International Water Association Financing Water Security Rudolf Frauendorfer Asian Development Bank
Introduction • Why “Financing Water Security” • Linking Water Security to Water Safety • ADB’s water program, Water Security and Water Safety ADB Financing Water Security
Overview • ADB’s approach to Water Security • Use Viet Nam as an example of developmental context • Serves to illustrate approach to water security in Southeast Asia • As pre-requisite for water safety ADB Financing Water Security
Viet Nam in history • September 1945: independence • 1954: Dien Bien Phu, Geneva Accords • 1975: Reunification • 1986: “Doi Moi” declared: renovation • 1993: ADB operations resumed • 1994: US trade embargo lifted • 2007: Accession to World Trade Organisation ADB Financing Water Security
2010: Regional Indicators ADB Financing Water Security
Poverty: % population on < $ 2/day ADB Financing Water Security
Employment in Industry ADB Financing Water Security
Urbanisation ADB Financing Water Security
Transformation of the economy • Strong industrial growth • Transition to market economy; part of global economy • De-centralisation: administrative / fiscal • Agriculture: still 52% of employed • Still using 80% of water ADB Financing Water Security
Water Resources • Annual Rainfall: 1,200 – 3,000 mm/year • Rivers discharge: 830 billion m3/year • 57% from Mekong basin • 16% Red – Thai basin • Total 60% generated outside borders • Water endowment: 9,800 m3/capita.year • In some basins: < 3,000 m3/capita.year • Critical in dry season for Dong Nai and other basins > 1700 m3/cap/yr “under stress ADB Financing Water Security
Water Users Total use 2008: 80 billion m3/year Total use 2020: 120 billion m3/year ADB Financing Water Security
Ground Water • Strategic reserve – essential for rural areas • Renewable potential: 63 billion m3/yr • In Northwest: 3,770 m3/cap.yr • In Mekong delta: 84 m3/cap.year • Water source for 55% of population: • 34 % of urban population • 65% of rural population ADB Financing Water Security
Ground water - issues • Unknown resource: insufficient data on renewable Quantity or Quality • HCMC and Hanoi: groundwater table lowered by 30m+ • Need to protect strategic resource • Storage to bridge between floods and droughts • Potential for artificial / induced re-charge? ADB Financing Water Security
Water Safety Plans • System Assessment: to review supply chain • Operational monitoring ofall control measures • Management Plans: documenting day-to-day operations; emergency measures • Minimize contamination: protect source • Reduce or remove contamination: treat • Prevent further contamination: protect network ADB Financing Water Security
Urban water supply • 68 water companies, under VWSA • Design capacity 5.4 million m3/day • Operating at 4.2 million m3/day • Coverage: 98% “access to improved source” • 59% with house connection • 39% shared connection or standposts • Investment 1991 - 2008: $ 2 billion • Mainly treatment & transmission, • 15% on distribution improvements ADB Financing Water Security
Urban water: data needs • Reliable: independent verification • Relevant: performance indicators, • Financial performance • Asset inventory and valuation • Comprehensive: data on small town systems (~ 400 towns) Minimum requirements to attract private sector interest in management, operation, investment ADB Financing Water Security
Urban water: non revenue water NRW VWSA: some doubt on data means of measurement lacking • Range: 15 – 70% • Average: 30% (2009) down from 39% (2000) • Government target: 15% by 2025 • $ 500 million government program, to be supported by ADB • Importance of reducing NRW as indicator of improved all-round efficiency ADB Financing Water Security
Urban water: Business principles • Legislation: enables tariff increases to full cost recovery • Some hesitation to applybut promising progress • Affordability not an issue < 1% hh income • Ownership of assets still unclear: prevents progress with full privatisation ADB Financing Water Security
Rural water: the issues • Coverage: 90% (2009) from 43% (1990) • Sector in transition: • supply driven developments • no funding for operation & maintenance • unsustainable systems • Provincial water companies: combining urban + rural responsibility. • ADB project in Hue: pilot with sustainable rural schemes to become part of urban company. ADB Financing Water Security
Urban wastewater: the issues • Coverage: waste from <10% of urban households is treated • Government target: 70% coverage by 2025 • Investment implication: $ 15 – 25 billion • Decentralised: local government’s responsibility • Financing: tariff can be raised, but not widely implemented. ADB Financing Water Security
Summary of Issues A. Efficient water supply companies: • define assets, then • manage to improve efficiency and safety B. Protect the sources: • Reduce waste discharges, to secure sources for the future WSP step 1 WSP step 2 ADB Financing Water Security
ADB’s strategies • Water supply: supportto water supply companies – including NRW reduction – to enable access to investment by private sector: Improving Efficiency • Wastewater – assist local government to meet government’s targets in waste treatment: Protect the sources • Province-wide programs combining urban & rural water & sanitation ADB Financing Water Security
Water supply • Line of credit $ 1 billion, 2011 – 2020 • Four large cities initially, specified • Smaller cities to submit applications • Institutional Support to water companies • NRW reduction program • Asset inventory & management • Run on business principles, maintain service charter • Prepare for privatisation • Gain access to capital markets ADB Financing Water Security
Wastewater • Starting point • Skills gap / Awareness gap / Funding gap • Long term programme • City sanitation strategies + capacity building • Loan preparation ==> line-of-credit 2013 - 2022 • New approaches: • Explore decentralisation • Fit-for-use treatment • Local re-use ADB Financing Water Security
Conclusion • Promote Water Safety Plans • By better understanding on essential operating data, to improve efficiencies, • to achieve financial sustainability, • critical for maintaining safety of supplies • Protect the sources • Urgent and large scale • Creative approaches & flexibility required ADB Financing Water Security
