Costa Rica will improve its drinking water, sanitation and wastewater treatment services, benefiting more than one million inhabitants of urban, periurban, and rural areas with assistance from a financial package that includes a $20 million grant from the Spanish Government and a $73 million loan approved by the Inter-American Development Bank.

The Bank’s loan and the grant from the IDB-managed Spanish Cooperation Fund for Water and Sanitation in Latin America and the Caribbean (FECASALC, after its Spanish initials) will complement an existing $150 million loan from the Japan International Cooperation Agency (JICA).

The program, to which Costa Rica’s Government will provide an additional $77 million in local counterpart funds, will invest a total $320 million to expand and rehabilitate drinking water and sanitation services, directly benefiting approximately 1,070,000 residents of the San Jose metropolitan area and 47,500 rural communities dwellers.

“This is an outstanding example of how the international community can join forces to provide strategic support to an initiative of the Government of Costa Rica,” said IDB Project Team Leader Coral Fernandez Illescas. “These investments will improve the environmental situation and the living standards of one out of every four Costa Ricans. They will also help the country improve the coverage and quality of its water and sanitation services, and in particular of wastewater treatment services.” 

Of the program’s total budget, $274 will be assigned to improve service in the San Jose metropolitan area. This component includes construction and rehabilitation of sewer networks and collectors –including more than 160 km of pipes in the Maria Aguilar and Tiribi river watersheds–, a treatment plant, a transmission tunnel connecting collectors and the plant, and connections between homes and city networks for low-income households.   

Another $26 million will finance the construction and rehabilitation of rural water systems and sanitation solutions in impoverished northern areas of the country. This will include the construction of drinking water systems at 112 rural communities, while 500 individual sanitation solutions will benefit the poorest sectors of the population, which currently use pit latrines with a high risk of contaminating the water table.

Finally, $14 million will be used to finance construction and rehabilitation of 73 km of drinking water networks and of 15 km of sewers at ten low-income periurban areas of San Jose.

FECASALC is a special non-reimbursable contributions fund managed by the Spanish Agency for International Development Cooperation (AECID) and the IDB whose aim is to speed up the expansion of drinking water and sanitation services and support regional governments’ efforts to meet the Millennium Development Goals in this area. AECID and the IDB have so far co-financed water and sanitation projects in Haiti, Bolivia, Ecuador, Peru, Paraguay, Uruguay, Brazil, Guatemala, El Salvador, Honduras, Costa Rica and the Dominican Republic.

The program will also finance hydrogeological studies and environmental and institutional strengthening actions in the rural, environmental education, and community development areas.

The IDB’s loan is for a 25-year term, with a six-year grace period, at a variable interest rate based on Libor.