March 7, 2002

IDB PRESIDENT PLEDGES BANK SUPPORT FOR BETTER WATER MANAGEMENT Enrique V. Iglesias calls for greater private sector role to solve ‘urgent problem’

Fortaleza, Brazil- IDB President Enrique V. Iglesias today called for a greater role for the private sector in solving what he called the “urgent problem” of financing and managing water resources in the countries of Latin America and the Caribbean.

Iglesias noted that public resources are insufficient to finance the potable water and sanitation services needed for the millions of people in the region who lack them. “If we do not learn how to work with the private sector, we cannot resolve this problem,” said Iglesias.

Declaring that the issue of water resources is central to achieving sustainable development and poverty reduction, Iglesias pledged the IDB’s support for training local governments and creating public-private partnerships.

Iglesias was speaking at the opening session of the seminar "Strategic issues of water use and management in Latin America and the Caribbean: an action agenda," held on the first day of activities in conjunction with the Bank's Annual Meeting in Fortaleza, Brazil. Other participants included Tasso Jereissati, governor of the state of Ceará, Michel Camdessus, former IMF managing director, Raymundo Garrido, Brazil’s undersecretary for the environment, and experts from the public and private sector in Brazil and other IDB member countries.

Results of the seminar will be used to help formulate a financing action plan addressed at solving the most pressing water related problems of the region. The plan will also support the objectives of the Third World Water Forum set for March 2003 in Japan.

Ceará Governor Jereissati, in his address, described an initiative underway to reduce the effect of periodic droughts in his state, which is 90 percent semiarid.

The Ceará plan is being organized on the basis of watersheds, and over the coming years a series of reservoirs and canals will link different management units. A central authority will oversee the state’s water resources. “In two to three years, the effects of drought will be greately reduced,”he said.

“If we can’t control the water that comes from above, at least we can manage the water after it reaches the ground,” he said.

In his remarks, Camdessus referred to the importance of the seminar in the preparation of the Japan Forum, where he will chair a panel on financing water infrastructure. He also emphasized the importance of a conference taking place later this month in Monterrey, Mexico, on finance and development. This meeting, he said, will set the financial parameters for the coming years for solving water problems and other development-related issues.

Like Iglesias, he stressed the importance of the private sector in the area of water resource management, calling a public-private partnership “absolutely essential.”

“If the private sector is not involved,” he said, “we will not achieve our goals.”

Water problems continue to afflict region

Despite significant progress in past decades, the social and economic development of the countries of Latin America and the Caribbean remains hobbled by serious water management problems that could be exacerbated in the future by increasing numbers of people and their concentration in urban centers.

The problems range from the lack of potable water systems in low-income neighborhoods to management of entire river basins to safeguard water supplies and prevent natural disasters. Many experts predict that water will emerge as the critical worldwide resource for this present century.

The status of water resources is of considerable concern to the IDB, which has directed a priority portion of its resources to financing the social sectors. The Bank has invested more than $35 billion in the water and sanitation sector since its inception over 40 years ago. The first IDB-financed project was for a water project in Arequipa, Peru. Throughout the region, millions of people in both urban and rural areas are presently served by IDB-financed potable water and sanitation systems.

But despite both these investments and the undeniable gains that they have produced, some 120 million people in the region still lack access to sanitation systems and 78 million do not have potable water connections.

A group of ambitious Bank-financed water management projects are being carried out in Brazil, host of this year’s annual meeting. In São Paulo, a project to bring the biologically dead Tiete River back to life through massive sanitation works is presently in its second stage. In Rio de Janeiro, a program to clean up Guanabara Bay will increase sewerage coverage from the present 35 to 50 percent of residents.

In Brazil's state of Rio Grande do Sul, a project to restore the quality of water in the Guaiba Lake basin is already well advanced in its objective of providing a total of over 400,000 people with sewerage coverage. In addition to infrastructure works, some 3,600 technical and administrative staff are being trained in water quality and waste management.

In the state of Bahia, a basic sanitation project will increase sewerage coverge in the city of Salvador from 26 to 82 percent, raise potable water coverge in 11 municipalities from 57 to 80 percent, and provide 70 percent sewerage coverage in eight municipalities where there is presently none.

Upcoming IDB projects include potable water and sanitation works in Fortaleza and communities elsewhere in the state of Ceara. In the state of Goias, water and sanitation services will be improved and managed by the private sector.