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11111 SIDE EVENT “TOWARDS SUSTAINABLE WATER TARIFFS IN LATIN AMERICA” THE NATURE CONSERVANCY (TNC) IN COLLABORATION WITH THE ASSOCIATION OF WATER AND SANITATION.

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Presentation on theme: "11111 SIDE EVENT “TOWARDS SUSTAINABLE WATER TARIFFS IN LATIN AMERICA” THE NATURE CONSERVANCY (TNC) IN COLLABORATION WITH THE ASSOCIATION OF WATER AND SANITATION."— Presentation transcript:

1 11111 SIDE EVENT “TOWARDS SUSTAINABLE WATER TARIFFS IN LATIN AMERICA” THE NATURE CONSERVANCY (TNC) IN COLLABORATION WITH THE ASSOCIATION OF WATER AND SANITATION REGULATORY ENTITIES OF THE AMERICAS (ADERASA) “5th WORLD WATER FORUM” FESHANE/FESHANE 4 José SALAZAR President, SUNASS Istambul, TurkeyMarch 19th 2009 SUSTAINABLE DRINKING WATER TARIFFS IN PERU

2 222 COVERAGE OF DRINKING WATER – SANITATION SUPPLY IN PERU PERU 26,8 MMHab 2006 With drinking water service 20,0 MMHab With sanitation service 15,3 MMHab Without drinking water service 6,8 MMHab Without sanitation service 11,5 MMHab MILLENIUM GOALS Goal 7: Ensure environmental sustainability By 2015, reduce by half the proportion of people without sustainable access to safe drinking water NATIONAL AGREEMENT COMMITMENTS GOVERNMENT POLICY Expantion of the coverage of drinking water and sanitation supply. 13 C Improve the drinking water and sanitation infraestructure 21 C

3 33 THE PERUVIAN WATER TREE Governability based in social, environmental and economic benefits: social inclusion, poverty reduction, social peace, public health, cleaner growth, changes in human behavior, better water-allocation, among others … Political view: The government is due to citizens Supply: Conservation of watersheds, forestation, desalination, dams for regulation, re-use of waste waters. Demand: Cultural education, saver equipments, houses eco- efficient, cleaner production, among others. Investment management shock Funds, donations, loans, guarantees, subsides, etc. Enterprises, city council, regions Objectives, policies, tools, actors Private-Public -Partnership, Identification of new opportunities Re-defining governability from water approach

4 44 CHANGING WITH ACCOUNTABILITY IN PERU: WATER FOR EVERYONE INITIATIVE WATER FOR EVERYONE SUSTAINABLE TARIFFS INVESTMENT GRADE POVERTY REDUCTION CLEANER ECONOMIC GROWTH SOCIAL JUSTICE/EQUITY SUSTAINABLE DEVELOPMENT REGIONALREGIONAL SUSTAINABLE DRINKING WATER TARIFFS CHANGING WITH ACCOUNTABILITY DRINKING WATER- SANITATION SECTOR CONSERVATION SECTOR Without drinking water access there is no growth, no social justice, no social peace, no democracy, no governability. TECHNICAL APPROACHPOLITICAL APPROACH WATER FOR EVERYONE

5 5 WATER FOR EVERYONE INITIATIVE: the Peruvian approach WATER FOR EVERYONE PUBLIC POLICIES POSITIVE IMPACTS IN THE COUNTRY DEVEOPMENT SOCIAL PEACE, SOCIAL JUSTICE, DEMOCRACY Health for more Peruvians Poverty reduction and equity Opportunities for poor people Sustainable countryCleaner energy Investment in drinking water-sanitation service universal access Investment in drinking water- sanitation service expansion Sanitation projects that generate jobs for people Sustainable tariffs : watersheds conservation Investment in watershed conservation to improve water regulation Water insure for the clean energy operation, reduce its operation costs and release water for cities in the watershed. Generation of jobs in Lima and other cities, this help to maintain the value of the new infrastructure investment Families included in society, now they are citizen with rights. Less government expenses in health attention related to drinking water and sanitation service access Integration of the water value chain (water generation and waste water treatment). Less costs for water enterprises.

6 6 WATER FOR EVERYONE INITIATIVE: the Peruvian case WATER FOR EVERYONE PUBLIC POLICIES POSITIVE IMPACTS IN THE COUNTRY DEVEOPMENT SOCIAL PEACE, SOCIAL JUSTICE, DEMOCRACY Water conservation, food security Home energy and water savings Cleaner growth Environmental education for the future Tourist capital conservation Ecosystem system compensation or environmental payment scheme Investment in home water saver equipments Investment in cleaner technology for industries (producing with less water) Saving culture Watershed conservation, with participation of tourist enterprises Insure the natural capital “water”, source of biodiversity. Drinking water savings in the industrial sector, that it is reflected in the bill, release industrial cash flow. Drinking water savings that it is reflected in the bill, release flow of the familiar budget and water for other families Water source conservation for the agriculture, energy, industry and city development Generate social consciousness about the water resource economic importance in the country, new generation of responsible citizens

7 7 SUSTAINABLE TARIFFS: The Peruvian setting  To achieve the millennium water goals, it is required US$ 5 billions to cope with increasing population demand.  To sustain the industrial growth it is required US$ 5 billions (mining, oil, agriculture, industry, etc.) in water generation and eco-efficient technology.  Public drinking water utility companies require investments and eco-efficient management, through public-private partnerships.  Reducing the drinking water gap: The water sources are declining (because of climate change, pollution) while the drinking water demand is increasing (cities-industrial expansion).  A new approach: sustainable drinking water tariffs are integrating the water value chain under a watershed approach with economic driven tariff-modeling. 7

8 Water companies value-creation from environmental management ProblemsConsequences for the water utility company 1Reduction of water sources due to climate change (ice melting, etc.). A new budget for a new water catch (or a new source of water) + the old water catch infrastructure was not repaid to the creditors yet + conflict with other water users (e.g. hydropower). 2Increase of sediments due to river basin erosion (upstream) The regulation-dam life-span is reduced + the storage capacity is reduced + expenses for cleaning the dam + more OPEX. 3Increase of floods due to river basin deforestation Increased expenses to deal with natural disasters (prevention, mitigation) require money + the disruption of services have public-health impact. 4PollutionReducing the life-span of pipelines + more OPEX. 8 From a cost benefit analysis, it makes business sense to invest in water source regulation rather than mitigation.

9 99 NEW APPROACH: Linking the watershed regulator (country-side) with the drinking water regulator (urban) Drinking water provision is a monopoly, so the regulator has become the interface among government bodies and the private sector, through PPP. $ WATERSHED APPROACH ECOSYSTEMIC APPROACH SUSTAINABLE DRINKING WATER TARIFF GOVERNMENT Public goods MARKET private goods REGULATOR REGULATORREGULATOR REGULATORREGULATOR

10 10 INTEGRATING THE COUNTRY-SIDE WITH THE CITY : Introducing the drinking water value chain within the water bill WATER GENERATION COLLECTION WATER TREATMENT STORAGE DISTRIBUTION DRAINAGE WASTE WATER TREATMENT ECOSYSTEMIC SERVICE DRINKING WATER-SANITATION UTILITY COMPANY WATER SOURCES CONSERVATION Search of new water sources Investment in desalination, regulation dams, etc. Investment in conservation in highlands. Investment in waste water treatment plants Search and development of new technologies Re-use of waste water SUSTAINABLE DRINKING WATER TARIFFS

11 11 SUSTAINABLE DRINKING WATER TARIFF: Moyobamba- Water Utility Company, SM-region Deforestation Higher treatment cost High tariffs Low quality COFFEE CROPS Drinking Water Sanitation Utility Company MOYOBAMBA Erosion SEDIMENTS Reduction of storage capacity WATERSHED THE CITY COUNTRY- SIDE SUSTAINABLE TARIFFS INFORMAL AGRICULTURE Pollution NATURAL AREAS REGULATOR WATER REGULATOR NATURAL AREA Tariffs increase depends on people trust on its drinking water-sanitation utility company, which is reflected in the willingness to pay (WTP) for a better service and for restoring the linkages between the country side and the city.

12 12 Financial tools for PES in Peru: trust funds created by the regulator ITEMDETAIL FUNDINGThe regulator allocate a % in the water bill, paid by the user. The % does not depend on the conservation project pipeline because it is a seed capital fund to be complemented with other funding sources. TYPEThe trust deals only with water-tariff incomes. It can not receive private funds nor subsidize other sectors (e.g., mining, hydropower, agro). COLLECTIONDirectly by the bank, avoiding the water-company intermediation. DISBURSEMENTOutput based, for reducing the bad management-project risk. EARMARKED FOR PROJECTS Each project has to have a positive impact on water regulation, based on hydro-models. Focus on ecological infrastructure not on expenses. MONITORING Outcome indicators verifiable. LEVERAGE The tariff is a mandatory funding, which is complemented with government funding (coming from city councils, regional-national government) and private donors (companies, NGOs, others). INVERSAN It is the national water-sanitation fund created by law. Under its umbrella, private and public donors can work together but not mixed (e.g., avoiding the scrambled eggs scheme).

13 13 Institutional partnerships for moving forward with sustainable drinking water tariffs PROCESS IN PERU DEVELOPEMENT AGENCIES ECLAC / UNITED NATIONS GREEN NGO WATER REGULATORS OF SOUTH AMERICA PERUVIAN GOVERNMENT MINISTERIO DEL AMBIENTE PRIVATE SECTOR Water, mining, hidroelectric, agroindustrial enterprises, banks, industries, within others players in the watershed. PERUVIAN WATER DONORS Outcomes of Lima Meeting (June 2008): Strategic partnership, discussion of the strategy and action plan for developing Sustainable Water Tariffs in Latin America.

14 14 VALUE CREATION FOR SUSTAINABLE DRINKING WATER TARIFFS POLITICAL APPROACH changing with accountability Before: = 4 (market economy). Tomorrow : = 10 for the creation of social and environmental value, has a positive impact on governability. SYNERGY

15 15 LESSONS TO BE LEARNED  Regional potential: Peru has created a sustainable development highway based on drinking water access.  Replicable model a regional scale. Each country has to move forward according to its institutional and legal setting.  Political will for changing with accountability (“water for everyone programme”). The government is due to the citizen.  Without drinking water access: No democracy, No social justice, No social peace, No equity, No economic growth, No governability.  Innovation: Partnership between drinking water regulator (city) and natural areas regulator (rural areas) creates long- lasting value for many stakeholders.  New generation of leaders are implementing the change.  New management eco-tools are created and tested.  Harmonization among authorities (ANA, SUNASS, MINAM) and actions TODAY, while the theoretical discussion continues. 15

16 16 José SALAZAR President, SUNASS Istambul, Turkey March 19 th, 2009 SIDE EVENT “TOWARDS SUSTAINABLE WATER TARIFFS IN LATIN AMERICA” THE NATURE CONSERVANCY (TNC) IN COLLABORATION WITH THE ASSOCIATION OF WATER AND SANITATION REGULATORY ENTITIES OF THE AMERICAS (ADERASA) “5th WORLD WATER FORUM” FESHANE/FESHANE 4 SUSTAINABLE DRINKING WATER TARIFFS IN PERU


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