Paraguay to Expand Sanitation in Lake Ypacaraí Watershed to Improve Environment

The Inter-American Development Bank (IDB) has approved a $154 million loan and $7.7 million grant from the IDB CLIMA program for a first round of construction under the Comprehensive Sanitation Plan for the Lake Ypacaraí Watershed in Paraguay. This project will improve environmental conditions in the watershed and drive climate-resilient and low-carbon development. It will also accelerate access to green and thematic debt markets for the water and sanitation sector.

The operation, which has been approved by the IDB Board of Executive Directors, is part of IDB CLIMA, a results-based pilot program that rewards countries for reaching targets related to protecting nature and combating climate change.

The operation is also aligned with the IDBImpact+ objectives of ramping up the impact and scale of IDB operations, reducing poverty and inequality, addressing climate change and driving sustainable regional growth.

The program will expand the coverage of sanitary sewerage and wastewater treatment in rural areas of the Lake Ypacaraí watershed and help reclaim its environmentally degraded areas.

It will also enhance the management of water and sanitation services in priority areas in the watershed and build the capacities of the Ministry of Public Works and Communications to better manage the watershed; design pro-climate or pro-nature investments; and perform climate and biodiversity monitoring, reporting, and verification within the water and sanitation sector.

The operation will directly benefit 27,341 homes by giving them access to sewerage and wastewater treatment services in prioritized areas of Capiatá, Itauguá and Areguá. It will benefit an additional 1600 homes by improving the sanitation system in San Bernardino.

Better environmental conditions in the lake will also benefit the 815,000 residents of the watershed through recreation, tourism and other opportunities. The operation will strengthen water and sanitation service providers and entities so they can take action on the climate and environment.

An icon of Paraguay, Lake Ypacaraí is one of the country’s main natural resources and tourist destinations. It is also the water source for the city of San Bernardino and a surrounding agricultural and industrial area.

The program will also fund the construction of 370 kilometers of sewer lines, 48 kilometers of impulsion lines, pumping stations, connections for vulnerable households, and a wastewater treatment plant with nutrient removal, along with plans for industrial restructuring, regulation and control of diffuse pollution sources, and solid waste management.

It will also support efforts to improve the performance of water and sanitation service providers and to strengthen institutional aspects of the Ministry of Public Works and Communications, Ministry of Environment and Sustainable Development, and Sanitary Services Regulatory Authority.

The $154 million IDB loan has a 23-year repayment term, a 6.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).