The World Bank and Water Resources: Management AND Development

Water Week 2004 Diving into Implementation The World Bank and Water Resources: Management AND Development David Grey Senior Water Advisor

The Story Line: 1. Water & poverty: water resources as a pervasive, unpredictable constraint to growth 2. The water infrastructure gap 3. The international community response in the 1990s 4. 2003: a turning point for the Bank 5. The WBG challenges of 2004 and beyond: Diving into implementation

Kenya winter flood 97/98 $2.39 Billion infrastructure damage

Kenya 1998-2000 drought $2.4billion losses

Kenya s 97-98 flood & 1998-2000 drought 10/97-02/98 flood infrastructure damage $ 2.39 b 10/98-05/00 drought 10/97-05/00 crop loss livestock loss reduc. HP production reduc. industr. production total cost of climate variability approx (annual) GDP impact as % GDP/annum $ 0.24 b $ 0.14 b $ 0.64 b $ 1.39 b ($9b/yr) $ 2.41 b $ 4.8 b $ 22 b 22%

Kenya s extreme rainfall variability which also means extreme landscape vulnerability 160% 140% 120% 100% 80% 60% 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980

2000 & 2001 winters: extreme flooding in Mozambique

Mozambique s 2000 floods -23% +44%

Zimbabwe: rainfall and GDP growth 15.0 3.0 Real GDP growth (%) 10.0 5.0 0.0-5.0 1979 1980 1981 1982 1983 Real GDP growth (%) 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 2.0 1.0 0.0-1.0-2.0-3.0 Variability in Rainfall (Meter) -10.0 Variability in Rainfall (Meter) -4.0 Years Correlation between GDP and Rainfall in Zimbabwe

FT, June 18, 2001: Rain in India

"Every one of my budgets was largely a gamble on rain. Finance Minister of Government of India

Where river basins are shared: impacts, risks & opportunities can be even greater Zambezi: Zimbabwe & Mozambique

Water infrastructure & growth Massive economy-wide shock of extreme events Pervasive economy-wide impacts in all years: investment disincentives / risk averse behavior throughout society Economies trapped in low level equilibrium Essential to de-link rainfall/runoff from growth: investments in water infrastructure & institutions All developed nations have invested in an optimum platform of water infrastructure to sustain growth, without exception

Water storage per person (m3) 7,000 6,000 5,000 4,729 6,150 4,000 3,000 2,486 3,255 2,000 1,000 0 43 Ethiopia 746 South Africa 1,287 1,406 Thailand Laos China Brazil Australia North America

Ethiopia & water security: proxy of artificial storage Water availability versus storage withdrawal/ capita (m3) 1000 800 600 400 200 0 Spain Australia S. Africa Ethiopia 0 1,000 2,000 3,000 4,000 5,000 storage/ capita (m3) with stable population & GDP, raising Ethiopia s storage to South Africa (12% of USA) ~ 5 X GDP Or 25% of GDP for 20 yrs (Australia 0.1%, South Africa 0.6%)

Water security :investment gap Country Additional Storage needed per person (m 3 ) Storage investments required per person (US$) Storage Investments Required (US$ Billion) Period needed at 5% current GDP investment per year (no pop. inc.) (Years) Lesotho 751 939 1.7 44 Namibia 542 678 1.3 8 Nigeria 402 503 67.3 32 Ethiopia 555 694 46.2 144 Kenya 307 384 12.1 24 Tanzania 610 763 27.4 60 Uganda 511 639 17.9 58 Burkina Faso 152 190 2.5 22 Senegal 683 854 9.9 40 Algeria 239 299 9.8 4 Morocco 128 160 5.1 4

The infrastructure gap: hydropower 100% Hydropower Potential Tapped 80% 60% Europe N America 40% 20% Asia (incl. China) S America 0% Africa

Infrastructure gap: access to electricity 2,000 2108 Elec consumption (kwh/yr)/capita 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 184 United States consumption 12000kWh/capita/yr 500 kwh/capita/year minimum consumption for reasonable quality of life 85 21 126 55 38 29 204 114 581 900 430 Cameroon Nigeria Ethiopia Kenya Tanzania Uganda Burkina Faso Ghana Energy use per person in Africa Senegal Algeria Egypt Morocco World Average

Rates of return on investment in water infrastructure & management Many developing countries All industrial countries

Closing the infrastructure gap There is a minimum platform of water resources infrastructure & institutions to achieve water security Where rainfall/runoff variability is high, storage of all kinds (surface- or groundwater, small and large) is essential Water security is a necessary condition for sustained economic growth & poverty eradication All industrial countries have invested heavily in storage & river regulation to achieve water security ; there is no other demonstrated route.. is there an alternative??

In its early years the World Bank was essentially an infrastructure finance institution.. The Indus Water Treaty and the accompanying development in Pakistan and India, is one of the Bank s proudest achievements The Indus - The Treaty (1960) Pakistan India

The decline of World Bank lending for all infrastructure 11.0 10.0 IBRD/IDA Infrastructure Investment Lending FY 93-97 Average: 37% FY 98-03 Average: 24% 9.0 8.0 7.0 6.0 5.0 IDA IBRD 4.0 3.0 2.0 1.0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

lending for water supply & sanitation down 2,500 2,000 1,500 1,000 500 0 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02

Irrigation lending down also World Bank Commitments (3 year moving average) in 2002 USD 2500 Million (2002) USD 2000 1500 1000 500 0 1978 1980 1982 1984 1986 1988 1990 year 1992 1994 1996 1998 2000 2002

and hydropower down most dramatically.. 1200 IBRD/IDA & Grant Comm Amt 1000 800 600 400 200 0 90-92 93-95 96-98 99-01 02-04

but the private sector did not fill the gap on the contrary. Private investment in infrastructure in developing countries ($ billions/year) 140 120 100 80 60 40 20 0 Total World Bank lending for all purposes 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 (note: levels still high relative to Official Development Assistance)

The framework: the Bank Water Resources Sector Strategy 1993: the normative position of the Bank 2002: Lessons learned in implementation 2003: Turning policy into practice as better partners

Summary of main themes of the SSP Effective development & management of water resources essential for growth & poverty reduction; thus World Bank must play major role in water resources Main management challenge not vision, but more effective implementation. To be more effective partner, World Bank must be more attentive to political economy of change, prioritization of actions, & time taken for change. Main development challenge is for countries to develop & manage appropriate stocks of well-performing hydraulic infrastructure, mobilizing public & private financing. World Bank has critical catalytic role & must be engaged & be realistic.

July 8, 2003 The Bank has recently made a renewed commitment to infrastructure Infrastructure Action Plan

Initiating change to improve performance & increase benefits of sector Developing approaches for implementing this change

Bank investments in water resources (% of total investments) now increasing rapidly '93-'01 '03-'05 16 15.9 12 8 9.7 4 4.3 6.1 0 TOTAL WRM COMPONENTS TOTAL PROJECTS WITH WRM COMPONENTS

Key Tool: the Country Water Resources Assistance Strategy The water equivalent to the Country Assistance Strategy, which specifies contract Bank-Government

Key Tool: The Bank-Netherlands Water Partnership Program Successful strategic partnership mobilizing technical & financial resources to support implementation: Promote reform and innovation in integrated water resources mgmt Leverage Bank operations & learning Respond to demand through 14 thematic Windows 1. River Basin Management 2. Watershed management 3. Water Rights Systems 4. Reforming Irrigation Institutions 5. Groundwater Management 6. Wastewater Management 7. International Waters 8. Dams Planning & Management 9. Environmental Flow 10. Flood Management 11. Water Resources & Livelihoods of the Poor 12. Capacity Building in WRM 13. National Strategies & Legislation 14. Country Water Resources Assistance Strategy

late 2003: An alternative (NGO) view of the Bank s strategy: Gambling with people s lives

Diving into implementation: needs we must support Achieving defined water security outcomes: WR infrastructure & institutional platform for sustained growth: public goods Beyond water security to achieving water productivity, enhancing growth: scaling up investments in water for food and for power: private goods Agricultural intensification through new irrigation (WfF s Agriculture Water Management Initiative) Expanded electrification through balanced hydropower investments, based on options analysis Accessing diverse financing instruments/sources for rational multipurpose water development: public and private

A case in point: George Verghese on Thursday The Ganges/Brahmaputra Brahmaputra/ Meghna Basin: the glaring contradiction of the largest concentration of the world s most poor unable to garner the bounty of one of the world s richest natural resource regions.. is an indictment that can no longer be tolerated. multipurpose, public/private, transformational

Diving into implementation: questions we must address Advocacy: can we get our message of water resources, economy-wide impacts & the poverty trap heard & understood? Alliances: can we build alliances with development partners, NGOs, private sector? Achieving outcomes: can we be a reliable partner? Environmental & social safeguards: can we simplify and harmonize, while achieving better practice? Financing: can we support scaled up investments in public goods & promote private re-entry? Transboundary waters: can we commit to costly, complex, & lengthy engagement & investment?

Building capacity of water colleges : managing internal tradeoffs & tensions The Water Resources Management Group Water Resources Management Water for People Water for Food Water for Power Water for Environment Water Week 2004: Bank s premier training event, with sessions in all 5 colleges

In conclusion:.

High Risk (to the Bank), High Reward (to the Poor) Reputational risk to the Bank IV III II I Benefit to the poor The hydraulic infrastructure challenge: we must not exclude any tools in solving problems but we must choose appropriate tools wisely

Minister Mutagamba Uganda & the Nile Basin Uganda 10 states, 4 of 10 poorest Uganda s key role & example Transformational potential 90% HP potential undeveloped; ~85% pop. without electricity 60% irrigable land unirrigated Few other financing choices Bank s role?

Jerson Kelman BRAZIL: 8 th economy, 90% hydro, transformation, other choices, Bank s role?

Water resources development is a major challenge for them, in which we must (re-)engage our view: Gambling with the Bank s reputation to improve people s lives

Thank you!