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Box 5 • Water and Sanitation Initiative

To achieve the Millennium Development Goals in the provision of water and sanitation services, Latin America and the Caribbean must extend adequate water services to some 85 million people and sanitation to an additional 110 million. The region will need to invest an estimated $30 billion by 2015 to reach these goals. There is also an urgent need to improve the continuity and quality of water services—especially to the poor— while safeguarding and decontaminating water sources. Finally, the region must strengthen institutions and legal frameworks in the water and sanitation sector in order to encourage the emergence of efficient and transparent service providers.

To help the region attain these goals, the IDB Board of Executive Directors last year approved a Water and Sanitation Initiative that set ambitious targets for the 2007–2011 period. First, the IDB is to provide financing to 100 mediumsized cities—with populations of around 50,000 people—that want to expand coverage or improve the quality of their water and sanitation systems. Second, the Bank will provide loans or technical assistance to at least 3,000 rural communities by working with local governments and other organizations that focus on water and sanitation. Third, the IDB will finance watershed management in at least 20 priority microwatersheds and wastewater treatment in many of these urban and rural projects. And fourth, the Bank will foster the growth of efficient and transparent service providers by financing management training, technical support and institutional strengthening.

During 2007 the Bank began preparing water and sanitation sector business plans for 12 of its borrowing member countries and will complete the 14 others in 2008. The plans will set out the IDB’s vision for the sector and propose a customized road map for each country. The Bank is also preparing two new financial instruments as part of the initiative. The first is a dedicated fund for technical cooperation and project preparation grants. IDB resources will be matched by special contributions from other donors. The second instrument is a quick-disbursing fund that will offer loans to service providers that meet certain efficiency and transparency benchmarks.

To achieve maximum impact, the IDB will leverage a variety of partnerships with donors and organizations active in the water and sanitation sector. Working with the United Nations Secretary General’s Advisory Board on Water and Sanitation, for example, the IDB will help to set up Water Operator Partnership programs that will match successful water utilities with smaller providers to transfer management skills.

In 2007 the IDB approved close to $700 million in loans that will contribute toward meeting the goals of the Water and Sanitation Initiative. These included three projects in Peru: $200 million for water resources reform, $100 million for sanitation reform and $50 million for the “Water for Everyone” program. In Argentina, a $120 million loan will improve the quality of water service and expand access to water and sanitation in small communities, and a $60 million loan will improve solid waste management in municipalities with high levels of tourism.

In Bolivia, a $21 million loan will increase the coverage of sustainable potable water service and wastewater disposal for 200,000 new customers living in approximately 500 rural communities. In Brazil, a $32 million loan for an environmental revitalization program will help address pollution and flooding problems in Joinville in the state of Santa Catarina. And in Chile, the IDB approved $100 million in financing to build 9,000 new potable water and 45,300 new sewerage connections in remote rural households.