Healthy Rivers and Ecosystem Restoration: the Role of IFIs

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1 Healthy Rivers and Ecosystem Restoration: the Role of IFIs 26 October 2017 Qingfeng Zhang, Director Environment and Natural Resources Division, East Asia Department Concurrently Chair, Water Sector Group Asian Development Bank

2 Disclaimer The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term country in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

3 Overview 1. Healthy rivers foundation for water secure future 2. Role of International Financing Institutions 3. Key Principles 4. An useful scheme PES

4 I. HEALTHY RIVERS ARE THE FOUNDATION FOR SUSTAINABLE DEVELOPMENT

5 Water Security Framework: Key Dimensions Household Water Security Resilience to Water- Related Disasters Economic Water Security Environmental Water Security Urban Water Security

6 Vision Societies can enjoy water security when they successfully manage their water resources and services to: 1. Satisfy household water and sanitation needs in all communities; 2. Support productive economies in agriculture, industry, and energy; 3. Develop vibrant, livable cities and towns; 4. Restore healthy rivers and ecosystems; and 5. Build resilient communities that can adapt to change. Source: Asian Water Development Outlook 2013

7 Healthy Rivers are the Foundation for Sustainable Development AWDO Key Dimensions 4 Healthy Rivers 3 Water Supply Sewer City Drained City Water Way City Water Cycle City 5 Freedom for Flood Risks Freedom for Drought Risks 2 Food Production Energy Production Employment 1 Drinking Water Sanitation

8 Essential actions for healthy rivers and ecosystem services (KD4) Accelerating the process of IWRM with all basin stakeholders will increase the return on public investment in water storage, productivity, and conservation. Public investment, market-based approaches, and support from the private sector can reduce pollution and finance the restoration of healthy rivers. $1 invested in a river restoration program can return more than $4 in benefits.

9 Premier Wen s Comments in 2007: the pollution of Tai Lake has sounded the alarm for us...the problem has never been tackled at its root. Money alone cannot solve the problem

10 II. RESTORING HEALTHY RIVERS AND ECOSYSTEMS ADB S EFFORTS

11 ADB is not just a bank. Increased water use efficiencies across the range of users Expanded sanitation and wastewater management Embedded IWRM, including improved risk management Expanded knowledge and capacity Enhanced partnerships with the private sector Rural Water Urban Water Basin Water

12 Amounts in $ billion Overview of ADB s Water Operations $2.4 billion approved investments Adaptation - $518 million Mitigation - $33 million Lending pipeline: $4.2 billion $4.8 billion $5.7 billion Annual Average Actual Pipeline Water supply, sanitation, wastewater management (WUS) Irrigation and drainage (ANR) Flood management (WUS/ANR) Water resources management, wetlands and watershed protection (ANR) Hydropower generation (ENE)

13 NEPAL: Bagmati River Basin Project Approved in 2014 Objective: Support the Government s efforts in improving water management and river environment in the basin. Structure measures: Construct upstream water storage, riverbed oxygenating weirs, riverbank beautification, and community initiatives to improve the river environment in Kathmandu Valley. Nonstructural measures: Support the formation of a river basin organization with adequate capacity and decision support systems for IWRM.

14 Integrated Citarum Water Resources Management Investment Program (2008) Most important river basin in Indonesia 15-year, $1 billion assistance Upgrade infrastructure, institutions (IWRM) 1,400 MW hydro 400,000 hectare irrigation Water supply for Jakarta, Bandung Challenges: Water insecurity Groundwater depletion Water quality (severe) Flood risk in upper basin

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16 China: Chao Lake Environmental Rehabilitation Project Introduce an integrated approach to overcome the issues of point source pollution control, nonpoint source pollution management Lake authority capacity building, and strengthening of wastewater services Solutions included structural measures such as wastewater treatment and sewer networks Solutions included institutional reform and capacity building for IWRM Solutions included innovative nonstructural measures such as ecocompensation and nutrient trading to reduce the agricultural nonpoint sources flowing into the lake

17 Nanjing Qinhuai River Environmental Improvement Project Public-private participation: water bond issuing WWTPs and collection systems River rehabilitation: diversion and water replenishment, wetland parks Flood control: stormwater drainage system

18 ADB Assistance along the Yangtze River Basin ( )

19 ADB Programmatic Approach for YREB ( ) Geographical areas Indicative budget Priority areas of the YREB Development Plan Preferred interventions Seven provinces and one municipality in the middle and upper reaches $2.0 billion 1. Ecosystem restoration, sustainable forest management, environmental protection & Integrated water resource management 2. Green and inclusive urban & industrial transformation 3. Low-carbon integrated multimodal transport corridors 4. Institutional strengthening, policy reform & finance catalytic, innovative, and adoption of high-level technologies

20 Policies, Institutional Support and Finance Mechanisms for the YREB National policy dialogue and reform mechanisms (MEP) Strengthening provincial planning and implementation (NDRC) Establishing trans-provincial watershed Eco-compensation for IRBM Support to the Yangtze River Commission to establish water ecosystem and water security monitoring/supervision system

21 Investment Project Selection Criteria 1. Enhance natural capital: improve water quality, climate-resilience, restore ecosystem functions, carbon sequestration 2. Integrated water resources management: integrated management of upper, middle and lower reaches 3. Transformation: catalytic, innovative, adoption of high-level technologies, GHG reduction

22 Selected YREB Ecological Restoration Projects Yangtze River Green Ecological Corridor Project ($300m) Xin'an River Eco-compensation and Green Development Fund (Anhui and Zhejiang Province, $100m) Chishui Watershed Eco-compensation Scheme (covering Yunnan, Guizhou and Sichuan provinces, $600m) South-North Water Transfer: Dengzhou City Water Resources Management and Green Development ($200m) Chongqi Longxi river environmental rehabilitation (three Gorges catchment, $150m)

23 III. KEY PRINCIPLES

24 1. Integrated Land and Water Planning Protection: environmental state of the water resources in providing goods and services. Balanced Development: social and economic outcomes related to water use, land use or catchment areas Disaster Risk: human, property or ecological risks of flooding and other disasters. Institutional: institutional intent for cooperation, collaboration and stewardship.

25 2. Different rivers, different challenges Ganges River Difficult to coordinate among the stakeholders Aging supply infrastructure Yangtze river Rapidly growing industrial and urban growth Regional disparity among provinces Mekong rivers High demand for hydro-power Urgent need for regional cooperation

26 3. WATER TARIFF AUS = Australia, CAN = Canada, CZE = Czech Republic, DEN = Denmark, FRA = France, GER = Germany, IND = India, ITA = Italy, JPN = Japan, KOR = Republic of Korea, m 3 = cubic meter, MEX = Mexico, POL = Poland, POR = Portugal, PRC = People s Republic of China, RUS = Russian Federation, SPA = Spain, TUR = Turkey, UKG = United Kingdom, USA = United States. Sources: Global Water Intelligence and Organization for Economic Co-operation and Development Global Water Tariff Survey. Global Water Intelligence. 12 (9); China Water Net Water Tariff Database. (in Chinese). Despite Being Scare Water Is Still Undervalued in the PRC Source: Global Water Intelligence, 2012 Water Tariff Survey/ via China Water Risk

27 4. Promoting Wastewater Management, and Investing in the 3Rs A lost service and a missed business opportunity Establishing tariff schemes Opening wastewater management market Integrated wastewater management approaches Wastewater reuse

28 5. Delivering on Effective River Basin Management ADB, with the Network of Asian River Basin Organizations (NARBO) and other partners, support: integrated water resources management (IWRM); adaptive management approach; benchmarking for performance improvement of river basin organizations; and greater participation by water users in river basin management.

29 IWRM is essential: four factors Institution: Effective management structure Economic: Integrated water and land use planning Social: Alternative livelihood to support local community Environmental: PES to reflect environmental externality

30 V. AN USEFUL MECHANISM - PES

31 Eco-compensation fits well in the IRBM Process IRBM Process Approach: Increase a triple bottom line + Economic benefits $ + Social (equity) benefits $ + Environmental benefits $ Optimize stakeholder satisfaction Adopt inclusive approach Find win-win solutions Generate buy-in for IWRM process Source: Lincklaen Arriens 2009

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33 Key Elements of PES in Yudongxia Watershed Upland forest Stream Farmlands Buyers: water users in Wudang district of Guiyang Municipality Yudongxia Reservoir Sellers: Xinshi township/communities in Longli Services: conserving water resources protection zone Sources of Payment: portion of water tariff in Wudang district Performance measures: water quality monitoring in Yudongxia watershed PES mechanism: PES agreement between GMG and Longli county

34 ADB as Key Partner, Connector and also Financier Policy: knowledge sharing events Regulation: assist in preparing ecocompensation/pes regulation framework Investment: piloting PES/ Ecocompensation concepts in the lending/ta projects Knowledge Services: various knowledge products

35 Support Knowledge Sharing Events 1 st International Conference on Eco-compensation and PES 2 nd International Conference on Eco-compensation for Watershed Services 3 rd International Conference on Eco-compensation Legislation

36 Operationalize PES/Eco-compensation through Loans/TAs

37 Trans-provincial eco-compensation project Nature Goal ADB loans (the central government financing for regional public goods + local financing for livelihoods) Sustainable watershed protection and development Water quality & flow Watershed ecosystem Livelihoods Trans-provincial investment platform for watershed protection in Chishui watershed 37

38 Trans-boundary watershed eco-compensation

39 Motivation for this Work Issues associated with PES and Ecocompensation Scientific uncertainty on valuation of ecosystem services Scale-up of PES scheme Compensation standard Property rights Private sector participation

40 ADB s Water Sector Group Sector Committee: 1 Chair, 1 Technical Advisor, 8 Directors Secretariat: 1 Technical Advisor, 2 International Staff and 1 National Staff Water Staff: 125 staff (88 HQ and 37 RM) Water SG membership: 200 members

41 Asian Development Bank