROUNDWATER In the 1970s three large pumping stations, Jiamakou, Xiaofan, and Zuncun, were built to lift water from the Yellow River to irrigate some 123,000 hectares of farmland. The shifting of the river channel and high sediment content caused serious disruptions in the water supply from these stations. At times, access to the river water was completely cut off, and farmers had to rely entirely on groundwater, and this intense use resulted in its overexploitation. Under the Shanxi Poverty Alleviation Project, improved irrigation was to cover 123,000 hectares, and it was expected that this would reduce pressure on groundwater by providing a reliable supply of Yellow River water to the existing Yuncheng Irrigation System. The project aimed to achieve this goal by lining irrigation canals with concrete, rehabilitating water distribution systems, and constructing large- scale sediment traps. By project closing, only 24,400 hectares were being supplied with irrigation water, and most of the target areas continued to rely on tube wells, leading to continuous overexploitation of groundwater. Source: ICR for the China--Shanxi Poverty Alleviation Project, closed in fiscal 2004 (P003649). Water and Environment | 45 BOX 4.5 THE BENEFITS OF PARTIAL RESTORATION OF MANGROVE FORESTS IN VIETNAM Mangrove forests support fisheries by providing breeding, feeding, and nursery grounds for commercially important fish and shellfish, and they lessen the impact of toxic substances on water and soil by serving as natural filters. They also serve as buffer zones against typhoon and flood damage to inhabited areas and limit the intrusion of salinity. But with the expansion of shrimp farming these forests are rarely left unmolested, and to the people living near them they are a source of no-cost wood products, food, and even roofing thatch and traditional medicines. In Vietnam, coastal inhabitants' disregard of the need to preserve the area's mangroves led to their widespread eradication, with catastrophic environmental impacts. The Vietnam Coastal Wetlands Protection Project tried to balance environmental protection of the mangrove forests with the livelihood needs of people dependent on natural resources. The project was designed to restore wetland ecosystems. Staff highlighted the need to implement reforestation and forest protection while addressing the underlying social causes of encroachment. It was understood that better protection of these areas would inevitably increase coastal and marine productivity in areas close to shore where the smaller boats used by the poor could safely go. Improving the income status of the adjoining communities required a combination of extension, credit, and social support. Contractual measures were created to provide the incentives necessary to ensure that environmental protection would take place. In total, 370 million trees have been replanted along 460 kilometers of coast. By project closing, because of reforestation efforts, the coastal erosion area had been substantially reduced and new land had begun to accrete along the coast: erosion was reduced by as much as 40 percent, and the area of coastline accretion increased by 20 percent. Source: IEG Vietnam case study research. The types of activities financed by the Bank included reduc- maintaining marine biodiversity. A recent Bank study tion of land-based pollution, management of coastal wet- found that although less than 1 percent of the area of the lands, construction of sea defenses to prevent flooding, and world's oceans is covered by some form of protected area development of sustainable coastal tourism. Marine activities status, most protected areas are still not managed effectively included preventing ship-based pollution, conserving marine (World Bank 2006a). Of the 21 marine ecosystem conserva- ecosystems (protecting coral reefs, sea grass, sea turtles, and tion projects covered in the evaluation, 9 successfully iden- mangrove trees), promoting aquatic recreation, and develop- tified or established MPAs: in the Arab Republic of Egypt, ing ports and marinas. The successful partial restoration of Georgia, Ghana, Madagascar, the Philippines (2 projects), mangrove forests, which provide a variety of economic and Samoa, Ukraine, and Vietnam. 12 environmental benefits, is an example of the large benefits Because the intrusion of salt water into freshwater aqui- that can be had from small-scale efforts (box 4.5). fers is becoming a more serious problem in many coastal The Bank's revealed strategic approach to coastal and ma- areas (whether because of natural processes or because of rine issues is changing. In projects that have closed, the human activities; see chapter 3), the Bank is financing a Bank's support focused primarily on integrated coastal number of attempts to combat the problem. A total of 34 zone management plans, the development of policies and projects in the water portfolio undertook activities to pre- regulations, and the prevention of oil discharges and other vent seawater intrusion, 19 of which related to the protec- water-polluting emissions from oceangoing vessels. In con- tion of aquifers. Twenty-three projects used nonstructural trast, more recently approved (and ongoing) projects focus mitigation measures, such as studies, aquifer monitoring, mainly on strengthening institutions (such as marine and and water quality testing, and 11 used structural mea- coastal management units) and mobilizing community sures to prevent seawater from entering irrigation canals participation, and on controlling land-based pollution (see or wetlands. The most common activity in this subset of appendix figure J.23). projects was the construction of barriers to keep seawa- ter from flowing inland. In Turkey, the Cesme-Alacati The Bank's revealed strategic approach to Water Supply and Sewerage Project (P008985, approved coastal and marine issues is changing to in 1998) made significant achievements in protecting the a focus on strengthening institutions and Ildir freshwater aquifer from seawater intrusion. The $13.1 mobilizing community participation. million project constructed a 700-meter-long barrier--an example of how a low-cost project can have far-reaching The establishment of marine protected areas (MPAs) is effects. However, the general lack of groundwater-quality among the most common approaches to protecting and monitoring, as well as the failure to monitor the impacts of 46 | Water and Development gure 2.1 FIGURE 4.4 Projects Addressing Wetlands and Mangroves by Year 50 40 Number of projects 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: IEG (2007). the constructed infrastructure on saline intrusion in many has yet to adopt this approach, and there is quite limited ex- projects of this type, makes it impossible to evaluate the perience for the development community to draw upon. results of most efforts. Attention to wetlands has been increasing The Bank has had some success with in projects since 1997, in part because of projects addressing saltwater intrusion. the adoption of safeguard policies. Wetlands Within Bank-supported projects, attention to wetlands has Bogs, swamps, and marshes filter out waterborne impurities, increased steadily since 1997 (figure 4.4). The increased fo- absorb silt, regulate the flow of water, and add moisture to cus is probably due to the adoption of environmental safe- the atmosphere. Without wetlands, rivers flow too fast, lakes guard policies OP 4.00 (1989) and OP 4.01 (1991, on envi- experience destructive algae blooms, and coastlines can be ronmental assessment), which stipulated the identification eroded. A little-appreciated facet of wetlands--and a classic of potential impacts on wetlands during the environmental example of the tragedy of the commons--is how effective screening process. they are at removing pollutants from wastewater. Natural Evaluating the Bank's work with wetlands is challenged by wetlands can remove even heavy metals, sewage, and slaugh- the imbalance between strong upstream attention and the terhouse waste (IUCN 2009). Unfortunately, half of the lack of downstream reporting. When projects close, self- world's inland wetlands (excluding large lakes) were lost in evaluation reports tend to be silent about project achieve- the last century. Constructed wetlands, an emerging technol- ments in this area, and they rarely pay any attention to the ogy, can be designed to emulate these features, but the Bank project's negative or unanticipated effects on these fragile BOX 4.6 SUCCESSFUL WETLAND RESTORATION CREATED A REPLICABLE MODEL FOR UZBEKISTAN As part of the Aral Sea Basin Program, the Aral Sea Regional Water and Environmental Management Project (covering Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan) successfully restored the Sudoche wetlands, adjacent to the sea, which had dried up as a result of poor water management. The project supported the construction of infrastructure--a dike, an outlet regulator to control water levels, and two new collector channels--to compensate for reduced water flows. The return of water to the wetlands led to the return of various species, and eventually the former inhabitants who had abandoned the zone because of the worsened environmental conditions returned as well. An IEG mission visit in 2007 found newly constructed houses being built right at the edge of the wetlands. The project's approach, designing structures to compensate for reduced flows, was replicated in additional sites by the government of Uzbekistan with its own resources. Source: IEG Aral Sea case study research. Water and Environment | 47 ecosystems. More than 450 projects were found to address demonstrate that it is improving, either because it is not, either wetlands or mangrove forests, or both, at the ap- or because data are lacking. Despite the support they have praisal stage.13 By project closing, only 98 actually provided received, water quality in the top five borrowers continues information about progress, protection, or the lack thereof to get worse. One reason is that when lending has a wa- regarding wetlands. Of the three completed projects that ter quality focus, the most frequently pursued strategies do had wetlands and mangrove restoration as an objective, two not directly confront the physical causes of water pollution. achieved satisfactory outcomes. Analytical approaches, such as environmental flow assess- ments, have the potential to integrate environmental con- Summary cerns into water resources management agendas. The Bank finances a great deal of post-flood rehabilitation, The problems facing rivers and lakes are the result of hu- much of it involving infrastructure reconstruction. This man activities that do not adequately protect these bodies strong emphasis suggests that what is being built is not of water. Fewer than half of Bank projects that attempted holding up when flooding occurs. The borrowers often do such protection achieved the desired result. Controlling not have the institutions required to take charge of mainte- excessive water extraction proved particularly challenging. nance and management. Nearly all of the relevant projects attributed poor results to Bank lending for droughts tends to be reactive rather than the absence of financial incentives to conserve water and proactive, and projects in drought-prone areas often do the failure to meet water pricing targets. not anticipate the risk of drought, even though drought The Bank's lending for coastal and marine management hot spots are well known. Drought projects, because they projects has been on the decline. The focus has shifted away typically involve behavioral changes, are often less suc- from the integrated coastal management plans, develop- cessful than flooding projects at achieving their objectives. ment of policies and plans, and pollution prevention that Successful projects have generally relied on activities that typified the earlier projects that have now closed. More- are relatively easier to accomplish. Projects that focused recent projects tend to focus on strengthening institutions, on such critical issues as improving agricultural practices, mobilizing community participation, and dealing with promoting technologies for efficient water use, and water land-based pollution. A number of marine protected areas conservation often failed to meet their appraisal targets, have been established with Bank support, but these are not yet these critical interventions will need to become more managed effectively. prominent. Half of the world's inland wetlands were lost in the last cen- Information about water quality and environmental flows is tury for lack of protective measures or their enforcement. scarce, and only a small minority of projects attempt to fill Within Bank projects, attention to wetlands has increased this gap. Lack of data prevents effective planning to address steadily, but little is known about the outcomes of Bank ac- environmental issues related to water quality and avail- tivities in this area, because data collection and monitoring ability. Projects designed to monitor water quality cannot have been inadequate. 48 | Water and Development Chapter 5 EVALUATION HIGHLIGHTS · The use of water for irrigation has increased dramatically in the developing world, but attention to agricultural water resources management and environmental issues has declined. · Water supply, sanitation, and sewerage activi- ties have been growing in the portfolio since 2004. · Water supply projects have performed on par with the Bank's overall portfolio and have substantially contributed to improving access to clean water. · Institutional weaknesses are a common cause of failure in water supply, sanitation, and sew- erage activities. · The poor often cannot afford sanitation schemes even with subsidies or financial aid. · Although the Bank's share of financing for dam construction for hydropower is modest, the potential is large in developing countries. Water Use and Service Delivery Water has almost as many uses as there are human endeavors, and the delivery of water services, a focus of the MDGs, is important to meeting the Bank's poverty reduction mandate. This chapter summarizes the trends and the findings of the IEG evaluation regarding the delivery of some of the most important water-related services: water for agriculture, water supply, basic sanitation, sewerage and wastewater treatment, and dams for hydropower. Irrigation the most important development objectives of agricultural water management projects, attention to environmental is- Irrigated land makes up about a fifth of the arable area in sues had steadily fallen since the mid-1990s. The IEG report developing countries, but it accounts for about 80 percent also concluded that more attention to water rights was im- of all water use. The volume of water used annually for ir- portant, though progress would be challenging where own- rigation in the developing world has doubled in the past 40 ership of land and water assets was unclear. years. But that increase has slowed because of heavy draws on groundwater aquifers and competition for water from Attention to agricultural water resources other sectors (World Bank 2006a, p. 3). At the same time, management has declined steadily, as has Bank lending for agricultural water management has de- creased in every decade since the 1970s (IEG 2006b). attention to environmental issues. The productivity of irrigated croplands has increased dra- This evaluation reviewed the experience with community matically in the past half century. For example, in that pe- management in 62 projects that created or supported water riod the production of rice and wheat increased 100 percent user associations (WUAs). It found that about 87 percent and 160 percent, respectively, with no increase in water use supported irrigation and drainage. The remainder were in per bushel. "However, in many [river] basins, water produc- the WSS sector. The main aims of both clusters of projects tivity remains startlingly low," the International Water Man- were to implement the user-pays principle; to maximize the agement Institute's (IWMI) Comprehensive Assessment revenue collected through maintenance of accounts receiv- notes (Molden 2007). Without continued improvements able and bill collection; and to reduce the cost of scheme in agricultural productivity, or major shifts in farming lo- maintenance, often through the use of local labor. About cations, the amount of water required for agriculture will 80 percent of the projects created new WUAs. Albania, In- grow by 70 to 90 percent by 2050, according to the IWMI's donesia, the Kyrgyz Republic, Mexico, and Pakistan estab- report. lished federations of WUAs to manage and operate main In 2006 IEG published an evaluation of agricultural water canals and to coordinate the use of jointly owned large use that reviewed the experience of 161 projects in 56 coun- agricultural machinery and water equipment among their tries (IEG 2006b). This evaluation draws on that work. The members. About six other projects foresaw setting up such 2006 evaluation found that attention to agricultural water federations at an unspecified future date. resources management had decreased steadily during the period studied and that the discussion of agricultural water WUAs that did not work effectively often charges had almost disappeared from Bank Country As- had received insufficient training of their sistance Strategies (see appendix F). The notable exception members and lacked member ownership. to this trend was the Middle East and North Africa, where concerns about agricultural water resources management WUAs were established as planned less than half the time, top the agenda because rapidly growing urban areas are but three-quarters of those that were established were re- competing with agriculture for scarce water. The study fur- ported to be working effectively at project closure. Farmers' ther found that although measures to increase the efficiency lack of motivation to organize themselves just to achieve a and sustainability of irrigation and drainage were among goal imposed by the government (often in line with the do- 50 | Water and Development nor's agenda), was the key reason underlying the low rate · If the aim is full cost recovery or even just recovery of of WUA establishment. Ineffective WUAs were often those operation and maintenance costs, water charges need to that did not provide sufficient training for members, which be realistic; that is, they must be adequate to cover the led to uncertainty and conflicts regarding their rights and actual expenses associated with running the systems. obligations, culminating in a low level of willingness to pay In-time water distribution and proper maintenance for service. About 15 percent of WUAs failed to achieve contribute to a higher ratio of water fees collected to fees long-term sustainability because of their own weak admin- assessed. istrative and financial capacities: lack of basic equipment · Transfer of public water systems to user groups can cre- (office space, computers, and telephones) and vehicles was ate a sense of energy and empowerment that can greatly often the cause. improve system efficiency, household incomes, and en- terprise-creating investment. The transfer process will Four main lessons can be drawn from the WUA experience: not be successful and sustainable unless the members of · Developing the capacity of WUAs is a long-term process the WUAs perceive real benefits in short order. that often cannot be completed within the span of one project. Water Supply and Sanitation · Training is integral to WUA development and works Even with 87 percent household water service coverage (UNI- best when it entails full participation of members in the CEF and WHO 2006, p. 23), over 1 billion people world- things the association is actually responsible for: plan- wide--one-sixth of the earth's population--lack access to safe ning, operation, and maintenance of water systems. drinking water. Bank involvement in WSS has been growing Photo courtesy of Ami Vitale/World Bank. Water Use and Service Delivery | 51 steadily over the past decade (figure 5.1) and comprises 550 Urban Water Services projects (29 percent of the 1,864 projects in the water port- The evaluation portfolio contains 556 projects dealing with folio). The number of projects with WSS activities has been urban water services, 229 of which focused exclusively on growing steadily since 2002 (except for a dip in 2006), prob- provision of urban water. Water services in urban areas are ably because of an overall increase in infrastructure projects, often subsumed under other rubrics and consist of more emphasis on the MDG targets for accessibility to clean water than just WSS (see figures 5.2 and 5.3). and basic sanitation, and endorsement of the World Bank Wa- On average, urban water projects performed about as well ter Resources Sector Strategy in 2003. Many of these projects as the overall water portfolio over the evaluation period. have included social and educational activities as well. Total However, they started from a lower base (65 percent satis- lending approved between 1997 and 2007 for WSS projects factory outcomes in 1998), and there has been a steady im- was just over $13 billion.1 provement in their success rate over time (80 percent were rated satisfactory in 2007). Ratings for urban projects vary Water supply, sanitation, and sewerage ac- by Bank Region (figure 5.3). Fourteen countries with mul- tivities have been growing in the portfolio tiple urban water projects achieved satisfactory outcomes since 2002. on all relevant projects (table 5.2). The evaluation found that within these projects, "hardware" As a group, the 356 urban water projects (physical assets) and "software" (institutional and financial in the portfolio have performed about the capacity building, technical and financial management sup- same as the overall portfolio, with a steadily port, training, and studies) were quite evenly balanced so as to increase the capacity of local institutions to provide improving trend. additional services without further Bank support. Table 5.1 shows that five of the seven most frequently undertaken The highest-rated urban water projects (those with "high- activities involved "software"; 57 percent of projects ad- ly satisfactory" outcomes) successfully completed the dressed one or more of the above activities.2 Several meth- construction of physical infrastructure and successfully ods--including activities in project administration, writing achieved institutional reforms or structured or restructured plans and proposals, accounting, computer training, and utilities. The least successful projects, in contrast, did not putting in place participatory structures such as water us- complete their infrastructure components, usually because ers groups-- were used to build institutional and financial the borrower failed to address dysfunctional institutional capacity. arrangements. It is therefore a positive sign that institution- al development is an increasingly common activity in on- The projects generally balanced physical in- going projects. Nearly 30 percent of completed urban water projects dealt with the risks to water supply either directly frastructure with capacity building, techni- or indirectly. In general, projects that explicitly addressed cal assistance, and training and studies. risk were concerned with preparing for or recovering from gure 2.1 FIGURE 5.1 Bank Commitments for Water Supply, Sanitation, Wastewater Treatment, and Sewerage Commitment amount (US$ millions) 5,000 4,000 3,000 2,000 1,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: IEG water database. Note: Includes both loans and grants. 52 | Water and Development TABLE 5.1 The Top 10 Activities for Water Supply The most successful urban water projects and Sanitation Projects both completed physical infrastructure and Number of Percentage of achieved institutional reforms. Activity projects all projects Institutional strengthening and capacity buildinga 166 30 Rural Water Services Rural water supply and sanitation 149 27 Urban water supply and sanitation 148 27 Technical assistancea 110 20 The world's 1 billion people without access Environmental managementa 73 13 to clean water live mainly in rural areas. a Studies 69 12.5 Traininga 69 12.5 A major challenge for developing countries in achieving Wastewater treatment 66 12 the MDGs, and in particular the MDG target with respect Financial capacity building 49 9 to safe drinking water and basic sanitation, is finding ways Equipment purchase 47 8.5 to provide sustainable water supply and basic sanitation in small towns and rural areas. As noted earlier, about 1 bil- Source: IEG water database. lion people are without access to clean water, and they are a. Activities that can be categorized as "software." located mainly in rural areas (UNICEF and WHO 2006). The evaluation portfolio includes 218 projects that had at natural disasters, as well as addressing water quality issues least one component dealing with rural water supply, repre- or facing scarcity. These projects performed somewhat be- senting $13.9 billion in World Bank support. In 96 of these low the rest of the urban water portfolio (64 percent had projects, rural water supply was a primary focus. Seventy- satisfactory outcomes). Another way to help improve the two percent of the 96 projects achieved a satisfactory out- performance of water utilities is through benchmarking, come rating. The dedicated projects were rated likely to be which can drive utilities to improve performance relative to sustainable (or better) in 67 percent of cases. competitors or to utilities in other countries (box 5.1). gure 2.1 FIGURE 5.2 Completed Project Activities for Urban Water Services Rehabilitated existing water infrastructure Built new potable water infrastructure Created or developed institutions Built or rehab'd sewage infrastructure Developed multisectoral project Addressed pollution and water quality issues Built or rehab'd energy infrastructure Reformed water utility Built or rehab'd sanitation infrastructure Engaged in comprehensive planning process Built or rehab'd drainage infrastructure Created community-based management process Natural disaster preparation or recovery Implemented DSM measures Created regional management process Built or rehab'd irrigation infrastructure Built or rehab'd other infrastructure Land use planning or reform 0 20 40 60 80 100 120 140 160 180 Number Source: IEG water database. Water Use and Service Delivery | 53 gure 2.1 FIGURE 5.3 Share of Urban Water Projects Rated Satisfactory by Region 100 90 Percentage satisfactory outcome 80 70 60 50 40 30 20 10 0 All Water Urban ECA LAC EAP MNA AFR SAR Region Sources: IEG water database. Note: Dark horizontal line indicates the average for all urban water projects. AFR = Africa, EAP = East Asia and Pacific, ECA = Europe and Central Asia, LAC = Latin America and Caribbean, MNA = Middle East and North Africa, SAR = South Asia. Bank-supported rural water supply investments have helped to provide access to improved water sources in rural areas, increase rural households' access to safe water. Beneficiary although in aggregate terms, progress in China and India data from 17 completed projects indicate that World Bank alone will be enough to meet the MDG target. financing has made a modest yet important contribution to Improved access to rural water supply helped raise the improving access to rural water supply over the past decade daily water consumption of rural families who previously (figure 5.4). However, as the figure also indicates, a more fell below minimum standards. This improvement, in turn, broad-based effort is still needed if the donor community is produced other favorable impacts in health and economic standing. Savings in distance traveled and time spent obtain- TABLE 5.2 Countries with 100 Percent Satisfactory ing water varied significantly by type of water service, with IEG Outcome Ratings for Urban Water the largest gains accruing to those who used a house con- Projects nection, followed by those who used a shared pipe connec- tion or a shared source. Women and children were often key Country Number of projects beneficiaries of time savings (box 5.2). Reductions in time Bolivia 7 spent per household in water collection freed up labor for Iran, Islamic Rep. of 6 other income-producing activities and schooling. Whether Afghanistan 4 beneficiaries rely solely on the new system for their drink- Peru 4 ing water greatly influences the impact on health. Reasons Benin 3 for using other, less safe sources include lack of information Cambodia 3 or training, long distances to safe water sources, and social Georgia 3 and economic incentives or disincentives. Jordan 3 Korea, Rep. 3 Sanitation Romania 3 Progress on sanitation has been limited: 2.6 billion peo- Ukraine 3 ple--40 percent of the world's population--still lack access Eritrea 2 to improved sanitation.3 The transition away from expen- Estonia 2 sive and wasteful waterborne sanitation has been slow-- Mongolia 2 which goes a long way in explaining the persistence of the Source: IEG data. problem. 54 | Water and Development BOX 5.1 BENCHMARKING UTILITY PERFORMANCE One way to improve the performance of water and sanitation utilities is through benchmarking. To assist with this, during the late 1990s, the Bank started managing the International Benchmarking Network for Water and Sanitation Utilities (IBNET) with financing from DFID. IBNET provides a global yardstick against which water and sanitation utilities and national policy makers can measure their performance and gain a better understanding of the utilities' strengths and weaknesses. The database contains information on more than 2,500 utilities in 100 countries, and more than 50,000 users log on to IBNET every month. In addition to the utilities themselves, other users include national policy makers, water and wastewater associations, researchers, investors, and international donors. Source: AECOM International Development, Inc. (2009). The review of sanitation-related projects found a preference (composting toilets and dry pit latrines) was undertaken in for capital-intensive works: 312 projects supported waste- 23 projects in the water portfolio (appendix table J.34). Sev- water treatment, while 115 projects addressed household enty-three projects provided household sanitation. Accord- sanitation. A number of the latter took a lower-tech ap- ing to Bank documents, the Bank is providing the materials proach: 47 projects supported the installation of latrines, for the basic structure--cement, porcelain pans, slabs and and some also constructed shared public toilets. In eight toilet seats, and connection and vent pipes. Earlier lessons countries alone (Benin, Bolivia, China, Ghana, Pakistan, from experience with the use of expensive latrine models Panama, Paraguay, and Sri Lanka), the Bank financed a suggested that the use of materials not locally available or total of 165,297 latrines.4 Work with waterless sanitation too expensive for beneficiaries (or both) limits the uptake gure 2.1 FIGURE 5.4 Share of the Rural Population with Access to an Improved Water Source by Country Ethiopia Mozambique Madagascar Zambia Mali Lao PDR Benin Brazil Uganda Ghana Paraguay Bolivia Yemen, Rep. of Indonesia Morocco Colombia Venezuela, R. B. de Rwanda Sri Lanka Burundi Tunisia Guyana China India Pakistan West Bank and Gaza Ecuador 0 20 40 60 80 100 Percentage of rural population Rural population with access to water supply World Bank contribution to improved access to rural water supply Rural population without access to water supply Sources: UNICEF and WHO (2006) and World Bank project self-evaluation reports. Water Use and Service Delivery | 55 BOX 5.2 GENDER AND WATER: FINDINGS OF THE IEG GENDER EVALUATION The 2009 IEG gender evaluation examined the degree to which water services were provided in a gender-sensitive manner in 12 countries. It distinguished the improvements in water service delivery derived by taking women's concerns directly into account. Field observations and desk reviews found that a safe and more convenient water supply had improved the quality of life and productivity of rural women who used project-supplied water in their homes. Easier access to safe water (and an assured supply) allowed women to provide a cleaner home environment with less effort. They washed their own and their children's hands more often, and the improved health of their children allowed the mothers to be away from the home doing productive activities more days per year. Safe water close to the home also helped women keep food preparation areas clean. Clothes washing and cooking were simplified and less time consuming. The targeted support for women, the evaluation noted, had been at a low level in about half the countries, and sustainability was a concern in some projects. Source: IEG (2010). of sanitation schemes and renders them not replicable. In Over the past 10 years, subsidies have increasingly been the three most recent projects, the use of locally available directed toward marginalized groups, with beneficiaries materials for latrines was stipulated. selected using characteristics other than income. (Women, children, the elderly, and indigenous groups are all exam- Forty percent of the world's population still ples that the evaluation came across.) Projects are more lack access to improved sanitation. likely now to give preference to beneficiaries who are or- ganized. A clear advantage of an organizational structure Many countries are reluctant to borrow significant amounts is that it can act as a liaison between project implementers of money from the Bank for onsite sanitation, particularly and beneficiaries, allowing the latter to state their needs and when the materials to be purchased are not capital intensive. technology preferences, and the former to accelerate and Still, there are significant Regional variations, with coun- coordinate the generation of a financial contribution. The tries in East Asia and Africa borrowing more for sanitation downside is that the poorest groups tend to have the weak- than countries elsewhere (appendix table J.41). est organizational capacity, and so may lose out. Subsidies for Basic Sanitation Subsidies have increasingly been directed In order to deliver affordable sanitation services, reduce toward marginalized groups, but their lack health risks, and minimize negative impacts on the envi- of organizational capacity may still limit ronment at a reasonable cost, the Bank supports subsidies access. for basic sanitation infrastructure (for example, latrines and cesspits of various types) required by households and com- The results show that, on average, subsidies help little with munities for safe management of excreta. The evaluation the uptake of sanitation. There is no statistically significant identified 51 projects that provided a sanitation subsidy, relationship between the level of subsidies and the percent- two-thirds of them in rural areas (appendix figure J.26). age of beneficiaries taking up the improved water or latrine About three-quarters of the projects provided a partial sub- programs (the t statistic on the subsidies variable is 0.76; see sidy (ranging from 20 to 96 percent), which often varied appendix tables J.35 to J.37). with beneficiary income or the level of service chosen or provided. Almost half of the projects (25 of the 51) required Sewerage and Wastewater Treatment a cash contribution, although in-kind contributions, mainly Absent adequate wastewater treatment, the pollutants in labor and construction materials, were also accepted in 15 wastewater can wind up in watercourses, from which they projects. Despite the subsidies, poor households still strug- eventually get recycled, with adverse implications for hu- gled to meet the requirements. Out of 25 closed projects, 14 man health and the environment. Of course, in less dense (56 percent) provided evidence that the sanitation schemes areas, and in dryer zones where streams are scarce, this is were not affordable for the poorest beneficiaries. much less of a problem. Constructing sewerage removes pollutants from densely populated areas, and wastewater The poor often cannot afford sanitation treatment infrastructure helps to prevent untreated wastes from being discharged into fragile ecosystems and protects schemes, even with subsidies or financial aid. downstream users. 56 | Water and Development Effective collection of urban wastewater has become a High-tech treatment facilities that produce extremely critical problem in most developing countries. Sewerage good-quality wastewater may be a luxury that only middle- and related investments were provided in 312 projects in income countries can afford. Hence, a broad approach to the evaluation. In the construction of new public sew- sanitation that provides low-tech, step-by-step improve- ers and the rehabilitation of existing ones, urban areas ments may be preferable to high-cost treatment plants in predominate--as is to be expected, given that wastewa- countries that have a lot of catching up to do. ter treatment is not cost-effective in rural areas. About 95 Over two-thirds of projects achieved successful results. percent of the 312 projects reviewed were implemented in When project achievements fell short of expectations, insti- urban areas. Sixteen projects involved activities related to tutional weaknesses in the sanitation sector were frequently rural sewerage and wastewater treatment. the cause (box 5.3). IEG also saw a number of treatment A comparison of activities of the closed projects with those plants functioning below design capacity because house- of ongoing projects reveals how the Bank's approach to holds were not getting connected to the systems; this is an wastewater treatment and sewerage has evolved (see ap- area where more emphasis is needed.5 pendix figure J.25). In particular, the construction and re- The Asunción Sewerage Project in Paraguay, described in habilitation of wastewater treatment plants have increased box 5.3, illustrates this point. The extent to which overca- enormously, as borrowers faced growing amounts of waste- pacity in Bank projects is the result of overdesign of the water generated by rapid population growth and urbaniza- treatment works is unclear. It could also be the case that the tion. Moreover, in times of increasing water scarcity, treat- client or the Bank, or both, is overly optimistic about the ment plants are a popular strategy to increase water use fraction of the population willing to pay for a house sew- efficiency. erage connection. Although the Bank often talks about the "populations served" by treatment works, the individual The Bank's approach to wastewater treat- household actually receives no direct benefit from treat- ment and sewerage has evolved with ment works and is often perfectly satisfied with discharging demand, focusing on construction and its waste into public drains or a drainage field. The beneficia- rehabilitation of treatment plants. ries are those downstream of the treatment works, not the polluting households themselves. BOX 5.3 SOME REASONS FOR FAILURE OF SEWERAGE WORKS The appraisal document for the Algeria Water Supply and Sewerage Rehabilitation Project (P004974, $250 million, closed in 2004) proposed the rehabilitation of sewerage networks and sewage treatment plants in several places around the country so that when used water was released back into the environment it would not cause problems for downstream users. In the end, inadequate institutional arrangements prevented the attainment of environmental and public health benefits. There was effectively no responsible authority to oversee the operation, and maintenance of the rehabilitated systems and other investments was dropped. Expected modifications to the tariff structure were not made because the borrower was reluctant to deal with the political risk. In Nepal's Urban Water Supply and Sanitation Rehabilitation Project (P010370, closed in 2000), the government sought Bank support for rehabilitating two sewage treatment plants and providing 10,000 new sewerage connections in 12 towns. The project failed to achieve most of its objectives, including the sewerage construction and rehabilitation works, largely because the managerial and operational capabilities of national water utilities were weak. As in the Algerian example, tariff increases were inadequate in Nepal because of government hesitancy. The Asunción Sewerage Project (Paraguay, P007926, closed in 2004) planned to expand sewerage services in that city through the provision of approximately 50,000 new house connections, construction of about 550 kilometers of sewage collectors, installation of 24 kilometers of sewage interceptors, construction of preliminary treatment facilities and a new sewage outfall, and rehabilitation of three existing sewage outfalls serving the city's sewerage system. However, no families in Asunción were connected to the sewerage system as a result of the project, because the local water utilities were incapable of dealing with the complexity of the multiple civil works. The project completion report found that there was little point in constructing expensive facilities without also creating the institutions that can effectively run the systems and ensuring that the target population gets connected. Sources: Project ICRs and IEG water database. Water Use and Service Delivery | 57 When projects fell short of expectations, About a third of water supply projects and it was usually because of institutional fewer than half of sewerage and wastewa- weaknesses. ter projects undertook economic analyses, and a majority of these did not meet their Analysis of the 312 projects dealing with wastewater treat- ment and sewerage revealed that the expected number of targets. beneficiaries of sewerage work and the impacts (in terms not calculating ERRs, about two-fifths of reports for water of both water quality and volume treated) of wastewater treatment projects that lacked ERRs argued that quantifica- treatment consistently fell short of appraisal expectations tion of the economic benefits of improved health,6 improve- (figure 5.5). A drop in the number of expected beneficiaries ments to the environment, and better quality of life was too in more recent projects reflects a shift in focus (toward leav- difficult. Even among ongoing water treatment and sewer- ing household connections to borrower agencies) and more age projects, only one-third estimated an economic or fi- realistic appraisal targets. nancial rate of return at appraisal (figure 5.7). Of course, Economic Analysis for Water, Sanitation, this will make it impossible for any ex post evaluation to Sewerage, and Wastewater Treatment compare results at completion with any economic goals or Projects objectives. A review of project completion reports shows that about one-third (35 percent) of completed water supply projects Multipurpose Dams and Hydropower and fewer than half (48 percent) of completed sewerage and wastewater projects undertook an economic analysis There are now more than 45,000 large dams in 140 coun- at project completion to test the efficiency of the invest- tries worldwide.7 Although dams help make water resources ments. Forty percent of water treatment and sewerage more available in some regions, they are also controversial. projects and a similar share (38 percent) of water supply Since they modify the water cycle, they can have negative projects for which an economic rate of return (ERR) was effects on livelihoods, health, and the environment if not calculated achieved or exceeded their ERR appraisal targets planned and managed well. For instance, when sediments (figure 5.6). In most cases, ERRs for water treatment were no longer reach the coast because they are blocked by dams, estimated based on the expectation of economic benefits the result can be land subsidence in coastal areas. Rivers stemming from broader access and availability of treated may run dry if too much water is extracted for irrigation water, although many of these projects also expected direct upstream. Lower river flows can also contribute to dis- economic benefits from the improved sanitation (delivered eases such as bilharzia and malaria. Populations upstream through construction or rehabilitation of sewer networks) of a dam can be displaced by the new reservoir, and those within the target area, irrespective of treatment. Although downstream that relied on the natural flows for agriculture many completion reports did not provide a justification for and fishing can be adversely affected. Nevertheless, given gure 2.1 FIGURE 5.5 Expected and Actual Beneficiaries of Sewerage Works 25 Number of beneficiaries (in millions) 20 15 Targeted at appraisal 10 Actual result 5 0 1986­88 1989­91 1992­94 1995­97 1998­2000 2001­03 2004­07 Approval fiscal year Sources: World Bank project documents. 58 | Water and Development gure 2.1 FIGURE 5.6 Water Supply Projects Reporting Economic Rates of Return 180 167 160 141 140 131 Number of projects 120 100 79 80 60 52 40 20 0 Completed fiscal 1997­2007 Projects with ERR values at appraisal Projects with ERR values at completion Projects with ERR values at appraisal and at completion Number of projects that achieved or exceeded ERR target at completion Number of projects that did not achieve intended economic returns Source: IEG water database. Note: N = 366. gure 2.1 FIGURE 5.7 Projects Calculating Economic or Financial Rates of Return 45 41 40 36 34 35 Number of projects 30 25 20 15 10 10 5 0 Exit fiscal 1997­2007 ERR analysis at appraisal No justification provided at appraisal Benefits are not quantifiable, lack of data to quantify benefits Financial rate of return analysis Sources: World Bank project documents. Water Use and Service Delivery | 59 the changes being wrought by climate modifications, hy- hydropower potential exceeds 1,900 gigawatts (GW), 70 dropower's contribution to clean (that is, non-carbon-emit- percent of which is not yet exploited. This compares with ting) energy is gaining increasing importance. current installed capacity of 315 GW in Europe and North America and 730 GW worldwide. About 7 percent of eco- Hydropower is an increasingly important nomically feasible hydropower potential has been exploited source of clean energy. in Africa, 18 percent in East Asia and the Pacific, 21 percent in the Middle East and North Africa, 22 percent in Europe After a peak in the mid-1990s, dam construction slowed in and Central Asia, 25 percent in South Asia, and 38 percent the late 1990s following an increasingly difficult dialogue in Latin America and the Caribbean. Projects representing among nongovernmental organizations, the private sector, approximately 7 percent of total potential are currently un- governments, and international organizations. In 1997 the der construction, of which the World Bank Group's share is World Commission on Dams was established to review the below 10 percent (World Bank 2009). development effectiveness of large dams and develop inter- nationally acceptable criteria, guidelines, and standards for IEG identified 211 projects that involved dams, whether large dams. These have since helped guide decisions by the for hydropower or other uses, in the evaluation portfolio. World Bank and others. Of these, 100 projects involved hydropower, 57 of which were multipurpose projects. Almost a third (66) of the 211 The Bank has recently again increased its financing for dam projects were primarily rehabilitation projects. Many dams construction, in many cases for multipurpose dams that face gradual deterioration from lack of maintenance, and a include the provision of hydropower to help countries de- number have been shut down because of salinity, sedimen- velop renewable energy resources (box 5.4). Annual com- tation, and other problems. mitments for projects involving dams have recovered from a low of $280 million in 1999 to nearly $700 million in 2007 The performance of the Bank's dams and (appendix H). hydropower projects as a group is on a par The Bank's recent return to financing dams with that of other water subsectors. has often included multipurpose dams that The overall performance of the Bank's dam and hydropow- also provide hydropower. er portfolio is on par with that of the entire water portfolio: Still, the Bank's share of worldwide dam construction for 77 percent of the 103 closed projects achieved an outcome the provision of hydropower is modest, although the poten- rating of moderately satisfactory or better. (See appendix H tial is large. In developing countries, economically feasible for details on ratings.)8 BOX 5.4 HYDROPOWER AND MULTIPURPOSE PROJECTS The Bank's 2003 water strategy notes that although the Bank has been important in attracting critical private sector investment in projects, there is growing concern that, "by disengaging from difficult, complex issues [that is, dams], the Bank is losing its credibility as a full-service investment and knowledge partner" (World Bank 2003b, p. 3). In response to this criticism, the Bank has been reengaging in hydropower. The new hydropower development business plan includes rehabilitation of existing plants and the construction of small and run-of-river plants (plants that do not create a reservoir) and multipurpose plants with reservoirs. It supports feasibility studies for technically, economically, and environmentally satisfactory projects. The tendency is to move toward multipurpose projects that produce hydropower but also support irrigation, flood protection, or industrial use. In fiscal 2007 nine hydropower projects (five of which are "carbon-financed," that is, paid for in part by the sale of carbon emissions reductions; see IMF and World Bank 2007) were approved for a total of $748 million in new World Bank Group financing, including $115 million in guarantees and $66 million in carbon finance. The Bank's water sector specialists see this "new" hydropower as demanding more sophisticated integration across disciplines, across water uses, across broader energy and water resources opportunities, across stakeholders (local and international), and across lending, reform, and capacity building. The new emphasis involves more projects that address both water supply and energy security. Source: IMF and World Bank (2007). 60 | Water and Development Summary rural families. Progress on access in China and India alone will be sufficient to achieve the MDG target for water sup- Irrigated land accounts for about 80 percent of all water ply. However, additional efforts are still needed to ensure use. A recent IEG evaluation found that although the use access to improved water sources in rural areas. of water for irrigation had increased dramatically in the developing world, attention to agricultural water resources Progress on sanitation has been limited: 2.6 billion peo- management had decreased steadily, as had attention to en- ple--40 percent of the world's population--remain without vironmental issues in projects dealing with agricultural wa- access to improved sanitation. Effective collection of urban ter use. The discussion of agricultural water charges almost wastewater has become a critical problem in most develop- disappeared from Country Assistance Strategies. ing countries. The Bank's support in this area has focused more on wastewater treatment than on ensuring household Water user associations have been promoted as a vehicle for connections to public sewerage systems. About two-thirds maintaining and operating irrigation and drainage schemes, of sanitation projects achieved successful results. When but establishing them has been challenging: they were es- project achievements fell short of expectations, institution- tablished as planned less than half the time, and only three- al weaknesses in the sanitation sector were frequently the quarters of WUAs that were established appeared to work cause. To facilitate low-income households' access to sanita- effectively at project closure. In the remainder, members tion, the Bank has supported subsidies, particularly in rural received insufficient training, and the creation of the WUA areas. Despite the subsidies, however, poor households still generated little sense of ownership. Some WUAs failed to struggled at times to meet the counterpart requirements. achieve long-term sustainability because strong technical or financial capacity was lacking. After a peak in the mid-1990s, worldwide dam construction slowed. The Bank has recently increased its financing of dam Water services in urban areas are often subsumed under other construction, in many cases for multipurpose dams that pro- rubrics and consist of more than just water supply and sanita- vide hydropower. A new hydropower development business tion: only about half of projects that dealt with urban water did plan, "Directions in Hydropower," completed in 2009, cov- so exclusively. The success rate of urban projects has steadily ers rehabilitation of existing plants, small and run-of-river improved, reaching 80 percent satisfactory in 2007. Nearly 30 plants, and multipurpose hydropower plants with reservoirs percent of completed urban water projects dealt with water (World Bank 2009). It also advocates the use of feasibility risk either directly or indirectly. Projects that explicitly address studies so that projects will be technically, economically, and risk are generally concerned with preparing for or recovering environmentally appropriate. The multipurpose projects from natural disasters, as well as addressing water quality is- also often support irrigation, flood protection, or industrial sues or future scarcity. These projects have performed some- use. The overall performance of the Bank's dam and hydro- what below the rest of the urban water portfolio. power loans is on a par with that of the water portfolio as a The evaluation portfolio includes 218 projects dealing with whole. Although the Africa Region has the highest number rural water supply. These projects have generally increased of hydropower projects of all Bank Regions, the continent's access to safe water and provided a variety of benefits to potential remains largely untapped. Water Use and Service Delivery | 61 Chapter 6 EVALUATION HIGHLIGHTS · Public providers remain the norm in WSS, but where the private sector has gotten suc- cessfully involved in urban WSS, it generally expanded infrastructure and increased fee collection. · A common theme in projects where private sector participation encountered difficulties was lack of a conducive regulatory and institu- tional framework. Photo courtesy of Curt Carnemark/World Bank. · Common positive outcomes in a decentralized setting were successful installation or rehabili- tation of infrastructure and improved service delivery. · IWRM projects focused most often on institu- tional development but frequently promoted top-down changes. · The Bank facilitated cooperation among ripar- ians in 31 international basins and funded some groundbreaking work on transboundary groundwater issues. Water Management Institutions The Institutional Aspects of Water Most countries have committed themselves to increasing access to water and sanita- tion in order to achieve the MDG targets. But a variety of paths have been taken to achieve this end. Two typical tactics to improve service delivery and increase efficiency are privatization of water service provision and decentralization of services to lower levels of government. This chapter documents the achievements and problems en- Private Sector Participation in Urban WSS countered with both tactics.1 Another tactic uses a project- Thirteen percent of projects dealing with urban WSS aimed by-project IWRM approach to improve both water service to introduce PSP in the sector. Seventy of these projects have sustainability and water provision. This chapter also discuss- closed, and 46 had managed to involve the private sector as es the Bank's current approach to building the institutions planned by the time of closure. Among the 24 projects that that promote cooperation around transboundary waters. did not, Turkey and the República Bolivariana de Venezu- ela terminated the contracts prematurely;2 6 countries (Al- The Context for Private Sector Participation geria, Argentina, Nigeria, Rwanda, Tunisia, and Uganda) cancelled only one or two out of several contracts; Bolivia in WSS cancelled all contracts; and in 6 other countries (Guinea, In 1985 the World Bank began to shift its development Jordan, Kosovo, Sierra Leone, Trinidad and Tobago, and focus from the public to the private sector. Private sector West Bank and Gaza), private companies efficiently man- participation (PSP) was fostered at first to close the large aged service delivery for several years, but when the con- gap in infrastructure financing for developing countries. tracts came up for renewal, the government was reluctant An early and persistent problem was that attracting private or contractors were not ready to continue work. In some investments in piped systems, treatment plants, and new instances the areas where the work was to have been done connections to water and sewerage systems is difficult when had become conflict-ridden. In all these cases, water servic- the rules are not clear to all involved stakeholders. Country es management reverted to the public utility. In countries institutional and regulatory systems had to be made more without the financial means to pay the operator, contract transparent, although it also helped if incentives could be expiration meant that the water system continued to dete- put in place to encourage efficient utility operation and riorate, as was the case in the Trinidad and Tobago Water cost-effective labor and maintenance practices. Thus, in Sector Institutional Strengthening Project (P037006), for 1993 the Bank strategy paper on water resources manage- example. In other countries consumers hardly noticed the ment detailed how the involvement of the private sector difference once the private operator left, as was the case would be encouraged (World Bank 1993). with the Turkey Antalya Water Supply and Sanitation Proj- ect (P009093). The public utility proved able to continue In 1997 a Board-endorsed action program, "Facilitating service provision at the same level as the private operator. Private Involvement in Infrastructure," gave more attention to the financing mechanisms deemed most effective in le- Two-thirds of projects that aimed to veraging private funding for infrastructure. Such activities facilitate PSP managed to involve the were to take place in conjunction with the Multilateral In- vestment Guarantee Agency (MIGA) or the International private sector as planned. Finance Corporation (IFC) (World Bank 1997; IEG 2002). Several factors contributed to the difficulties of private sec- With the idea of making a lasting impact on water utility tor involvement. A single project may have encountered reform in developing countries, the Bank, in conjunction several of these: with IFC, developed various forms of engagement with the · Lack of effective regulation (27 projects) private sector, including concessions, leases, and manage- ment contracts (appendix box I.1). · Civil unrest, conflict, or coup (14 projects) 64 | Water and Development · Natural disasters, such as floods, droughts, fires, and in the preparation of contracts and bidding documents for earthquakes (9 projects) PSP and funded studies to explore opportunities for PSP in the country context (see appendix table I.5). Bank support · Financial crisis (7 projects) for the private sector has a notably long record in Africa and · Loss of private operator interest3 (5 projects) Latin America (also see appendix figure I.5). · Change from a government that promoted PSP to one that did not (4 projects). The private sector's role is much more limited in rural areas. Lease/affermage contracts (see definition in appendix box I.1) seemed the least affected by these factors, followed by Of the 34 completed rural projects that sought to introduce management contracts and concessions. A well-functioning PSP, 29 succeeded in effectively getting the private sector and well-maintained regulatory system (one able to control involved in rural WSS; in 2 of the 5 projects that did not facilities and set or change prices) was important in deter- introduce PSP, legislative and institutional reforms set the mining whether a private operator was able to take over stage for private participation, but PSP did not get off the the provision of water supply or sanitation, although the ground during the life of the project. Among the completed creation of a new regulatory agency with little institutional rural WSS projects with PSP, projects in Albania, Costa capacity but a lot of discretionary power has been a major Rica, Ethiopia, Madagascar, and Paraguay set up a regula- cause of the failure of PSP in several countries. tory agency or otherwise improved the institutional frame- work. However, a regulatory agency did not always prove A supportive regulatory system has proved necessary. Especially in countries with weak institutions, it important to private operation. was sometimes more effective simply to formulate contracts with the private sector and enforce their terms rather than World Bank self-evaluation reports and IEG assessments change the country's whole regulatory system (Kauffmann for the completed projects found that when a project suc- and Perard 2007, p. 15). Thus, in Benin, Guyana, Kosovo, cessfully involved the private sector in urban WSS, it gener- and the República Bolivariana de Venezuela, contracts were ally resulted in increasing both infrastructure provision and developed without a regulating agency in place. In 17 coun- fee collection. The different contract types yielded slightly tries legislation was passed and policies were developed to different results (see appendix tables I.1 to I.4). Concession allow for PSP in the water sector. Among those countries, contracts and management contracts resulted in greater ef- Albania, Ethiopia, Ghana, and Rwanda also developed a ficiency gains for fee collection, tariff increases, and more strategy or action plan, mapping out a route to involving the installed water meters, whereas lease contracts focused private sector in the provision of rural WSS. In those coun- slightly more on increasing the supply, production, and tries the projects closed before PSP could be implemented. quality of water. International private firms involved in urban areas in de- The private sector was generally successful veloping countries were engaged in rural areas in only four in increasing infrastructure and fee collec- countries (Burkina Faso, Kosovo, Rwanda, and Trinidad and Tobago). In all other projects, the local private sector tion in urban WSS. was involved. The most common way to involve the private sector in rural water delivery was through the construc- Private Sector Participation in Rural WSS tion of rural water supply systems, followed by operation Of 218 rural WSS projects, 56 aimed to encourage PSP. or maintenance activities (see appendix table I.6). For ex- Those projects (34 completed, 22 ongoing) were spread over ample, in the 1998 Madagascar Rural Water Supply and 41 countries, 12 of which had more than one operation (see Sanitation Pilot Project (P001564), private operators signed appendix figure I.5). The Bank's role in this process was to 18 medium-term affermage contracts with the local govern- conduct high-level discussions to promote PSP. The Bank ment for the operation and maintenance of water systems. also organized conferences to train government officials Over the course of the project, these operators expanded the Water Management Institutions | 65 large amounts of funding in infrastructure investments or in increasing the efficiency and cost-effectiveness of water utili- ties. In rural areas the local private sector got involved in the operation of water systems, but it invested less and shared lit- tle financial risk. Its role was therefore much more limited and focused on efficiencies in management. What projects involv- ing the private sector in rural WSS can bring in addition to water delivery is employment and an upgrading of local skills, both of which can help reduce rural poverty. Thirty-eight per- cent of projects actually created employment. The international private sector tends to focus on large and medium-size cities; small-scale local operators can have com- parative advantage in more remote areas, but their capacity is often limited. Overall, although the Bank's attempts to increase private in- volvement in water service delivery had some success (see Photo courtesy of Dominic Sansoni/World Bank. appendix I), the formal private sector has not played the investment role that had been hoped for, and public provid- ers remain the norm (Marin 2009). Informal, small-scale private providers continue to play a large role in water sup- ply to the poor in the cities of many developing countries, a role that the Water and Sanitation Program (a multido- nor program administered by the Bank) and the Bank itself have played a constructive role in documenting. Private involvement has been less successful in irrigation and drainage. According to a 2007 study undertaken by the Bank's Water Sector Board, "experience with public-private partnership in I&D is scant. Regarding client benefits in service (mostly by supplying pipes, equipment, and meters) the public-private partnerships studied, the general result to 115,000 people in 24 small towns. A beneficiary survey is improved but more expensive water service because of of the project found that all 200 communities were manag- decreased government subsidies not fully compensated by ing their water systems satisfactorily with the support of the efficiency gains" (World Bank 2007a). village caretakers trained by the project. Public providers remain the norm for Engaging the private sector in rural areas often foundered on issues related to economies of scale (appendix box I.2). service delivery. Water and sewerage companies in large and medium-size cities are attractive targets for the private sector, but interna- Decentralization tional firms tend to ignore smaller, more remote towns and Decentralization transfers authority and responsibility for places where political interference is more prevalent (appen- governance and public service delivery from a higher to a dix boxes I.3 and I.4). Indigenous, small-scale private opera- lower level of government (IEG 2008c).4 Of the 206 projects tors can have comparative advantage in such settings. The that either dealt with decentralization of services or oper- Bank can be useful in developing a favorable environment ated in a decentralized setting (105 completed, 101 ongo- for such cases, as happened in the Colombia Water Supply ing), 27 had decentralization of water service provision as and Sewerage Sector Project (P006836, appendix box I.3). an objective (19 completed, 8 ongoing). Of the remaining Comparison of rural and urban PSP (appendix I) reveals that projects, 114 involved at least one decentralization-related where Bank support succeeded in helping countries bring component, and 65 were only carried out in a decentraliza- the private sector into WSS, the international private firms tion setting without a particular component directed at the tended to become involved in urban areas and contributed decentralization process. 66 | Water and Development quality management, and water resources management, in- Most projects done in a decentralized set- cluding IWRM. Finally, 20 percent also helped establish lo- ting involved capacity building, particularly cal water utilities in urban areas and WUAs in rural areas. at the local level. Under the right conditions, projects nearly These projects supported a combination of physical in- always achieved some positive results, but vestments and policy and institutional changes. Most wa- they rarely met expectations fully. ter supply and sanitation projects done in a decentralized setting sought to build local or central capacity, with local Completed projects in a decentralized environment rarely involvement clearly more prevalent. In terms of physical met expectations fully, but when the budget and authority as- infrastructure, the largest number of projects focused on signed to the lower level of government matched the respon- new water supply infrastructure, followed by construction sibility delegated to it, the projects almost always had some of sanitation or sewerage infrastructure. Over 50 percent of positive achievement. Projects were most successful with the projects had a cost recovery component (appendix figures construction or rehabilitation of infrastructure and improve- J.29 and J.30). 5 Seventeen percent of projects attempted to ment in service delivery. In general, activities such as main- strengthen local resource mobilization by adjusting the tar- tenance and cost recovery, which are a challenge outside of iff system, the objective being to finance at least operation a decentralized context, were challenging within it as well. and maintenance costs through user contributions.6 Thirty Only about one-third of projects that aimed at improving op- percent of projects also worked on improving operation and erations and maintenance and one-third of projects aiming at maintenance of WSS infrastructure, and another 30 percent improving cost recovery succeeded in doing so. About half of developed an institutional framework for decentralization. projects that aimed to strengthen local capacity and two-fifths Less frequently, but still in over 20 percent of cases, projects of projects that supported institutional reforms were success- addressed environmental issues such as pollution, water ful. Other positive outcomes usually associated with decen- gure 2.1 FIGURE 6.1 Activities of Completed Decentralization Projects Capacity building, local level Construction of WS infrastructure Local resource mobilization Construction of sanitation infrastructure Promotion / support of decentralization Capacity building, central level Pollution and water quality management Water / wastewater treatment CDD investments O&M improvement Water resources management Rehabilitation of WS infrastructure Promotion of PSP Drainage infrastructure Institutional framework for decentralization Multisectoral project Reform of tariff system Rehabilitation of sanitation infrastructure Establishing of local water utilities / WUAs Participatory community model Watershed protection and management Reform of local water institution Decentralization feasibility studies / pilots Reform of tax system Assessment of the potential for PSP 0 10 20 30 40 50 60 70 80 90 100 Percentage of projects undertaking activity Source: IEG water database. Note: CDD = community-driven development. Water Management Institutions | 67 tralization--increases in accountability, ownership, empow- include the adequacy of cost recovery and whether decen- erment, and social cohesion--were achieved in a minority of tralization was neglected or incomplete (for example, with cases, although for about half of the relevant projects at least no particular component directed at supporting the process one of those elements was reported to have improved (figure even though implementing capacity is still weak, or with no 6.1). An incomplete decentralization process was associated fiscal decentralization). This implies that capacity building, with negative project outcomes in over 10 percent of cases, in particular with respect to financial management (since suggesting that it is important that decentralization not lead that was a frequent focus of these efforts), is essential, es- to unclear or overlapping responsibilities and, in particular, pecially if local capacity is still weak and if decentralization that administrative decentralization be followed by transfer of is less extensive, such as in deconcentration settings. The the respective resources. Box 6.1 summarizes the experience findings also suggest that neglecting the decentralization with several water projects in a decentralized context. process can lead to undesirable negative outcomes, which implies that, in a decentralization setting, how the decen- Figure 6.2 depicts the success rates of the decentralization tralization process can be supported and how the institu- process by decentralization type for the aggregate subset tions involved can be strengthened should always be evalu- of 105 completed projects.7 Decentralization occurred as ated. planned in 61 percent of the closed projects; in 12 percent it did not, and decentralization was partial in the rest. As Delegation projects seem to have been only slightly less can be seen from this disaggregation, projects carried out in successful than projects aimed at devolution, but projects a devolution framework had the highest success rate (where carried out in a deconcentration setting performed worst. success is defined as in table 6.1). Hence, the type of decentralization seems to affect the suc- cess of a project.8 Since devolution is the deepest form of Decentralization was successful in 61 percent decentralization, the finding also suggests that it should be of projects--but some types of decentraliza- easier to elicit the potential benefits of decentralization if tion were more likely to succeed than others. authority is transferred completely, provided there is ad- equate local capacity. Less extensive forms imply potential Regression analysis of the factors that influence decentral- coordination problems when critical aspects of the decen- ization success (see appendix table J.39) found that in addi- tralization process remain incomplete, leading to an imbal- tion to decentralization type, important explanatory factors ance between responsibilities and authority or resources.9 BOX 6.1 EXAMPLES OF DECENTRALIZATION PROJECTS IN THE WATER SECTOR The Morocco Rural Water Supply and Sanitation Project ((P040566, completed in 2003) sought to shift from the conventional supply-driven approach to service provision to a demand-responsive, community-based approach that involved setting up village-level WUAs to participate in the design and to take over O&M of the water supply schemes. The project included the creation, training, and operation of social mobilization teams (SMTs) responsible for the implementation of the participatory approach and hygiene education. However, training by SMTs was limited to social mobilization. Training on O&M, financial management, and hygiene generally was not provided. In practice, SMTs concentrated on getting construction under way and provided little support to WUAs once the schemes were operational. As a result, each scheme is managed by a WUA, but where social capital is weak, these associations are fragile and need prolonged support from SMTs until they can manage the systems on their own. In particular, they did not receive help to set up their tariff structure. Hence, the price of water usually covers only operational expenditures and not replacement costs, as was expected at appraisal. The Lao PDR Luang Namtha Provincial Development Project (also completed in 2003) promoted decentralization of management responsibilities at the provincal level. However, the insufficient transfer of resources from the central government and limited mobilization of local revenue resulted in inefficient allocation of resources. Heavily dependent on the central government for resources, the provinces face constraints in developing any project on their own. Moreover, existing legislation does not provide incentives to the provinces for collecting or generating new sources of revenue for investments. This could undermine future efforts to strengthen local capacity and ensure the overall effectiveness of decentralization. Concrete steps need to be taken to increase the transparency of the funds being transferred to the provinces from the central government, improve the reliability of transfers in terms of timing and amount, and enhance planning and decision-making capacity at the provincial level. Sources: Project ICRs and IEG water database. 68 | Water and Development gure 2.1 FIGURE 6.2 Success of Decentralization by Decentralization Type 100 21 27 80 21 Percentage 60 77 36 40 71 20 36 0 Devolution Delegation Deconcentration Successful Partly successful Not successful Source: IEG water database. Note: Only those projects where decentralization affected the outcome are included. The total number of projects was 90 (43 devolution, 14 delegation, 33 deconcentration). For statistical significance levels see appendix table J.39. TABLE 6.1 Classification of the Success of Decentralization Decentralization was successful if... Decentralization was partly successful if... Decentralization was not successful if... Service delivery improved while none of the other indicators outlined in box 6.2 deteriorated. At least two of the other indicators One of the other indicators improved while improved while service delivery as service delivery and the remaining indicators well as the remaining indicators stayed constant. stayed constant. Service delivery improved or stayed constant while at most one of the other indicators deteriorated. In any other case. Source: IEG data. BOX 6.2 Delegation projects had an only slightly lower success rate than devolution projects; POTENTIAL BENEFITS OF projects in a deconcentration setting were DECENTRALIZATION least successful. 1. Improved service delivery Integrated Water Resources Management 2. Increase in allocative efficiency Following internationally accepted best practice, the Bank 3. Increase in productive efficiency has endorsed the IWRM approach (see box 1.1 in chap- 4. Increase in accountability ter 1) in the water sector, beginning with its 1993 Water Resources Management Policy Paper. Implementation of 5. Improvement of cost recovery and this approach was facilitated by the Bank's shift to matrix sustainability management in the late 1990s. This integration was further 6. Strengthening of social cohesion reinforced by the reorganization of the water sector in 2007, which created a single Water Sector Board (see appendix Water Management Institutions | 69 The 1998 China Second Tarim Basin Project (P046563) il- lustrates how IWRM principles were implemented in the context of irrigation improvements. The project effectively Photo courtesy of Simone D. McCourtie/World Bank. brought about institutional reforms at the river basin man- agement level. It also introduced a water quota system by establishing restrictions on agricultural water use, increased the productivity of water usage in irrigated agriculture, and established a water quota allocation specifically for a down- stream riverside environment, which resulted in significant environmental water releases. Discussions with water professionals from both borrower countries and donors, together with the evidence acquired during the case study missions to Brazil, Morocco, Tanza- nia, Vietnam, and the Aral Sea, indicate that much of what has been accomplished with IWRM in the water sector can be done in a top-down manner without greatly changing C). The Bank continued its support for the IWRM approach what is happening on the ground, such as the writing of laws in its 2003 strategy.10 and regulations, but significant provisions for enforcement are generally not a priority. Although some new institutions IWRM projects focused most often on have been created, more have simply been renamed (from institutional development. Irrigation to Water Management, for example). To some de- gree the approach to implementing IWRM has been for- IEG identified a total of 125 projects whose design and im- mulaic, and this has impeded success (see box 6.4 for an plementation were wholly or largely consistent with IWRM example from Morocco). The most obvious manifestation principles. These projects focused most frequently on in- has been the promotion of river basin organizations with- stitutional development activities, including financial and out taking the political context sufficiently into account. regulatory capacity building. Some countries (India, Koso- vo, Mexico, Morocco, the Philippines, and Tanzania, among Case studies found that what has been others) passed water laws that embodied IWRM principles. done in IWRM is mostly of a top-down In addition, river basin management institutions were often nature, and the approach has at times been set up to develop basin plans and make water allocation de- cisions involving relevant stakeholders (box 6.3). In some formulaic. cases there were attempts to administer and enforce water Countries often make desperately needed changes to the rights, including through the collection of water fees. Not way they manage water resources in response to a shock, all the IWRM-consistent projects focused exclusively on such as a natural disaster or other major catastrophe such as institutional reform, however. Others combined activities a spill of toxic pollutants into an important drinking water such as setting up hydrometeorological monitoring systems source for a major city. When Morocco confronted a severe with the provision of irrigation or water supply infrastruc- drought during the 1990s, decision makers at the highest ture (see also chapter 3 on river basin organizations). political levels decided that efforts to reduce demand should supplement the search for increased water supplies. Some projects implemented IWRM principles jointly with irrigation Similarly, in Tanzania the 2004­06 drought, which saw eco- nomic growth decline by over 1 percentage point, was deci- improvements. BOX 6.3 DATA ON WATER AVAILABILITY HELP BUILD CONSENSUS The 2001 Kosovo Pilot Water Supply Project (P070365) Carried out a water availability study that became the basis for water allocations within the watershed. The primary competing users in the project area were domestic water users (households) and irrigators. The study provided a rational basis for water allocations based on technical criteria such as the agronomy of the irrigation needs, the demands for domestic water, and the environmental flow requirements. Source: Project ICR. 70 | Water and Development BOX 6.4 IWRM IN MOROCCO In the early 1990s the Moroccan government decided to reform its water sector, and in 1995 it passed a comprehensive water law that laid the groundwork for that reform. The 1998 Water Resources Management Project (WRMP, P005521) was designed to support the goals and principles of the water reform, taking an IWRM approach that decentralized water management to the basin level and set up river basin agencies, while promoting further legislation to change the institutional structure and help the 1995 law become more functional. Twenty-one decrees and 32 public orders to support the institutional framework for IWRM were processed through the national administrative, political, and legislative systems and published. The Oum-er-R'bia River Basin Agency was created under the project. As of 2009, seven major and two smaller river basins were managed by basin agencies. These agencies collect user fees, manage watershed planning, protect the environment, and mitigate natural hazards. In the years since project closing, 11 more decrees have been approved and published. According to local sources, 9 of these decrees include regulations that have been approved or have been put into effect to some degree. Five additional decrees have been prepared but not yet approved. Despite this considerable progress on the legal front--and publishing decrees is an important step--a far more important challenge is the creation of an institutional framework and a change in behavior among the ministries and the population. Although it is not surprising that reforming and integrating Morocco's water sector has not happened overnight, 10 years after the approval of the WRMP it is beginning to look as if it will take a generation to see results. Some informants felt that the WRMP could have accelerated this process a bit more if it had paid more attention to the political processes involved, especially to who was gaining and losing power and influence, while it was supporting increased attention to IWRM. Source: IEG Morocco case study research. sive in moving the country further along the path to IWRM Cooperation on International Waterways already established by a 1981 law (World Bank 2006c). The evaluation identified 123 Bank-funded projects with activities related to international waterways, 40 of which Evaluation missions also saw major progress made with were financed by GEF grants. During the period reviewed, IWRM after shock events in pollution-menaced Brazil, 27 projects were closed, and the remaining 96 are still and in Vietnam after a major release of industrial chemi- ongoing, pointing to the increasing importance of trans- cals into a critical river basin. A fast-onset crisis that com- boundary projects in recent years. The amounts commit- promises the water supply of a major city, such as in Brazil, ted to transboundary projects were $6.2 billion in mostly when pollution threatened Brasilia or the drought put the IDA and IBRD funding and $273.5 million in GEF grant survival of Fortaleza at risk, is more likely to provoke dra- funding. Almost 70 percent of the lending for transbound- matic action. ary projects went to the Africa Region and the Europe But if the problem moves slowly, as in the Republic of Ye- and Central Asia Region (50 and 45 projects, respectively; men, where the water table drops year after year, change, figure 6.3), the two Regions with the most transboundary too, happens very slowly. basins. To discern whether the Bank--as stipulated by its strate- Transboundary Water: Managing across gy--is focusing on those watercourses where its support is National Frontiers most likely to have an impact, the evaluation team ranked As an international financial institution, the World Bank river basins by the number of countries sharing the basin has a long tradition of fostering transboundary coopera- and compared that ranking with a ranking of basins by tion around projects affecting international waterways.11 number of projects undertaken in the basin. The analysis The Bank can assist its borrowers in addressing trans- suggests that the Bank does prioritize those international boundary issues only where there is a willingness to ne- waterways that are shared by the largest number of coun- gotiate. A stark divergence of national interests, a weak tries (appendix table J.40). Overall, the number of riparian regional institutional and regulatory framework for water, countries per project ranged from 2 to 22, with a median of or political instability can represent a major constraint and 4. In total, the Bank facilitated cooperation among riparian prevent the resolution of disputes within a transboundary countries in 31 international basins, but not all riparians in river basin. all basins participated in project-funded work. Water Management Institutions | 71 Photo courtesy of Anatoliy Rakhimbayev/World Bank. World Bank­ and GEF-funded projects fall into three cat- The Bank has operated as a go-between and egories: large-basin initiatives; support for the implemen- tation of treaties and conventions, including projects that taken a flexible approach to supporting co- foster cooperation around topics such as pollution, biodi- operation among riparians sharing a basin. versity, and groundwater conservation; and projects with activities largely determined by the provisions of the Bank's Large-Basin Initiatives operational policies--that is, those that triggered a Bank The Bank has supported cooperation among riparians, of- safeguard. ten in multiproject programs, focusing on tasks centered on gure 2.1 FIGURE 6.3 Transboundary Projects and Their Total Lending by Region 3,000 60 Number of projects 2,000 40 US$ million 1,000 20 0 0 AFR ECA EAP MNA LAC SAR Region Number of projects US$ million Source: IEG water database. Note: AFR = Africa; ECA = Europe and Central Asia; EAP = East Asia and Pacific; MNA = Middle East and North Africa; LAC = Latin America and the Caribbean; SAR = South Asia. 72 | Water and Development BOX 6.5 THE NILE BASIN INITIATIVE During the study period, a total of 19 projects involved the Nile Basin, including Lake Victoria. In 8 of these projects the Bank facilitated cooperation for environmental restoration or power deals between countries; in the other 11 the Bank notified other riparians of projects in the basin. The Bank has been supporting the Nile Basin Initiative (NBI) since 1997, when the Nile Council of Ministers (Nile-COM) first requested support to coordinate donor involvement and establish a consultative group to raise financing for cooperative projects. The NBI was formally launched in February 1999 by the ministers of water affairs of the 10 countries that share the Nile Basin: Burundi, Democratic Republic of Congo, the Arab Republic of Egypt, Ethiopia, Eritrea, Kenya, Rwanda, Sudan, Tanzania, and Uganda. Together, these ministers make up the Nile-COM. The NBI is guided by the countries' shared vision "to achieve sustainable socio-economic development through the equitable utilization of, and benefit from, the common Nile basin water resources." The basin-wide program is intended to build capacity and confidence. It also involves subbasin programs of investments to demonstrate the development results of cooperation. Despite regular meetings between riparians, tensions between them persist, such as between Uganda and Tanzania around water levels in Lake Victoria, which have been falling dramatically in recent years. Following two dry years (2004­05) when little hydropower could be produced, the Bank helped Uganda, through the 2006 Uganda Thermal Power Generation Project (P069208) , to find alternative means to generate electricity in order to reduce friction between the riparians. In parallel, and although progress is slow, the Bank is helping countries to align their priorities with the regional perspective through the NBI. Source: "The World Bank and NBI," go.worldbank.org/C25RHXSYG0, retrieved on November 11, 2009. large basins. An early example is the Indus Water Treaty of Lithuania and Latvia (see also the discussion on river basin 1960 between India and Pakistan, where Bank involvement management in chapter 3). These institutions create a forum led to successful settlement of a major international disagree- where representatives from different countries meet and dis- ment over a river basin. During the 10 years of negotiation, cuss water allocations and water quality issues. Creating an the Bank's role as an impartial go-between made agreement enabling environment that fosters cooperation and openness possible (World Bank 1998, p. 155). During the period stud- to lending opportunities is as important as the lending itself. ied for this evaluation, the Bank has facilitated cooperation agreements along international waterways in the Congo, The Bank facilitated agreements, charters, Lake Chad, Niger, Nile (box 6.5), Senegal, Volta, and Zam- protocols, and memoranda of understand- bezi Basins in Africa, as well as in the Aral Sea, Caspian Sea, ing in 35 international waters projects. Danube, La Plata, and Mekong Basins, among others. Results have been mixed. Although the organizations created are generally fragile and often confront political issues beyond their capacity to resolve, the mere fact that an institution now exists to deal with the issues that arise is clear progress. Treaties, Conventions, and Institutional Strengthening The Bank's 1993 strategy paper recommended technical, financial, and legal support to help governments establish or strengthen river basin organizations addressing transna- Photo courtesy of Arne Hoel/World Bank. tional water management activities. In 35 projects the Bank facilitated international agreements, charters, protocols, and memoranda of understanding addressing cooperation around international waters. Examples are the Senegal River Water Charter, where Guinea was included as a fourth ri- parian, and the Lake Victoria Protocol. In addition to these agreements, international river basin institutions were or- ganized for the Aral Sea, the Nile Basin, the Senegal Basin, Lake Victoria, Lake Chad, and the Lielupe River shared by Water Management Institutions | 73 During the evaluation period, a water treaty was signed be- per year will be averted. This was a major achievement for tween Lesotho and South Africa for a scheme that transfers the relatively modest sum of $17 million provided by the water to the latter. In addition to brokering the deal, the GEF-funded project. Bank provided funding for the transfer infrastructure. An- other agreement was reached between Azerbaijan and the In 27 projects that addressed oil spills and autonomous Russian region of Dagestan. Under the agree- ship waste, the Bank facilitated the signa- ment, infrastructure in Azerbaijan regulated water flows so tory process and helped countries comply that 20 percent of the annual flow of the Samur River was with international conventions. diverted to Dagestan, 61 percent to Azerbaijan, and 19 per- cent kept in the river for environmental and other needs. Transboundary Groundwater Management The subset of transboundary projects in the evaluation da- World Bank projects for transboundary aquifer projects tabase also addressed transboundary data collection and are rather limited in number, but the Bank has funded monitoring activities as well as institutional capacity build- some groundbreaking work. The Bank's flagship project in ing (box 6.6). A review of project experience indicates that transboundary groundwater was the 2002 Guarani Aqui- institutional strengthening was the most difficult activity in fer Project (P068121), funded by the GEF in the amount of the transboundary projects. $32 million, which involved all four riparian countries: Ar- gentina, Brazil, Paraguay, and Uruguay. The project funded Institutional strengthening has proved to be a transboundary assessment of the age and quality of the the most difficult activity in transboundary Guarani aquifer. It also created institutions in each country, projects. organized a public information campaign, and supported a few cross-border subprojects. According to a project-level Twenty-seven projects addressed pollution from oil spills evaluation report, as a result of the project, the risk of over- and ship waste (box 6.6). The outcomes of 11 closed proj- extraction and contamination of groundwater resources ects were rated satisfactory. In these projects the Bank also and any transboundary impacts have been significantly facilitated the signatory process and, once it was completed, reduced. helped countries to comply with the relevant international conventions, for example, the International Convention for The Bank has funded some groundbreaking the Prevention of Pollution from Ships (MARPOL 73/78). work on transboundary groundwater. One example was the Wider Caribbean Initiative Project (P006956, closed in fiscal 1998), which provided support Inland Water Transport in the ratification and implementation of MARPOL to 22 Navigation does not figure largely in the current trans- Caribbean countries. Another example was China's Ship boundary portfolio, but Operational Policy and Bank Pro- Waste Disposal Project (P003630), whereby, as a result of cedure (OP/BP) 7.50 lists navigation as one activity requir- waste treatment systems installed at 6 ports, over the next ing notification. 20 years an estimated dumping of 6.3 million tons of waste BOX 6.6 THE GULF OF AQABA ENVIRONMENTAL ACTION PROJECT The 1996 Gulf of Aqaba Environmental Action Project (P005237) in Jordan improved environmental management of that body of water and fostered transboundary cooperation between Jordan and Israel. Project teams on all sides were determined not to allow politics to impinge upon environmental cooperation. As a result of the project, Jordan is now equipped with financial and productive human resources to implement public awareness programs, coastal policing and enforcement, marine pollution prevention and response, and marine park management. Cost recovery mechanisms were put in place and include marine park fees (diving fees, visitor fees, and beach facility fees); issuance of permits (air emission permits; cooling water discharge permits; resource user fees for import and export of all goods, to be set at 0.05 piaster per ton; and a 25 percent surcharge on the use of port reception facilities once they exist); and fines for environmental damages, including industrial pollution and oil spills. All revenue from these fees and fines is earmarked for the Department of Environment, Regulation, and Enforcement and contributes to project sustainability. Source: Project files: Jordan--Gulf of Aqaba Environmental Action Project. 74 | Water and Development BOX 6.7 THE INLAND WATERWAYS AND PORTS PROJECT IN THE MEKONG RIVER DELTA The Inland Waterways and Ports Project (IDA-30000; P004843) in Vietnam contributed to a huge increase in waterway traffic and transported cargo, although the extent to which the throughput is international is not known. In 1995, 23.5 million tons of cargo was carried through the inland waterway. By 2004, the last year for which data are available, cargo transported had risen to 55 million tons. The project financed major improvements to Can Tho Port, including paving the entire port area, installing dock bumpers and other improvements to berths, and adding cranes for container loading and unloading. The increased ship traffic in the improved canals and waterways is reflected in a dramatic increase in the port's throughput. During project preparation, Can Tho's cargo flow was originally predicted to increase to about 1.2 million tons by 2010. By late 2008, however, total cargo flow was already at 3 million tons, about six times what was to be expected at this stage. And the profitability of Can Tho Port had grown sixfold. Source: Project Performance Assessment Report. Port and navigation infrastructure have been important in In many countries, public water service delivery is being de- facilitating trade between countries (box 6.7). Fifteen proj- centralized to increase the capacity for service delivery and ects in the water transport portfolio overlap with projects improve efficiency. When the budget and authority allo- in the transboundary waterways portfolio. In interviews, cated to the lower level of government matched the respon- some Bank staff mentioned that staff working on water is- sibility assigned to it, projects operating in a decentralized sues and those working on inland water transport do not setting almost always generated some positive results, even communicate regularly. In addition, the Bank has produced if they seldom fully met expectations. Projects were most few publications on inland water transport. Supporting successful with the construction or rehabilitation of infra- countries' investments in inland water transport and port structure and improvement in service delivery, but progress facilities may be another approach to fostering their coop- on improving operations and maintenance and strengthen- eration along international waterways. ing cost recovery was limited. About half the projects that aimed to strengthen local capacity and two-fifths of those Transboundary projects have not taken ad- that supported institutional reforms were successful. vantage of the linkages to ports, navigation, The Bank adopted the IWRM approach to the water sector and trade. beginning with the 1993 Water Resources Management Pol- icy Paper. The 125 projects that were wholly or largely con- Summary sistent with IWRM principles focused most frequently on in- stitutional development. The spread of IWRM to the Bank's Although the Bank's attempts to increase private involve- borrowers has been slow, and it appears that countries are ment in water service delivery have had some success, pub- most likely to make needed changes after a shock event, such lic provision remains the norm. Where private provision of as a major catastrophe. The evaluation has seen at least one WSS services was successfully introduced, efficiency often water-stressed country where major progress has been made improved. Comparison of rural and urban private sector with IWRM after such an event, but where the water prob- participation indicates that where Bank support succeeded lem worsens slowly, change likewise happens very slowly. in helping countries bring the private sector into WSS, the international private sector tended to become involved in The Bank has a long tradition of fostering transboundary urban areas and contributed large amounts of funding for cooperation around projects affecting international wa- infrastructure investments or to increase the efficiency and terways, and it has funded an increasing number of trans- cost-effectiveness of water utilities. In rural areas the local boundary projects in recent years, partly with GEF support. private sector got involved in the operation of water sys- The Bank is a proven broker in transboundary issues and tems, but it invested less and shared little financial risk, fo- has appropriately given priority to international waterways cusing mainly on improving efficiencies in management. that are shared by a large number of countries. Water Management Institutions | 75 Chapter 7 Conclusion, Findings, and Recommendations Water has been a major focal area for World Bank lending from its earliest years. Through its support for investments in irrigation, water supply, sanitation, flood control, and hydropower, the Bank has contributed to the development of many countries and helped provide essential services to many communities. Bank staff have developed an extensive menu of options--this study identified more than 400 different water-related activities supported by Bank-financed projects--that can be used to put together sup- port tailored to each borrower's needs and circumstances. The 2003 Water Resources Sector Strategy developed 23 these areas will need to be addressed in the years ahead strategic objectives. This evaluation found evidence that given that growing water stress will determine development achievements have been made under each of those objec- outcomes in many countries. tives (appendix table J.42). Projects currently managed by the Water Sector Board represent less than half of the port- Main Findings folio, reflecting the strategy's goal to integrate water into Increased Lending and Improving Project other sectors. IEG performance ratings track a steady im- Performance provement in sector performance. During the most recent The Bank increased its lending for water and the number five-year period, water showed the strongest performance of countries it served during the period evaluated. Al- improvement of any sector. Water sector ratings are now though the number of countries that borrow for water has slightly better than the Bank-wide average, although they varied from year to year, 79 borrowers were served in 2007, still trail those of several other sectors. compared with 47 in 1997. Lending for water increased by Projects have evolved in some of the right directions. For over 50 percent during the period. example, more attention is being given to wetlands, and the The integration of water practice across Bank sectors ap- Bank has been more cautious about financing irrigation proj- pears to be well under way. Integration of water practice ects that rely on falling underground aquifers. Its approach to was an important goal of the 2003 Water Resources Sec- dams has become more balanced and more environmentally tor Strategy, and during the period evaluated the majority and socially sensitive, as is its commitment to "new" hydro- of water-focused projects were overseen by sector boards power that takes these lessons into account. First steps with other than Water Supply and Sanitation. watershed management and water resources management are clearly moves in the right direction. Yet the Bank, its part- Water projects in the aggregate have good success rates ners, and its clients have tended not to respond at scale to when measured against objectives. IEG performance rat- some increasingly pressing challenges, especially the preser- ings show steady improvement in sector performance mea- vation and restoration of groundwater resources, water qual- sured against project objectives. During the most recent ity improvement, coastal vulnerability, and sanitation. five-year period, water was the most improved major sector by this criterion, with a particularly noteworthy 23-percent- Although the water portfolio has witnessed a steady im- age-point improvement in the share of satisfactory projects provement in performance measured against projects' stat- in the Africa Region. Within the portfolio, 77 percent of the ed objectives, the evaluation also found that the Bank and 857 completed projects had an aggregate outcome rating of its clients have underemphasized some of the most chal- satisfactory ("moderately satisfactory" or better), slightly lenging areas, such as fighting pollution, environmental res- above the Bank-wide average of 75 percent. The trend con- toration, and water quality monitoring. The limited success tinued in 2008, when water sector projects attained a 90 with full cost recovery has caused the Bank to moderate its percent satisfactory rate. approach, but the question of who will pay for uncovered costs remains unanswered. The evaluation shows that suc- The focus of Bank activity has shifted over time. The Bank cess rates in the more difficult areas have been lower, yet has lent heavily for irrigation and water supply, and dams 78 | Water and Development and hydropower have become more important in the last In the area of water supply, reducing UfW has been the few years. But some activities that are of growing impor- main activity directed at improving water use efficiency. tance as water stress increases have become less prominent About half of projects that attempted to address UfW man- in the Bank's portfolio--notably, coastal zone management; aged to reduce it by at least 1 percent. Finding effective ways pollution control; and, to a lesser degree, groundwater con- to improve efficiency and manage demand for water will servation. Although the portfolio has performed well when be critical if the Bank wants to maintain a leading role in measured against projects' stated objectives, the Bank and this area. the borrowing countries as a group have not yet sufficiently Integrated water resource management, the focus of two tackled several tough but vital issues, among them sanita- consecutive Bank water strategies, has gained traction tion, fighting pollution, restoring degraded aquatic envi- within the Bank but has made limited progress in most ronments, monitoring and data collection, and cost recov- client countries. Within the Bank there has been consider- ery. Where it has lent for hydrological and meteorological able progress in integrating water into the work of other monitoring, the Bank has focused on providing technology sectors and in consolidating institutional structures to car- for data collection and relatively less on gathering and in- ry out water-related activities. However, outside the Bank, terpreting information for which there is an identified de- even in countries where IWRM is now well integrated into mand. Such aggregate findings, however, mask Regional the legal framework, it is known mainly just in the water and country-specific variations and needs. For example, sector. The information necessary to inform decision mak- East Asia and Africa have responded more actively than ing is not easily available, and perhaps more important, the other Regions to the sanitation challenge. These issues are economic implications of water constraints are not widely covered in greater detail below. appreciated. Meanwhile there are indications that the Bank Water Resources Management is paying less attention to data collection, an essential pre- Effective demand management is one of several criti- requisite for successful IWRM implementation, because cal challenges worldwide in the face of increasing water countries have less motivation to confront a situation with scarcity. Demand for water can be affected by three broad unknown parameters. sets of measures: pricing, quotas, and measures to improve When IWRM is successful, it most often happens in a par- water use efficiency. ticular location at a time of necessity. Some countries Efforts to improve the efficiency of water use and limit have made progress with water resources management af- demand in agriculture, the largest consumer of water, ter natural disasters, for example. Shocks often do not affect have had limited success. Efficiency-enhancing technolo- entire countries, however, nor are they a desirable route to gies alone do not necessarily reduce on-farm water use, IWRM. The way to open the window of opportunity with- and efforts to manage demand with water charges in agri- out waiting for a shock is to support monitoring process- culture have encountered limited success, partly because es that deliver information to relevant public and private of the low price elasticity of demand for agricultural wa- stakeholders. The example of Brazil shows that making wa- ter. Fixing and enforcing quotas for water use is a rela- ter data publicly available over the Internet helps increase tively recent approach and deserves careful evaluation stakeholder concern, which helps to mobilize the political when more projects featuring this approach have been will necessary to confront entrenched water problems. completed. Cost recovery in Bank-supported projects has The number of projects dealing with groundwater issues rarely been successful: only 15 percent of projects that has been declining, but within that problematic trend the attempted cost recovery achieved their goal. The suc- portfolio has also witnessed a positive shift away from a cessful projects have generally been those that improved focus on extraction. This shift is important given falling the efficiency of water institutions at collecting fees. This water levels in critical aquifers in many Bank borrowers. limited success has caused the Bank to moderate its ap- proach, but without clearly identifying sources to finance Within the groundwater portfolio, activities aiming to in- the recovery shortfall, threatening the sustainability of crease water supply were the most successful as a group, investments. whereas activities related to reducing pressure on ground- Conclusions, Findings, and Recommendations | 79 water and promoting conservation generally proved more ter quality in the top five borrowing countries is declining, challenging. Yet such activities will need to become more and fewer than half of projects that set out to monitor wa- prominent in the portfolio, if the Bank is to effectively help ter quality could show whether an improvement had taken the growing number of water-stressed countries address place. increasing groundwater scarcity. In the Republic of Yemen, Water Use and Service Delivery for example, rapidly growing consumption of irrigation wa- The Bank has increasingly focused on water service de- ter caused by improved tube well technology and the avail- livery, but there has been a declining emphasis on moni- ability of highly subsidized diesel fuel has resulted in irriga- toring economic returns, water quality, and health out- tion extracting over 150 percent of the country's renewable comes. Only a third of wastewater treatment and sanitation water resources. projects calculated economic benefits. Watershed management projects that take a livelihood- Sanitation needs greater attention. Population growth focused approach perform better than those that do in developing countries has been rapid, as has urbaniza- not. Projects combining livelihood interventions with en- tion. An expansion of piped water services and increased vironmental restoration enjoyed high success rates, even household water use will lead to an accelerating demand for though effects on downstream communities (such as re- adequate sanitation. The evaluation recognizes that even if duced flooding and improved water availability) and social the Millennium Development Goal for clean water supply benefits in both upstream and downstream communities is achieved, 800 million people will still lack access to safe were often not measured. Hydrological monitoring (with drinking water in 2015, but a much larger number--1.8 or without remote sensing) and watershed modeling could billion--will still lack access to basic sanitation. Within help improve impact assessment, and thus make it easier to sanitation, more emphasis is needed on household connec- calculate the cost-benefit ratio of such interventions. tions. Connection targets in projects are generally not met, Environment and Water and IEG has seen a number of treatment plants functioning Environmental restoration is underemphasized in Bank below design capacity because households have not con- projects, possibly because its immediate and long-term nected to the systems, in part because willingness to pay has financial importance is unclear. More attention to cost- been overestimated and facilities have been overdesigned. benefit calculations could help the Bank and its clients This report highlights the particular weakness of sanitation evaluate trade-offs and get better results. institutions, which will continue to constrain progress until their capacities improve. Most Bank projects focus on infrastructure, even though in some cases environmental restoration is more strate- Hydropower projects have performed well, and significant gically important. It is not always necessary to restore the untapped potential remains for appropriate develop- water-related environment to a pristine state in order to ment, particularly in Africa. After a peak in the mid-1990s, obtain major social, economic, and environmental benefits dam construction around the world slowed. The Bank has and reduce vulnerability. Priority improvements to degrad- recently increased its financing for dam construction, in ed environments, even when small, can have big impacts. many cases for multipurpose dams that provide hydropower and often also support irrigation, flood protection, or indus- A coastal wetlands protection project in Vietnam, for ex- trial use. Almost a third (66) of the 211 Bank-financed dam ample, successfully balanced reforestation with livelihood and hydropower projects covered in the evaluation rightly needs. The project successfully reforested critical areas and focused on dam rehabilitation, as many dams have expe- led to a substantial reduction in coastal zone erosion. rienced gradual deterioration due to lack of maintenance, Countries and donors need to focus more on coastal and a number have been shut down because of salinity, management going forward, as some 75 percent of the sedimentation, and other problems. A new hydropower de- world's population will soon be living near the coast, put- velopment business plan, "Directions in Hydropower," was ting them at heightened risk from the consequences of completed in 2009 and supports feasibility studies so that climate change. Approvals of Bank projects in this area projects will be technically, economically, and environmen- have dwindled over time, and the reasons for this should be tally appropriate. Indeed, it will be vital to take on board the considered in the Mid-Cycle Implementation Report. experience with hydropower projects, including their scale, Many projects contain funding for water quality man- socioeconomic, and environmental impacts. agement, but few countries measure water quality. The Institutions and Water number of projects that actually measure water quality is Water services are delivered by public providers in most declining. Evidence of improved water quality is rare, as are countries, but private sector participation has made some indications of the improved health of project beneficiaries. progress. Where international private firms have been suc- The data that are generated need better quality control. Wa- cessful in urban areas, they have contributed significant in- 80 | Water and Development vestments to infrastructure, and in some cities they have tral to their development strategy. This is not to say that the managed to increase the efficiency of water utilities' opera- Bank should stop providing support to water-rich coun- tions. In some Bank-financed projects in rural areas, the lo- tries, or that increasing lending to water-stressed countries cal private sector manages the operation of water systems, is the only or even necessarily the best solution. The failure but it has invested little and shared little of the financial to meet human needs for water and sanitation has its roots risk. Where governments want private involvement, a well- in political, economic, social, and environmental issues. functioning, well-maintained regulatory system is neces- These are becoming more entwined and cannot be solved sary for its sustainable participation in utility operations. In unless a broader range of actors gets involved. many cases this has remained elusive, and this has limited The most water-stressed group consists of 45 countries (35 of private sector involvement. them in Africa) that are not only water poor but also economi- Projects operating in a decentralized environment have cally poor. Country Water Resource Assistance Strategies have had difficulty meeting expectations, but when the budget helped to place water resource discussions more firmly in the and authority accorded to the lower level of government context of economic development in the countries where they have matched the responsibility assigned to it, projects have been done. Including ministries of planning and finance have had positive achievements. Half of projects that in the dialogue is another critical step, as is expanding the aimed to strengthen local capacity and two-fifths of projects calculation of economic benefits to increase countries' under- that supported institutional reforms were successful. Other standing of the economic importance of water. positive outcomes usually associated with decentraliza- Collaboration with other partners is particularly impor- tion--increased accountability, ownership, empowerment, tant, and it is likely to increase in importance as the Bank and social cohesion--were achieved in a minority of cases. helps countries tackle water crises. This is true not only Support for institutional reform and capacity building for water supply and sanitation, but also for water resources has had limited success in the water sector. Institutional management in national and transboundary basins. Many reform, institutional strengthening, and capacity build- of the problems described in this report are far too big for ing have been the most frequent activities in Bank water- the Bank to tackle on its own. related lending. Yet these interventions have often been less Successful implementation of the Bank's Water Resources than fully effective, and weak institutions have often been Sector Strategy will require a great deal of data on water responsible for project shortcomings. resources, and implementation needs to give a higher pri- The Bank has been actively engaged in addressing trans- ority to data gathering going forward. Data on all aspects boundary water issues. In its choice of transboundary of water and relevant socioeconomic conditions need to be projects, the Bank has given priority to international water- more systematically collected and monitored. Data need to ways shared by a large number of countries. The Bank has be used better within projects. For example, the collection been more successful in helping to address transboundary and analysis of up-to-date groundwater data are more im- disputes than in strengthening transboundary institutions. portant now than ever and need to be taken on board more Work with its borrowers on transboundary aquifers is still commonly than they have been. in the early stages. Strategic Issues Recommendations The Bank's complementary strategies for the water sector Work with clients and partners to ensure that critical wa- have been broadly appropriate. However, their application ter issues are adequately addressed. thus far has underemphasized some of the most difficult · Seek ways to support those countries that face the great- challenges set by the 2003 strategy, and this has left some est water stress. The mid-term strategy implementa- needs unmet. The Bank's approach to water will face height- tion review should suggest a way to package tailored ened challenges brought about by climate change, migra- measures to help the Bank and other donors work with tion to coastal zones, and the declining quality of the water these clients to address the most urgent needs, which resources available to most major cities and industry in the will become far more challenging as water supply be- coming decades. These will require some shifts in emphasis. comes increasingly constrained in arid areas. Water stress needs to be confronted systematically. At · Ensure that projects pay adequate attention to conserv- present there is no statistical relationship between the ing groundwater and ensuring that the quantity extract- amount of Bank water lending to a country and that coun- ed is sustainable. try's water stress. The issue for the Bank is finding an entry point and helping the most water-stressed countries put the · Find effective ways to help countries address coastal pieces together so that water needs can become more cen- management issues. Conclusions, Findings, and Recommendations | 81 · Help countries strengthen attention to sanitation. · Systematically analyze whether environmental restora- tion will be essential for water-related objectives to be Strengthen the supply and use of data on water to pro- met in a particular setting. mote better understanding of the linkages among water, economic development, and project achievement. Monitor demand management approaches to identify what is working and what is not working, and build on · In project appraisal documents, routinely quantify the these lessons of experience. benefits of wastewater treatment, health improvements, and environmental restoration. · Clarify how to cover the cost of water service delivery · Support more frequent and more thorough water moni- in the absence of full cost recovery. To the extent that toring of all sorts in client countries, particularly the borrowers must cover the cost of water services out of most vulnerable ones, and help ensure that countries general revenue, share the lessons of international ex- treat monitoring data as a public good and make those perience with them so that they can allocate costs most data broadly available. effectively. · In the design of water resources management projects · Identify ways to more effectively use fees and tariffs to that support hydrological and meteorological moni- reduce water consumption. toring systems, pay close attention to stakeholder par- ticipation, maintenance, and the appropriate choice of · Carefully monitor and evaluate the experience with monitoring equipment and facilities. quotas as a means to modulate agricultural water use. Photo courtesy of Tran Thi Hoa/World Bank. 82 | Water and Development Endnotes Management Response appendix tables J.8­J.10). These projects were mainly for water utilities and large hydropower projects but also in- 1. Management notes that this evaluation covers the role of cluded a small number of water transportation and fisher- the private sector in the delivery of water supply and sanita- ies projects. Most of these projects (76 percent) were in the tion, in which the Bank has a role only to the extent that a Asia and Latin America Regions. public-private partnership is involved. Management notes 3. The Bank-wide averages are larger because many non- that this evaluation does not address the specific role of IFC water-related loans, such as Development Policy Loans, and MIGA, as the "Approach Paper: IEG Evaluation of Bank tend to be larger than those seen in projects with water ac- Group Support for Water" (IEG 2008b) indicated it would tivities. do. 4. The same type of overlap is possible between most cat- Chapter 1 egories; appendix J provides an overlap analysis. 5. The top 10 IDA borrowers for water, in order of amount 1. The state of world water has been characterized as a crisis committed, were India, China, Vietnam, Pakistan, Tanza- by the United Nations and other international organiza- nia, Uganda, Ethiopia, Bangladesh, Nigeria, and Sri Lanka. tions as well as in the popular press. See, for example, DFID 6. All projects prepare an Implementation Completion Re- (2008), Lall and others (2008), and Rogers (2008). port (ICR) when they close. Part of this process involves the 2. According to EM-DAT: The International Disaster Data- assignation of performance ratings. These are reviewed and base, Université Catholique de Louvain, Brussels, Belgium validated by IEG for quality control purposes. In addition, (www.em-dat.net). 25 percent of all projects are subject to field verification by 3. The Dublin Principles are as follows: "1. Fresh water is IEG. If this leads to a ratings change, the revised rating is a finite and vulnerable resource, essential to sustain life, used in major IEG evaluations such as this one. development and the environment. 2. Water development 7. The overall water portfolio ratings lagged a percentage and management should be based on a participatory ap- point behind the rest of the Bank portfolio in likely sustain- proach, involving users, planners and policy-makers at ability (67 versus 68 percent) and substantial institutional all levels. 3. Women play a central part in the provision, development impact (46 versus 47 percent) during the management and safeguarding of water. 4. Water has an period 1997­2006, when IEG assigned such ratings. Bor- economic value in all its competing uses and should be rec- rower performance was slightly better than the Bank aver- ognized as an economic good" (Global Water Partnership, age, and Bank performance was about the same as for the "Dublin Statements and Principles," www.gwpforum.org/ Bank-wide portfolio. Annex J provides more detail on the servlet/PSP?iNodeID=1345). ratings analysis. 4. The MDGs are not the first time that the international 8. IEG (2008b). The 2009 Annual Review of Development community has set ambitious targets for water. In the early Effectiveness was not used in this analysis because it does 1980s the goal was "Water and Sanitation for All by 1990." not report five-year averages and does not focus on water. That unmet goal was reset a decade later with the declaration It does, however, show a small performance improvement of the Third Water Decade. from the 2003­05 period to the 2006­08 period. 5. World Bank (2003a). The Sustainable Infrastructure Ac- 9. Data for 2007 are not based on the evaluation portfolio tion Plan approved in 2007 further refined the relevant but rather are from Annual Review of Development Effective- guidance. ness 2008 (IEG 2008a). 10. Comparing open and closed projects provides an indica- Chapter 2 tion of whether the focus of Bank water projects has shifted, 1. There were also 35 recipient-executed activities, 30 spe- and comparing the percentage of ongoing projects in each cial financings, 7 guarantees, and 56 grants. subset with the percentage of ongoing projects for the water 2. In addition, the International Finance Corporation (IFC) portfolio as a whole shows the overall relative extent of Bank approved $752 million in financing for 45 projects in the attention. water sector between 1997 and 2007 (not evaluated in this 11. The calculation of the index is described as follows: report; for additional information on the IFC portfolio, see "WPI is calculated based on five components: Resources, Endnotes | 83 Access, Capacity, Use, and Environment. Each of these five 3. Water Encyclopedia, "Artificial Recharge," www.wateren- indices is composed of sub-indices. Each sub-index is gen- cyclopedia.com/A-Bi/Artificial-Recharge.html. erated by a group of indicators. A country's sub-index value 4. The information available on the remaining project was is evaluated by its position relative to the values in other not sufficient to allow a determination of whether the basin countries, usually producing a value between 0 and 1 (val- management organization had been established as planned. ues less than 0 are assigned 0 and values greater than 1 are 5. Only early warning systems that used hydrological and assigned 1). The sub-indices are averaged and multiplied by meteorological monitoring systems were included. 20 to produce one of the five, equally-weighted, component 6. This figure does not count hydropower projects that pro- indices. Once all five component indices have been calcu- mote electricity conservation. lated, they are added together, producing a value between 7. IEG is preparing an evaluation of economic analysis in 0 and 100. This value is the water poverty index. The Re- projects for expected delivery in 2010. sources component addresses the issue of water availabil- 8. Some projects in this category almost achieved the eco- ity. It is comprised of internal water resources and external nomic returns estimated at appraisal. The ERRs for these water flows indices. Less emphasis is put on external water projects ranged between 0.1 and 44 percent, with a me- flows than on internal water resources, as external resourc- dian of 7 percent. es are considered less reliable. Access is made up of indica- 9. The Bank's 2003 Water Resources Sector Strategy notes tors which address basic water and sanitation needs as well that "For decades there has been a yawning gap between as the water requirements for agricultural food production. simple economic principles (farmers should pay the full fi- Capacity addresses several socio-economic factors that can nancial costs--operation and maintenance, rehabilitation, impact water access. This index is composed of GDP [gross debt servicing on existing infrastructure--and the oppor- domestic product] per capita (adjusted for the currency's tunity costs of water) and on-the-ground reality" (World purchasing power), under-five mortality rate, the educa- Bank 2003b). tion index calculated by the United Nations Development 10. "Pricing and Subsidies," go.worldbank.org/SJBI3DFZW0, Programme, and the Gini coefficient, which describes the retrieved on October 7, 2009. distribution of income across a population. Use incorpo- rates the water use, on a per capita basis, in the domestic, Chapter 4 industrial, and agricultural sectors. Environment attempts 1. Some regions have an annual cyclone season and are to address not only water quality issues but also those is- therefore counted more than once in this figure. sues of environmental governance. This index averages five 2. IEG (2007) found that 45 percent of loans responding to component indices: water quality, water stress, regulation an emergency built roads. Of those projects that built roads and management capacity, informational capacity, and bio- in a postdisaster context, 98 percent financed the rehabili- diversity" Natural Environment Research Council, Centre tation of disaster-damaged roads, while only 2 percent fi- for Ecology and Hydrology (2002). http://earthtrends.wri nanced new construction of roads. .org (accessed 10/19/09). 3. The impact of water scarcity and drought on energy 12 . As a group, water-poor countries borrow slightly more systems was dramatically demonstrated in Brazil in 2001, for water-related projects (38 percent of their total bor- when severe drought struck São Paulo state, which is heavily rowing) than do non-water-poor countries (34 percent). dependent upon hydropower. Unable to meet demand for When the analysis is repeated for dedicated projects only, electricity, state officials imposed electricity rationing selec- the difference is even smaller: 8.7 percent of total lending in tively, according to the economic importance of particular water-poor countries versus 8.9 percent in non-water-poor industries and the jobs affected. The crisis cut the nation's countries. The correlation coefficient between the share of gross domestic product by 2 percent, a loss of $20 billion. borrowing for water and the WPI is 0.01, pointing to the 4. "Drought Management," go.worldbank.org/YBDD5POI20, virtual absence of a relationship. retrieved on October 7, 2009. 5. This definition is from the 10th International Rivers Sym- Chapter 3 posium and International Environmental Flows Conference, 1. These problems include increasing prevalence of mono- held in Brisbane, Australia, on 3­6 September 2007. The cropping, erosion as a consequence of deforestation, and the conference was attended by more than 750 scientists, econo- myriad inappropriate agricultural practices that can cause a mists, engineers, resource managers, and policy makers from steep decline in the productivity of soils, not to mention the more than 50 countries (see www.riverfoundation.org.au/ poor coverage and quality of agricultural support services. images/stories/pdfs/bnedeclaration.pdf). 2. Even in projects paying special attention to women and 6. Some projects called for putting in place laws to mandate minorities, women's preferences were often not sought; see EFAs (4 projects) or institutions to support EFAs (7 projects), chapter 5, box 5.2. or both. 84 | Water and Development 7. According to the Global Monitoring Report 2008 (IMF and registered as Ramsar sites (wetlands protected under the World Bank 2008), China still tops the global list of indus- 1971 Ramsar Convention). trial water polluters, emitting over 6 million kilograms of 13. Four hundred and ten project documents discussed organic water pollutants a day; India is third, with emissions wetlands, and 115 discussed the preservation or restoration of over 1.5 million kilograms per day; in Brazil, regional and of coastal mangroves (replanting). Some projects did both. seasonal water scarcity in the northeast, in addition to water pollution, has created serious water quality problems, and Chapter 5 the problem is growing. Pakistan faces water-related infec- 1. The commitment amount was compiled based on the tions, and pollution-related problems, contributing to child percentage within projects devoted to the WSS subsectors mortality and contaminated water, remain a major risk fac- according the internal Bank database's coding. tor for maternal health. Indonesia has one of the lowest rates 2. The percentages for the five software activities sum to of sewerage and sanitation coverage in Asia, which contin- more than 57 percent of projects because some projects in- ues to cause widespread contamination of surface water and cluded more than one of the activities. groundwater (Locussol 1997). 3. Basic sanitation, a subject of the MDG target, consists of 8. The Bank has also focused on hardware, building water human waste management at the household level. As de- and sanitation infrastructure, and drainage and irrigation fined by the World Health Organization (WHO), it is "the systems. Yet little has been done to protect watersheds and lowest-cost technology ensuring hygienic excreta and sul- wetlands, which are vital to the recharge of underground lage disposal and a clean and healthful living environment sources of water. both at home and in the neighborhood of users. Access to 9. A 2007 evaluation from the Ministry of Foreign Af- basic sanitation includes safety and privacy in the use of fairs of Denmark found (DANIDA 2007) that "none of the these services. Coverage is the proportion of people using countries [reviewed] have monitoring systems in place to improved sanitation facilities: public sewer connection; sep- measure WSS cost-effectiveness, by benchmarking unit tic system connection; pour-flush latrine; simple pit latrine; costs for specific water and sanitation facilities or value for ventilated improved pit latrine." WHO, "Water Sanitation money studies. Therefore it is very difficult to measure sec- and Health (WSH)," www.who.int/water_sanitation_health/ tor efficiency. Improvements in sector monitoring fields mdg1/en/index.html, accessed October 22, 2009. are thus urgently needed." In addition, a 2004 evaluation 4. One latrine may serve many people; how many depends undertaken by the Asian Development Bank's Operations on the country. In countries such as Bolivia, Panama, and Evaluation Department on the impact of water on the poor Paraguay, one latrine may be used by a small family of four; (ADB 2004, p. 21) states that, "Insufficient attention by in rural Ghana, as many as 60 people tend to share one la- ADB to project management and monitoring causes slow trine. loan disbursements, adversely affecting project implemen- 5. These included, among others, the Guinea Third Water tation and performance." The National University of Singa- Supply and Sanitation Project (P001075), the Turkey Erzin- pore's Institute for Water Policy undertook a review of 33 can Earthquake Rehabilitation and Reconstruction Project ADB water resources, water, and wastewater projects com- (L3511), the Brazil Municipal and Low-Income Areas Proj- pleted between 1995 and 2008. A total of 58 percent of the ect (Loan 2983), and the Abidjan Environmental Protec- completion reports for these 33 projects mentioned the im- tion Project in Côte d'Ivoire (Loan 3155). portance of monitoring. The need for monitoring systems 6. The health benefits of the Bank's WSS investments are ranked highest on the list of the 10 most important lessons rather obscure. Although half of the 117 WSS projects to be learned (Aral and others 2009). evaluated for the 2008 IEG health evaluation cited poten- 10. A World Bank Policy Research Working Paper (Kilgour tial health benefits, and 89 percent financed infrastructure and Dinar 1995) noted that of the 200 extant transboundary that plausibly could have improved health, only 1 in 10 river basins, 145 are shared by 2 countries, 30 by 3, 9 by 4, listed improved health as an objective. Projects approved and 13 by 5 or more--up to as many as 10. more recently (fiscal 2002­06) are even less likely to have 11. A textual search of the Bank's entire water database for been justified by health benefits, to have explicit health the 1997­2007 period identified 217 projects that included objectives, or to plan to collect health indicators. Only 14 at least some discussion of rivers or lakes and related issues. water projects included health benefits in their economic However, a more in-depth review of the project documents analysis. revealed that only 174 projects made an identifiable attempt 7. World Commission on Dams (2000). According to the to undertake an activity relating to those river and lake is- International Commission on Large Dams, a "large" dam is sues; this is the group of projects analyzed as the "river and one that is at least 15 meters high (from the foundation), or lake portfolio." between 5 and 15 meters high and with a reservoir volume 12. This figure also includes projects with coastal wetlands of more than 3 million cubic meters. Endnotes | 85 8. More guidance on this topic is provided by the World responsibilities, authority, and accountability to lower gov- Bank (2009). ernmental levels, at least to some degree. Less extensive forms of decentralization include delegation, with the central Chapter 6 government transferring some authority but the local gov- 1. For rural water supply, community management is the ernment remaining accountable to the central government, most notable institutional approach of the last two decades. and deconcentration, where some functions are delegated to This is discussed in the section on WUAs in the previous the local level but the central government remains in charge chapter and in appendix G. (von Braun and Grote 2000). The latter two forms of decen- 2. The Turkey contract was abbreviated because the opera- tralization usually transfer some administrative and political tor was dissolved and terminated because of unpredicted authority, but the fiscal dimension often remains at the cen- cost overruns. tral level, because decentralization of fiscal resources involves 3. According to the UNDP's Human Development Report a significant loss of power for the central government. 2006: Beyond Scarcity, "Major international companies such 8. This finding is also supported by an ordinary least squares as Suez, the world's biggest water company, Veolia Environ- regression of decentralization success on decentralization ment and Thames Water are pulling back from concessions type and various other covariates. in developing countries, sometimes in the face of pressure 9. See Ahmad and others (2005) for further details on the from government and regulators. For example, Thames inefficiencies that can arise out of an incomplete decentral- Water withdrew from the operation of a plant in China in ization process. 2004, two years after the Chinese government ruled that the 10. The 1993 strategy elaborates on the IWRM approach, rate of return was too high" (UNDP 2006, p. 92). stating that specific options for investment and development 4. IEG (2008c). In the mid- and late 1990s, the Bank's ap- must consider the interrelations among different sources of proach to decentralization shifted from neutrality to strong water. Surface and groundwater resources are physically partisan support for the decentralization of responsibilities. linked, and therefore their management and development The current approach, however, is somewhat more cau- should also be linked. Land and water management activi- tious. Although decentralization is still seen as a potential ties as well as issues of quantity and quality need to be in- contributor to public sector reform, it is no longer the only tegrated within basins or watersheds, so that upstream and favored approach to institutional strengthening, and lack downstream linkages are recognized and activities in one of capacity at the local level is now recognized as a major part of the river basin take into account their impact on oth- constraint to its broader application. The 2003 Water Re- er parts. Investments in infrastructure may displace people sources Sector Strategy (World Bank 2003b), for instance, and disturb ecosystems. Thus, water resource assessments points out the substantial risks associated with decentral- need to consider these cross-sectoral implications. ized water service provision and argues that optimal water 11. The first World Bank policy on international waterways resources management may need to be at the national or was issued in 1956. Its current version (OP/BP 7.50, issued even international level. in 2001, currently under revision) covers rivers, canals, 5. See Global International Waters Assessment, "The GIWA lakes, bays, gulfs, straits, and tributaries to those bodies of LME Matrix," www.unep.org/dewa/giwa/publications/fi- water, and it commits the Bank to facilitate cooperation and nalreport/back_cover.pdf, retrieved November 12, 2009. notify riparian countries of Bank projects on international 6. However, as the project research regarding cost recovery waterways. The 1993 strategy also states that the incremen- in WSS found, most projects that attempt cost recovery are tal cost of actions taken by riparian states to protect inter- actually unsuccessful. national water resources and river basins will be financed 7. The deepest form of decentralization is the devolution of within the framework of the GEF. 86 | Water and Development Bibliography Relevant World Bank Policies Other Publications All policies available at: ADB (Asian Development Bank). 2004. "The Impact of Wa- http://www.worldbank.org/ ter on the Poor: Summary of an Impact Evaluation Study of Selected ADB Water Supply and Sanitation Projects." OP 4.07--Water Resources Management (February 2000) ADB Operations Evaluation Department, Manila. OP/BP 4.37--Safety of Dams (October 2001) AECOM International Development, Inc. 2009. "Inputs into OP/BP 7.50--Projects on International Waterways the Preparation of the IBNET Blue Book. Final Report." OP/BP 4.01--Environmental Assessment (January 1999) Prepared for the International Bank for Reconstruction OP/BP 4.02--Environmental Action Plans (February 2000) and Development, AECOM International Development Relevant World Bank Strategies Inc., Los Angeles, CA. 1993 Water Resources Management Policy Paper. Wash- Ahmad, Junaid, Shantayan Devarajan, Stuti Khemani, and ington, DC: World Bank. Shekhar Shah. 2005. "Decentralization and Service De- 2000 Cities in Transition: World Bank Urban and Local livery." World Bank Policy Research Working Paper Government Strategy. Washington, DC: World Bank. 3603, World Bank, Washington, DC. 2001 "Commitment to the Millennium Development Ait Kadi, Mohamed. 1999. "Irrigation and Water Pricing Goals." World Bank, Washington, DC. Policy in Morocco's Large Scale Irrigation Projects." 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Bibliography | 91 Photographs ix Fishing boat off the coast of Ghana xiii Young boy at a water pump, India 1 Parched soil by the White Nile, Khartoum, Sudan 7 Centuries-old water cistern in Kawkaban country, Republic of Yemen 20 Port activity, China 21 Drilling for water, Mali 24 Canal channeling water, Sri Lanka 27 Walking through drought-affected fields, Mali 35 Checking irrigation canal, Philippines 37 Black Hmong transplanting rice in field outside Sapa town, Lao Cai province, northern Vietnam 38 Family whose home floods every year, which creates hazardous conditions, Colombia 45 A field of taro-like plants with edible tubers near the Da River in Moc Chau town, Hoa Binh province, northern Vietnam 49 Woman carrying water, Mali 51 Huts for sanitation built by Unicef in village of Karako, Côte d'Ivoire, which has a population of 1,500 63 Building a water pump, Mali 66 Young girl drinking water from a community water pump, Sri Lanka 70 Community water-users group discusses water supply and sanitation, Kaski, Nepal 72 Cattle grazing near rusting shipwreck on the former banks of the Aral Sea, which has receded inland, Uzbekistan 73 Fisherman on the White Nile (Morada), Khartoum, Sudan 77 A view of the ocean, glaciers, and mountains, Chile 82 At the port of Saigon, boat traffic on the Saigon River 92 | Water and Development IEG Publications Annual Review of Development Effectiveness 2009: Achieving Sustainable Development Addressing the Challenges of Globalization: An Independent Evaluation of the World Bank's Approach to Global Programs Assessing World Bank Support for Trade, 1987­2004: An IEG Evaluation Books, Building, and Learning Outcomes: An Impact Evaluation of World Bank Support to Basic Education in Ghana Bridging Troubled Waters: Assessing the World Bank Water Resources Strategy Climate Change and the World Bank Group--Phase I: An Evaluation of World Bank Win-Win energy Policy Reforms Debt Relief for the Poorest: An Evaluation Update of the HIPC Initiative A Decade of Action in Transport: An Evaluation of World Bank Assistance to the Transport Sector, 1995­2005 The Development Potential of Regional Programs: An Evaluation of World Bank Support of Multicountry Operations Development Results in Middle-Income Countries: An Evaluation of World Bank Support Doing Business: An Independent Evaluation--Taking the Measure of the World Bank­IFC Doing Business Indicators Egypt: Positive Results from Knowledge Sharing and Modest Lending--An IEG Country Assistance Evaluation 1999¬­2007 Engaging with Fragile States: An IEG Review of World Bank Support to Low-Income Countries Under Stress Environmental Sustainability: An Evaluation of World Bank Group Support Evaluation of World Bank Assistance to Pacific Member Countries, 1992­2002 Extractive Industries and Sustainable Development: An Evaluation of World Bank Group Experience Financial Sector Assessment Program: IEG Review of the Joint World Bank and IMF Initiative From Schooling Access to Learning Outcomes: An Unfinished Agenda--An Evaluation of World Bank Support to Primary Education Hazards of Nature, Risks to Development: An IEG Evaluation of World Bank Assistance for Natural Disasters How to Build M&E Systems to Support Better Government IEG Review of World Bank Assistance for Financial Sector Reform An Impact Evaluation of India's Second and Third Andhra Pradesh Irrigation Projects: A Case of Poverty Reduction with Low Economic Returns Improving Effectiveness and Outcomes for the Poor in Health, Nutrition, and Population Improving the Lives of the Poor through Investment in Cities Improving Municipal Management for Cities to Succeed: An IEG Special Study Improving the World Bank's Development Assistance: What Does Evaluation Show: Maintaining Momentum to 2015: An Impact Evaluation of Interventions to Improve Maternal and Child Health and Nutrition Outcomes in Bangladesh New Renewable Energy: A Review of the World Bank's Assistance Pakistan: An Evaluation of the World Bank's Assistance Pension Reform and the Development of Pension Systems: An Evaluation of World Bank Assistance The Poverty Reduction Strategy Initiative: An Independent Evaluation of the World Bank's Support Through 2003 The Poverty Reduction Strategy Initiative: Findings from 10 Country Case Studies of World Bank and IMF Support Power for Development: A Review of the World Bank Group's Experience with Private Participation in the Electricity Sector Public Sector Reform: What Works and Why? An IEG Evaluation of World Bank Support Small States: Making the Most of Development Assistance--A Synthesis of World Bank Findings Social Funds: Assessing Effectiveness Sourcebook for Evaluating Global and Regional Partnership Programs Using Knowledge to Improve Development Effectiveness: An Evaluation of World Bank Economic and Sector Work and Technical Assistance, 2000­2006 Using Training to Build Capacity for Development: An Evaluation of the World Bank's Project-Based and WBI Training The Welfare Impact of Rural Electrification: A Reassessment of the Costs and Benefits--An IEG Impact Evaluation World Bank Assistance to Agriculture in Sub-Saharan Africa: An IEG Review World Bank Assistance to the Financial Sector: A Synthesis of IEG Evaluations World Bank Group Guarantee Instruments 1990­2007: An Independent Evaluation The World Bank in Turkey: 1993­2004--An IEG Country Assistance Evaluation World Bank Engagement at the State Level: The Cases of Brazil, India, Nigeria, and Russia All IEG evaluations are available, in whole or in part, in languages other than English. For our multilingual section, please visit http://www.worldbank.org/ieg. ISBN 978-0-8213-8393-3 SKU 18393