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Water is essential to sustain life and economic development, and the livelihoods of the poorest people are critically associated with access to water services. The sustainable management of water resources has acquired a new urgency in the face a global population expected to reach nine billion by 2050, economic development spurring demand for more and better food, and increased hydrological variability caused by climate change. Sustaining Water for All in a Changing Climate reaffirms the strategic directions for the World Bank Group’s approach to supporting water resources management.
Countries that borrow from the World Bank Group (WBG) must provide clean drinking water and good sanitation to their citizens, ensure sustainable irrigation, use hydropower to produce electricity, and maintain diverse ecosystems. They must prepare for and respond to droughts and floods, while also working with neighboring countries to manage trans-boundary water resources. Decisions about water resource management are further complicated by the lack of reliable information about water availability, the quantity being used, and the impact of today’s actions on tomorrow’s resources. All countries face these challenges, but the developing world is particularly at risk. Food security, hit by price shocks in 2008, remains dependent on agriculture which is, by far, the largest consumer of water—as much as 90 percent of water use in some countries. With more turbulent weather, including more frequent droughts and flooding due to climate change, that urgency and complexity of integrated water resource management is greater than ever. This report finds that both governments and the WBG need to break down barriers between ministries, departments, public and private sectors, and the communities they serve, to integrate efforts in the water sector. A symptom of the failure to do this, thus far, is the reality that the Millennium Development Goal for sanitation will not be met by 2015. This report places water at the forefront of the WBG mandate for sustainable development. It describes WBG achievements in the water sector since 2003, identifies challenges, and defines how to move forward. To date, WBG efforts have been guided principally by the Water Resources Sector Strategy, aimed at helping countries improve water resources management and development for sustainable growth and poverty reduction. The report concludes that the existing strategy’s principles should be retained at the core of future work. It also defines the changes needed to respond effectively to the more complex challenges now facing water resource management.
Achievements and Lessons Learnt over FY03-09.
The Strategy has provided a solid overarching framework to guide Bank assistance
in the water sector; the recent IEG evaluation on World Bank support for water
identified achievements in each of the 23 strategic objectives of the Strategy.
To respond to a growing agenda, World Bank Group assistance to the water sector,
led by the International Development Association (IDA) and the International Bank for Reconstruction and Development(IBRD) was significantly scaled up from FY03-09, and annual commitments increased from $1.8 billion to $6.2 billion. Overall, Bank assistance was directed toward those countries that face the greatest water needs, and the sector outperformed the Bank-wide average in terms of quality of lending. However, this support was provided primarily through the public sector. It has been difficult to attract the private sector to water-related projects, as evidenced by
the relatively low levels of investment by International Finance Corporation (IFC)
and the Multilateral Investment Guarantee Agency (MIGA) in water. The Bank re-engaged in infrastructure as a priority area. Infrastructure development is critical for improved access and storage of water, as well as for protection from floods and droughts. Physical infrastructure has often been an easier entry point for dialogue with client countries than water resources management; however, the Bank has continued to support management reforms, despite benefits that take longer to materialize. In addition, policy reform in Governance and Anti-Corruption (GAC)
issues have received increased attention over the past several years. In spite of high-reputational risks, the Bank increased its investments in large and complex hydraulic infrastructure projects. Such projects require a long-term engagement by the Bank that goes beyond the traditional timeframe of projects. By their sheer complexity, these projects have pushed the Bank’s approach beyond ensuring the compliance to safeguards. Through its engagement in large infrastructure, the Bank gained knowledge and experience in dealing with the reputational risks which compromised project development in the 1990s. This knowledge was a catalyst for the formulation of the Bank’s safeguard Operational Policies. In addition, the Bank invested significant resources in building sector knowledge. New analytic instruments, such as Country Water Resources Assistance Strategies (CWRAS), Water Public Expenditure Reviews (PERs) and the recent IFC/McKinsey instrument have been developed to support engagement and holistic dialogue with client countries on water issues. Bank projects have made some progress in adopting a multi-sectoral approach to water resources management. More projects systematically linked the availability of water with its use; water was mainstreamed in environmental, social, poverty and health projects. But these cross-sectoral projects are more complex and costly, and take longer to design and implement than traditional sector projects. The current internal incentives system still favors independent sectoral outcomes over cross-sectoral results. Another constraint has been the institutional settings and governance structures of most client countries, which do not encourage integrated planning, development, and management of water resources. Since water transcends political boundaries, the Bank has facilitated cooperation in international rivers and trans-boundary issues. Its efforts focused on upstream analytic work and technical assistance to better understand the political economy of transboundary engagement, environment and local development activities for short-term benefits, and large infrastructure investment programs for long-term benefits. While collective action for sustainable management of trans-boundary resources requires considerable time and efforts from all involved parties, inadequate attention to trans-boundary issues can harm livelihoods, undermine growth, and exacerbate resource-based conflicts.
Strategic Directions for the World Bank Group, FY10–13.
For FY10–13, WBG water commitments, led by IDA and IBRD, are projected to be between $21 and $25 billion. The Bank will continue to support infrastructure. However, these projects will take a more integrated approach, linking water services with water resources. The Bank will favor irrigation projects that integrate water productivity, and water supply projects that link water use to resource management, over stand-alone irrigation and water supply projects. Water will also be increasingly mainstreamed in projects of other sectors, including environment and
energy. However, the actual mix will depend on clients demand and country strategies.
Finally, improving client countries’ access to technologies, such as remote sensing and early flood warning systems, will be critical to increase the availability and dissemination of information for results-based decision making.
The Strategy was forward looking, anticipating the issues of climate change and rapid urbanization before they were at the forefront of global discussion. But the external environment is rapidly evolving and the water agenda is becoming more
complex, requiring the WBG to be flexible and responsive to new challenges and opportunities. The Bank responded by developing a new results framework of the Strategy, which will help to monitor progress as the Strategy is implemented over FY10–13. Adapting to increased climate variability will require better information and a more integrated approach towards water resources management. Efforts towards climate change mitigation will be paramount in WBG investments and engagements
going forward. The WBG will scale up support for hydropower as the largest source of
renewable and low-carbon energy, and look for energy efficiency opportunities in water supply systems. Ensuring regional food security has become increasingly challenging given the volatile global food market. Supported by the recent World Bank Group Agriculture Action Plan, the WBG will increase its assistance to
agricultural water management, giving more attention to both expanding irrigated areas where feasible, and improving water use efficiency of existing schemes. Support for rainfed agriculture will focus on improved water control, including broader watershed management. These efforts will become even more critical as climate change affects drought incidence. Almost 39 percent of the world’s population, or over 2.6 billion people, live without improved sanitation facilities, and the international community will miss the 2015 sanitation MDG by almost one billion people. The Bank will put the full extent of its instruments to support this issue. In addition to using lending, the Bank will work together with partners and governments to ensure that critical policy dialogue and technical assistance support global progress towards the MDGs. To translate this vision for the water agenda into action, the Bank will continue to combine traditional and innovative financing and knowledge instruments. Experience of water PERs will be assessed from the perspective of enhancing their effectiveness in engaging client countries on the allocation of fiscal resources to the water sector and financing of water services. This work, in conjunction with the lessons learned on cost recovery from past projects, will support policy discussions on the efficiency (and conservation) of water use under way. To strengthen the link between CWRAS and Country Assistance Strategy (CAS), the Bank will develop a rapid assessment tool to be used to feed into the CAS and Country Economic Memorandum (CEM) discussions before undertaking a CWRAS. Work will continue to define how the WBG/McKinsey instrument can be applied in specific countries to support policy or lending initiatives of key strategic importance. Political economy analysis will be used more systematically to support sector engagement in transboundary and GAC issues. The WBG will explore opportunities presented by private finance, including guarantees, mobilizing private financing for water utilities, and reforming public water utilities to improve
their financial management through corporatization and similar structural efforts.
In response to the mounting water resource challenge, the Bank will address staffing to ensure the availability of appropriate expertise through strategic batch
recruiting, expert support teams, and strategic secondments. It is expected that global expert teams will operate as integrated, Bank-wide entities capable of recruiting and developing the best talent, managing knowledge and dissemination across the Bank, and strengthening the networks with key knowledge centers across the world. The Bank will continue to engage at the corporate level on regional and global issues that cannot easily be tackled by the countrybased approach, such as water-sharing arrangements in international river basins and engagement in major dams, as well as on more specific issues, such as drainage of peat land. Finally, the Bank will continue to seek new ways to promote cross-sectoral outputs. Balancing these projects with more traditional projects will be critical, given their higher cost and longer time-frame to deliver results. The Bank has been experimenting
with various approaches to encourage inter-sectoral cooperation and to promote
the delivery of cross-sectoral outputs. The lessons learned from these pilots will contribute to the institutional reform effort under way. The WBG’s vision is to develop more flexible ways of working across sectors and respond more effectively to a complex, rapidly evolving environment. The Bank's Committee on Development Effectiveness endorsed these strategic directions for the sector on May 26, 2010.
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