IDB Supports Improved Water and Solid Waste Management in Uruguay

The Inter-American Development Bank (IDB) has approved a $200 million loan to support a program in Uruguay to boost water security and environmental sustainability, with a focus on circularity and mitigating and adapting to climate change. Its specific objectives are to enhance water resource management and water service quality by increasing resilience to extreme events, as well as to strengthen solid waste management.

From late 2022 to early 2023, Uruguay was hit by one of the worst droughts in its history. The drought had a major impact on all economic sectors, especially the drinking water supply, because water was scarce and of poor quality.

Solid waste management is closely linked to the water situation, since poor disposal of waste contaminates water resources, exacerbates the impacts of extreme events and triggers serious environmental, social and economic consequences.

To address these challenges, the program will support ten policy reform measures for integrated management of water resources and water and sanitation services, which include creating a drought response protocol and a flood early warning protocol. These measures will improve the country's capacity to prevent and respond to extreme events and will boost its resilience.

The operation will also support an agreement between the Ministry of the Environment and the state-owned water utility to better manage losses in drinking water systems, and to update and modernize the regulatory framework on water discharge, reuse, and quality that dates from 1979.

The program will also support seven measures for solid waste management with a circular economy approach, including implementation of the National Strategy for Preventing and Reducing Food Loss and Waste, which will tackle the problem of 10% of the country’s food currently going to waste.

The operation will also promote agreements between the Ministry of the Environment and eight departmental governments with commitments to improve waste management at the departmental level. It also seeks to enhance comprehensive management of electronic waste, due to its potentially hazardous content.

The program will benefit the country's population by preparing for and predicting extreme events, preventing drinking water service outages and improving solid waste disposal. It will also benefit vulnerable households, with tools to reduce food insecurity and to help formalize the status of the job of waste picking.

Other beneficiaries will be the agricultural, industrial and private sectors, which will enjoy better-quality water resources and mechanisms to increase the circularity of solid waste and effluents.

The $200 million IDB loan has a 20-year repayment period, a 5.5-year grace period and an interest rate based on the Secured Overnight Financing Rate (SOFR).