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International Water Association

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. Overview. ADB’s approach to Water Security

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International Water Association

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  1. International Water Association Financing Water Security Rudolf Frauendorfer Asian Development Bank

  2. Introduction • Why “Financing Water Security” • Linking Water Security to Water Safety • ADB’s water program, Water Security and Water Safety ADB Financing Water Security

  3. 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

  4. 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

  5. 2010: Regional Indicators ADB Financing Water Security

  6. Poverty: % population on < $ 2/day ADB Financing Water Security

  7. Employment in Industry ADB Financing Water Security

  8. Urbanisation ADB Financing Water Security

  9. 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

  10. 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

  11. Water Users Total use 2008: 80 billion m3/year Total use 2020: 120 billion m3/year ADB Financing Water Security

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

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