contents · contents abbreviations 2 foreword 5 introduction 7 impacts 8 institutional efficiency,...

Contents

ABBREVIATIONS 2

FOREWORD 5

INTRODUCTION 7

IMPACTS 8Institutional Efficiency, Operations, and Management 9Privatization 11Socioeconomic Impacts and Poverty Reduction 12Sanitation 13Gender 13Environmental Impacts 13Sustainability 14

LESSONS LEARNED 14

ADB PROPOSES AN INTEGRATED APPROACH 16

EVALUATION STUDIES 18

Improving Life for the Poor through Water Supply and Sanitation 5

Foreword

Water supply and sanita-tion alone accounted for$4 billion, equivalent to5 percent of total lending,as of December 2000. Mostof this assistance hasbeen for the constructionof water supply facilities.

This summary of evaluation stud-ies in the water supply andsanitation sector is the fourthin the Assessing DevelopmentImpact (ADI) Series of the Op-

erations Evaluation Department (OED) ofthe Asian Development Bank (ADB). It pre-sents the major findings, lessons, issues,and conclusions of OED’s recent studiesand reports in the sector.

Water supply and sanitation alone ac-counted for $4 billion, equivalent to 5 per-cent of total lending, as of December 2000.Most of this assistance has been for theconstruction of water source pumping fa-cilities, treatment plants, booster pumps,reservoirs, and/or main and distributionpipelines. There has also been technicalassistance of almost $65 million for prepa-ration of projects and strengthening thelocal agencies that run the water services.

ADB’s water supply and sanitationprojects have been successful in physicalterms. That is to say, they have added tothe supply of much-needed water in Asia,where delivery of water has not been keep-ing pace with demand. Furthermore, theyhave made significant contributions toeconomic development, and in meetingbasic needs, as well as in reducing pov-erty. Overall, the water supply projectshave significantly benefited women andassisted gender equality. But many of theprojects have faced internal difficulties–because of fundamental problems commonthroughout Asian countries’ water indus-tries. The two key problems, which areconnected, are (i) the low prices typicallycharged for water, and (ii) the lack of privateparticipation and competition in the in-dustry. Sanitation has been given lowerpriority than water supply in the countriesbeing assisted. Willingness to pay for pro-

vision of wastewater disposal facilities canbe very low. It might be concluded thatsubsidization of investment in sanitationis to some extent inevitable for piped sew-erage. Another solution is to reduce thedemand for water for sanitation by devis-ing alternative ways for waste disposal,such as on-site removal of solid waste, andpit latrines.

ADB’s new water policy stresses theneed for an integrated water resourcemanagement approach, with interlinkedinvestments in river basins. For example,an integrated approach might combine (i)sealed septic tanks; (ii) educational cam-paigns to raise awareness of the principlesof hygiene; (iii) neighborhood water sup-ply provided by the private sector or acommunity initiative; (iv) more watertightpiping; (v) 24 hour operations, even at lowpressure, to avoid contamination by suc-tion of material into old pipes; (vi) en-hanced monitoring of water quality usingcommunity-based self-monitoring tools;(vii) bottling of modest volumes of checkedwater for drinking; (viii) a river basin ap-proach, with good drainage both to reduceflood peaks during the rainy season andto avoid concentration of wastewater atlimited points during the dry season; and(ix) a well designed discriminatory tariffsystem that would ensure reasonable fi-nancial internal rates of return but with-out penalizing the poor. It is time for ADBto prepare pilot projects in selected de-veloping member countries to demonstratethe integrated approach.

VLADIMIR BOHUN

Director

Operations Evaluation Department


Introduction

Almost 20 percent of the peoplein the world lack access tosafe drinking water; and halfof the world’s population doesnot have adequate sanitation.

Without water, the prospects for economicand social development are seriously im-paired. The lack of clean water under-mines general living conditions, especiallyhealth. Diseases related to water and sani-tation result in considerable suffering, withup to 50 percent of the population of de-veloping countries suffering from them atany given time; and these diseases alsokill about 10 million people annually. Inaddition, scarcity of potable water hindersthe preparation of food and imposes aheavy burden of time and effort on thosewho have to fetch water, mostly women andchildren, who often have to walk severalkilometers to wells. The problems are worstin rural areas, where almost three quar-ters of the world’s poor live.

Two major statements on the world’swater problems have been issued in recentyears. First, the Dublin Principles of 19921

declared that every human has the rightto claim a minimum amount of water tosustain life and meet sanitation needs. Forsurvival, the minimum required is about 5liters a day; and for sanitation, bathing,and cooking the minimum is about 50 li-ters. Second, the World Water Councilstated in 1999 that it desires at least 95percent of human beings to have safe wa-ter and sanitation by 2025.

Water problems are most acute in theAsian region, which contains almost a bil-lion of the world’s poorest people; but Asiahas the lowest per capita availability ofwater of all the continents. It is estimatedthat 850 million people in Asia lack ac-cess to safe drinking water. For example,in Indonesia only 36 percent of the popu-lation had access to proper water supplyin 1998.

Consequently, the Asian DevelopmentBank (ADB) has devoted a large part ofits lending to the water sector. Water sup-ply and sanitation alone, on which thisbooklet focuses, accounted for $4 billion,equivalent to 5 percent of total lending asof December 2000. The main beneficiariesof water supply and sanitation projectshave been People’s Republic of China, In-donesia, Republic of Korea, Malaysia, Pa-kistan, Philippines, and Thailand.Together they accounted for 80 percent ofthe total lending for water supply and sani-tation.

Most of the assistance has been for theconstruction of water supply facilities.Typically these included water sourcepumping facilities, treatment plants,booster pumps, reservoirs, and main anddistribution pipelines. But there has alsobeen technical assistance of almost $65million for preparation of projects and

1 The United Nations International Conference on Water and theEnvironment (Dublin, 1992) concluded with four principles on theworld’s approach to water, which became known as the Dublin Prin-ciples.

Without water, theprospects for economicand social developmentare seriously impaired.The lack of clean waterundermines generalliving conditions,especially health.

8 Assessing Development Impact

strengthening the local agencies that runthe water services. While water supply andsanitation’s share of total ADB lending hasbeen declining in recent years (see graph),lending for health, education, and ruraldevelopment has increased.

But recent reviews have resulted in areassessment of the importance of the sec-tor, and in ADB’s new water policy. 2 TheADB publication Emerging Asia concludedthat water pollution was the most seriousenvironmental problem in the region, andwater was selected as a priority for ac-tion in ADB’s Annual Report 1999.

Impacts

ADB’s water supply and sanita-tion projects have been suc-cessful in physical terms. Thatis to say, they have added tothe supply of much-needed

water in Asia, where delivery of water hasnot been keeping pace with demand. Fur-thermore, they have made significant con-tributions to economic development, andin meeting basic needs, as well as in re-ducing poverty.

But many of the projects have facedinternal difficulties—because of fundamen-tal problems common throughout Asiancountries’ water industries. The two keyproblems, which are connected, are (i) thelow prices typically charged for water, and(ii) the lack of private participation andcompetition in the industry. These commonproblems have been confirmed in a seriesof operations evaluation reports, on whichthis booklet is based. References are givenon p. 18.ADB Lending for Water Supply and Sanitation

2 Water for All: The Water Policy of the Asian Development Bank,October 2000.

500

450

400

350

300

250

200

150

100

50

0

20

18

16

14

12

10

8

6

4

2

01968 1978 1988 1998

US$ million Percent

Annual lending

Share of annual lending

Share of cumulative lending

Trend in cumulative lending

Year


The evaluation reports that were re-viewed end with a capsule conclusion, inwhich the overall performance of eachproject has been assigned to one of threegroups—generally successful, partly suc-cessful, or unsuccessful. The most impor-tant criteria are a reasonably higheconomic internal rate of return (EIRR,see Box 1) and sustainability, i.e., the abil-ity of the project to continue to generatebenefits without having to resort to out-side support.3 Of the water supply andsanitation projects that have been evalu-ated, only about 49 percent have beenclassified as generally successful comparedwith about 56 percent of all projects, andwith 89 percent of power projects. One fun-damental reason for this record is the factthat water supply and sanitation projectsin the past did not have to face the usualdiscipline of economic evaluation. For mostprojects in other sectors, such as roads orenergy, EIRRs usually have to be above 12percent, which means that the economicbenefits of a project had to be projected toexceed the costs before the go-ahead wasgiven. But until 1998 water supply projectswere excused from the obligation of cal-

culating the EIRR during appraisal, be-cause it was assumed that the benefitswere difficult to measure. Older apprais-als relied mainly on financial internalrates of return (FIRRs) to assess the vi-ability of a project.

In 1998, however, new guidelines wereintroduced for the calculation of EIRRs onwater projects. Two main approaches arenow used in the operations evaluations:the benefits are measured either by “will-ingness to pay” or by savings in time thatwould otherwise be incurred in walking towater supplies. When subjected to thesetests, many of the water supply and sani-tation projects have been found lacking.That is to say, although there are economicbenefits, they are not commensurate withthe costs incurred to obtain them. Few ofthe EIRRs have exceeded 12 percent,which is often regarded as a threshold foracceptability.

Institutional Efficiency, Operations,and Management

The institutions running the water supplyindustry are usually 100 percent state-owned. As in almost all countries for mostof the last century, the provision of watersupply has been regarded as a state re-sponsibility. Many of these agencies, how-ever, are performing poorly.

One of the common measures of effi-ciency is what the industry calls eitherunaccounted-for-water (UFW) or nonrev-enue water (NRW).4 UFW can be veryhigh; it is frequently over 30 percent, andwent as high as 60 percent in Manila after

Box 1: Terms Used in Economic andFinancial Analysis

■ The economic internal rate of return(EIRR) of a project measures the neteconomic benefits to the community at-tributable to an investment.

■ The financial internal rate of return (FIRR)measures the net financial revenues tothe investing agency resulting from aproject. The FIRR can be negative de-spite a high EIRR if the prices chargedare too low.

■ “Willingness to pay” means simply whatpeople would be willing to pay, as dis-tinct from the price they actually do pay.This measures the true value of the goodto the buyer. For water supply projects itis measured by the area under the de-mand curve for water, which is equiva-lent to the welfare cost saving plus theconsumer surplus.

Two main approachesare now used in theoperations evaluations:the benefits aremeasured either by“willingness to pay” orby savings in time thatwould otherwise beincurred in walking towater supplies. Whensubjected to these tests,many of the watersupply and sanitationprojects have beenfound lacking.

3 OED recently released new guidelines on project performance auditreports. Projects are now rated on five aspects, which are assigneddifferent weights: relevance, efficacy, efficiency, sustainability, andinstitutional impact. The overall performance is computed to clas-sify the project into one of four groups: highly successful, successful,partly successful, or unsuccessful.

4 Both essentially measure water produced at treatment plants mi-nus water billed. NRW includes both technical (leakages) and non-technical (illegal connections, meter errors, incomplete billings, etc.)losses, while UFW includes only nontechnical losses.


one of the projects. At that level the lossesclearly jeopardize sustainability.

Another measure of efficiency is theoperating ratio, which measures expendi-ture on operation and maintenance as apercentage of revenues. In general, anoperating ratio of about 0.6 is typical ofefficient systems, for example in Singapore.But in most of the projects that were re-viewed, the operating ratio was higher,mainly as a result of low tariffs (see Box2). It is also noteworthy that in some de-veloping member countries, better operat-ing ratios are found in the larger agencies(e.g., in Indonesia). There appear to beeconomies of size that work against thegoal of poverty reduction, since rural wa-ter supply agencies tend to be small.

High operating ratios mean limitedfunds for the water supply agencies. Andthis leads to a downward spiral in perfor-mance. Typical results are■ declining production;■ limited hours of water supply per day

(as low as 2-3 hours in an extreme casein Nepal);

■ poor maintenance; for example, aproject in Manila that was presentedas an investment project funded whatwas in reality deferred maintenance,and still failed;

■ sometimes high staff turnover; and■ long delays in completing the projects,

often several years; the long implemen-tation periods result in severe suppres-sion of demand.ADB has frequently provided technical

assistance to improve operations and fi-nancial discipline, but this has probablyhad only limited success—although it hasproved difficult to identify the specific im-pact of ADB in institutional strengthening.

Privatization

Privatization has proved an effective wayto solve the problems of many industries,

but it is not yet widespread in water sup-ply. Foreign investment in water supplylags well behind that in power or telecom-munications. The main reasons are thefollowing:■ Water tariffs tend to be low, and gov-

ernments are often unwilling to raisethem to levels that will cover costs.

■ Water utilities are more difficult thanmany other industries to open up to theprivate sector because of the large ele-ment of natural monopoly. There is lim-ited scope for competition, which isnecessary to get the best out ofprivatization.

■ The private sector requires returns oncapital that are higher than those ofstate-owned water supply agencies.In these circumstances a gradual,

stepwise approach to privatization may be

Box 2: Reasons for Low FinancialRates of Return

The FIRRs were lower than the EIRRs inalmost all the projects reviewed. In fact,some of the FIRRs were negative. Thereare several reasons for this. Costs are of-ten higher than expected, and water lossesoften account for over 30 percent of pro-duction; but the most important commonproblem is that tariffs are too low. Thisapplies across a wide range of countries.The reasons are:

■ Many of the users have low incomesand may be unwilling to pay for water.

■ Governments are often unwilling to riskunpopularity by raising the price of anessential good.

■ Much of the water supplied, especiallyto poor areas, is distributed via publicwater taps rather than household con-nections. Users of public water tapsusually pay less and waste more.

■ Revenues are further reduced by a vi-cious circle: Because revenues are lim-ited, cash is not available formaintenance; consequently, more wa-ter is lost through leakage, and rev-enues fall even more.

Water utilities are moredifficult than manyother industries to openup to the private sectorbecause of the largeelement of naturalmonopoly. There islimited scope forcompetition, whichis necessary to getthe best out ofprivatization.

adopted.5 At first, public investment wouldcontinue, but with the facilities let on amanagement contract basis or leased outto private operators. As information, con-fidence, and the regulatory environmentimprove, the water supply could progressto a long-term concession.

There has been some progress in theshift to private sector participation. ThePhilippines has let 25-year concessions forwater supply and sewerage in Manila, re-portedly with some success; there have alsobeen partial privatization projects in Ma-laysia (Johor Baru) and Thailand; ADB’sfirst build-operate-transfer water supplyproject was initiated in Chengdu in thePeople’s Republic of China; and in Indo-nesia the government has introduced con-cessions for water treatment anddistribution, service contracts (for meterreading, leakage repairs, and revenuecollection), and later two concessions forwater supply in Jakarta. However, theprojects reviewed in Indonesia predatedthe government’s private sector participa-tion program, and therefore had no spe-cific component or covenant dealing withprivatization. Nevertheless, ADB did helpindirectly by creating more efficient localwater enterprises, which then becamemore attractive to potential private inves-tors. There were also technical assistanceactivities dealing with water pricing andregulatory/sector reforms, which have ac-celerated the restructuring necessary toattract private sector participation.

In addition, the review of lending forintegrated urban infrastructure develop-

ment projects in some countries (e.g., In-donesia) identified other prospects for at-tracting private sector participation.

Nevertheless, significant obstacles mustbe overcome in increasing the efficiencyof the water supply industry. The existingstate agencies are often operationally andfinancially weak, particularly where thefacilities are small and/or in remote ar-eas. But private participation is needed,given the scale of investment required.Another solution discussed in a recentevaluation in Indonesia is a much higherlevel of community involvement in theprojects, which would improve the deliv-ery of all urban services, including watersupply and sanitation.

Socioeconomic Impacts and PovertyReduction

ADB’s overarching objective is povertyreduction. And there can be little doubtthat access to adequate water supply andsanitation is fundamental to this aim, giventhe high incidence of water-related illnessand other consequences of poor water sup-ply mentioned earlier. The evaluation re-ports confirm these gains, but find themdifficult to quantify, as they are not attrib-utable to water alone. Nevertheless, inmany operations evaluation surveys, thebeneficiaries rated “health” as the secondmost important reason, after “conve-nience,” for having a house connection.

Unfortunately, however, it seems pos-sible that the poorer the area, the lowerthe probability of success. Shortfalls inperformance relative to expectations atthe time of appraisal were often more pro-nounced in rural areas or the peripheriesof urban areas. This is a consequence ofthe particularly low willingness to pay andthe (partly related) poor performance ofthe agencies. For example, in Indonesiathe smaller local water and sewerage en-terprises were seen to have weaker finan-

In many operationsevaluation surveys, thebeneficiaries rated“health” as the secondmost important reason,after “convenience,”for having a houseconnection.

5 ADB is in a strong position to assist with the transition fromstate-owned to private operations, having wide inter-industry ex-perience in the area. The requirement would include the setting upof independent regulatory bodies; the development of higher, butprobably discriminatory tariffs (possibly including low prices fora basic minimum requirement); benchmarking of performance; theorganization of international (or local) competitive bidding; andfinancial support for new private projects in an area previouslydominated by the state. The presence of ADB in the list of lenders cangive comfort to commercial banks, which are not yet used to lendingfor this type of project. In urban areas, the private sector could takeover responsibility for investment.


cial positions than the larger ones; and inremote Nepal, a rural water supply projectwas considered to be only partly success-ful. Another weakness of the projects inmore remote areas is that they lack in-dustrial users.

Sanitation

Sanitation has been given lower prioritythan water supply in the countries beingassisted. Willingness to pay for provisionof wastewater disposal facilities can bevery low. In one survey in Malaysia, abouthalf of the respondents said they wereunwilling to pay for waste disposal, andmost of the rest said that they would beprepared to pay only 1-5 percent of theirwater bills, which were already low. Itmight be concluded that subsidization ofinvestment in sanitation is to some extentinevitable for piped sewerage. Anothersolution suggested in some evaluation re-ports, and introduced in newly preparedprojects, is to reduce the demand for wa-ter used for sanitation by employing alter-native methods of waste disposal, such ason-site removal of solid waste, and pit la-trines.

Gender

ADB has placed particular emphasis onthe importance of women’s developmentin recent years. And although these issueswere not made explicit when most of theprojects were initiated, the improvementsto water supply clearly benefited women.Women are usually the main users of wa-ter in the household and the carers of thesick. The ending of the need to fetch wa-ter, which in some, although not all, soci-eties is delegated to the women andchildren, can be a major saving in timeand labor. Also, in a limited way, the pro-vision of piped water helps to enhanceproductivity as well as the status of women

in rural areas. Overall, the water supplyprojects have significantly benefitedwomen and assisted gender equality.

Environmental Impacts

ADB’s water supply projects generatedmostly positive effects on the environment.But there have been a few adverse impacts,especially where limited knowledge led topollution of groundwater, like the arsenicpollution in shallow groundwells inBangladesh.

Women are usually themain users of water inthe household and thecarers of the sick. Theending of the need tofetch water, which insome, although not all,societies is delegated tothe women and children,can be a major savingin time and labor.

Making Steady Progress in Water Supply and Sanitation 13


Pollution is particularlyundesirable in the watersector, because water,unlike electricity, cannotbe created or produced.It can only be collectedor harvested. Pollutiontherefore reduces thefinite volume of supply.In some countries this iscritical.

Pollution is particularly undesirable inthe water sector, because water, unlikeelectricity, cannot be created or produced.It can only be collected or harvested. Pol-lution therefore reduces the finite volumeof supply. In some countries this is criti-cal. The vulnerability of a region is mea-sured by what is known as “water stress.”Water stress is the degree of annual wa-ter use, i.e., water withdrawn from agroundwater source for human consump-tion, as a percentage of total resources inthat basin. For a country it is measured interms of the total stress for all its riverbasins. Stress begins when withdrawals offresh water rise above 10 percent of re-newable resources. Countries have highwater stress when the ratio of water useto supply exceeds 40 percent. Where it ishigh, pollution of the scarce supply under-mines the sustainability of clean wateravailability.

Many of the projects reviewed avoidedthe problem of pollution. But there wereexceptions, including the Philippines Sec-ond Island Provinces Rural Water SupplyProject. The pollution there arose for tworeasons. First, shallow groundwater waspolluted by septic tanks that were installed(independently of the project) too close toshallow wells and hand pumps. Many ofthe tanks did not have sealed bottoms, andthe concrete blocks were porous. The re-sult was that effluent leaked into the shal-low groundwater. Second, at the coastalsites in the same project, excessive extrac-tion from deeper wells changed the bal-ance of fresh water and seawater. Thissucked seawater into the fresh water, turn-ing it brackish and making it too salty forhuman consumption. These developmentsresulted in health problems in the localcommunities. Other problems arise fromsimple ignorance of hygiene. For example,interviewees in Sumatra expressed a pref-erence for rivers rather than toilets for thedisposal of human waste.

More general problems of pollution arecaused by failure to dispose of the waste.The correct solution is to have the sludgethat is accumulated in the septic tanks re-moved and disposed of in centralized facili-ties. This is mandatory in industrializedcountries, but it would be expensive in de-veloping countries. An option would be “drydisposal,” a method that has the advantageof providing compost for agriculture. Forexample, a number of households can pipewaste to a central sealed tank, which wouldprocess it into methane gas for cooking, pluscompost.

These problems call for, first, educationin the principles of hygiene; and, second,“total system” approaches to entire riverbasins—combining water supply and sani-tation, and also drainage, sewerage, andsolid waste management. One such inte-grated system is described at the end ofthis booklet.

Sustainability

The viability of many of the water supplyagencies that received ADB assistance hasbeen limited by low tariff rates, as de-scribed earlier, resulting in low FIRRs, andthe vicious circle of limited funds for main-tenance, followed by higher water losses.In practice, however, the agencies are ableto continue to operate, often with budget-ary support from government funds—jus-tifiable in the sense that the EIRRs aremuch higher than the FIRRs.

LessonsLearnedDespite many years of awareness of theproblems, the water industries of theregion still suffer from deep-rootedweaknesses:

■ Water losses, due especially to leak-ages, remain high.

■ Prices and FIRRs are too low; andwhere prices are low, consumption andwastage are excessive, and the privatesector loses interest. Low tariffs are adeterrent to investment, especially byprivate companies.

■ Tariff collection is poor, partly due toillegal connections and poor meterreading. This leads to a downward spi-ral in performance as a consequenceof shortages of funds for operation andmaintenance.

■ Almost all projects have been subjectto delays.

■ The better off have often benefited morethan the poor. In fact, there appear tobe some fundamental problems in reach-ing the poor. High installation chargesare deterrents to house connections,while water drawn from public tapstends to be wasted. And the water agen-cies operating in rural areas tend to beweaker than those working in more af-

fluent urban areas. Experience hasshown that the water projects in poorareas have tended to be less successfulthan those in richer areas.

ADBProposes anIntegratedApproach

ADB’s water supply projectshave been successful in help-ing to satisfy the growing de-mand for piped water. Theirmain aim was to provide new

capacity to deliver water to consumers;and, in doing so, they have assisted in eco-nomic development, and in meeting basic

Experience has shownthat the water projects inpoor areas have tended tobe less successful thanthose in richer areas.


W: Water of drinking quality at affordable pricesA: Alternative water supply from shallow wellsT: Tap water for various purposes (including recharging shallow wells)E: Environment treatment of human wasteR: River basin oriented approach

WTP: Water treatment plant

needs. They have contributed to povertyreduction and have benefited women andchildren in particular. They have, more-over, caused no significant damage to theenvironment.

But despite these achievements,clearly identifiable problems remain, par-ticularly when water supply is approachedin isolation. ADB’s new water policy canaddress these problems effectively, with an

integrated water resource managementapproach, with interlinked investments inriver basins. For example, an integratedapproach might combine (see illustration):■ sealed septic tanks;■ educational campaigns to raise aware-

ness of the principles of hygiene;■ neighborhood water supply provided by

the private sector or a community ini-tiative;

WATER


■ more watertight piping;■ 24-hour operations, even at low pres-

sure, to avoid contamination by suctionof material into old pipes;

■ enhanced monitoring of water qualityusing community-based self-monitoringtools;

■ bottling of modest volumes of checkedwater for drinking;

■ a river basin approach, with good drain-age both to reduce flood peaks duringthe rainy season and to avoid concen-tration of wastewater at limited pointsduring the dry season; and

■ a well designed discriminatory tariffsystem that would ensure a reasonableFIRR, but without penalizing the poor.One solution would be a stepped tariffwith a “low lifeline tariff” for low con-sumption to cover basic needs, subsi-dized by progressively rising tariffs forthe larger volumes that are used for,say, car washing. In addition, FIRRscould be increased by bottling a lim-ited percentage of the water for drink-ing and selling it below the marketprice, but nevertheless far above thecost of production. The revenues frombottled water could therefore cross-sub-sidize the distribution of essential vol-umes to poor users, and also improveFIRRs. Furthermore, where drinkingwater is available in bottles at afford-able prices, it would be possible to limitdistribution via public taps and alsoavoid the need for connections andmeters for poorer users.It is time for ADB to prepare pilot

projects in selected developing membercountries to demonstrate the integratedapproach.

Next, despite continuing policy dia-logue, many water supply institutions re-main inefficient, and their financialviability remains too weak to be able toimplement such programs. The key chal-lenge is to create incentives in the indus-

try to make it perform efficiently and withmore financial discipline. One option forrural water supply and sanitation wouldbe increased community participation;but the most reliable solution in the urbanareas is probably private participation—via contracting out, concessions, or pri-vate investment and operations. Thetransition to private operations with in-centives and competition, however, islikely to be slower than in other sectors.The industry is therefore caught betweenweak existing state systems and the diffi-culties of bringing in private participation.These are challenging problems in thewater supply and sanitation sector totackle in the years ahead. ADB, with itswide experience in the area, will be ableto make a major contribution.

Evaluation StudiesPPA: INO 22264, 23212, 20104: Three Inte-

grated Urban Infrastructure Develop-ment Projects, November 2000.

IES: INO 99004: Bank Assistance in theWater Supply and Sanitation Sector inIndonesia, September 1999.

PPA: PHI 24028: Second Island ProvincesRural Water Supply Sector Project,December 1999.

PPA: PAK 09007: Hyderabad Water Supplyand Sewerage Project, November 1997.

PPA: NEP 15064: Rural Water Supply Sec-tor Project, December 1997.

PPA: PHI 21222: Manila Water Supply Re-habilitation Project and Second ManilaWater Supply Rehabilitation Project inthe Philippines, April 1997.

IES: MAL 94025: Bank Operations in theWater Supply and Sanitation Sector,December 1994.

IES: THA 91027: Bank Operations in theWater Supply Subsector in Bangkok,February 1992.

It is time for ADB toprepare pilot projects inselected developingmember countries todemonstrate theintegrated approach.


ADB ASSISTANCE TO THE WATER SUPPLY AND SANITATION SECTORBY MEMBER As of March 2001

A. Loans

Member No. of Loans Amount ($ million) Percent

Bangladesh 2 45.40 1.0Bhutan 1 3.30 0.1Cambodia 1 20.00 0.5China, People’s Republic of 7 846.50 19.0Hong Kong, China 2 41.50 0.9Indonesia 9 325.60 7.3Kiribati 1 10.24 0.2Korea, Republic of 18 488.40 11.0Kyrgyz Republic 1 36.00 0.8Lao People’s Democratic Republic 5 58.10 1.3Malaysia 10 219.11 4.9Marshall Islands 1 9.90 0.2Micronesia, Federated States of 1 10.60 0.2Myanmar 4 35.96 0.8Nepal 7 224.00 5.0Pakistan 7 264.50 5.9Papua New Guinea 4 45.54 1.0Philippines 20 772.80 17.4Singapore 3 47.00 1.1Solomon Islands 1 1.65 0.0Sri Lanka 4 164.70 3.7Thailand 8 540.00 12.1Viet Nam 6 239.60 5.4

Total 123 4,450.40 100.0

Continued on page 20

ADB’s OperationsEvaluationDepartment

The Operations Evaluation Department(OED) supports ADB’s vision of a pov-erty-free region by pursuing excellence

in evaluation and ensuring its impartiality,integrity, and independence. OED is respon-sible for administering ADB’s independentoperations evaluation functions, which aimto (i) improve the design and execution ofADB’s future activities in light of the lessonslearned from its operations, and (ii) enableADB to account to its shareholders for theeffectiveness of its development assistanceto its developing member countries.

OED’s mandate has broadened and has be-come considerably more demanding overthe past several years. In addition to its tra-ditional focus on measuring the perfor-mance of completed projects, programs, andtechnical assistance, OED has intensified itswork on (i) preparing in-depth studies ofparticular thematic issues; (ii) evaluating theeffectiveness of ADB’s operations, practices,and procedures; (iii) providing real-time feed-back on ongoing operations; (iv) monitor-ing and reporting on actions taken by ADBand its executing agencies in response toOED recommendations; (v) building evalua-tion capacity within and outside ADB toenhance self-evaluation; and (vi) coordinat-ing closely with multilateral and bilateralagencies on evaluation methodology.


C. Regional Technical Assistance (RETA)

Type of RETA No. of RETAs Amount ($ million) Percent

Training 5 0.61 16.3Conference 3 0.62 16.6Study 2 0.27 7.2Research 1 0.60 16.0Others 4 1.64 43.9

Total 15 3.74 100.0

B. Technical Assistance (TA)

Member No. of TAs Amount ($ million) Percent

Bangladesh 6 2.54 3.4Bhutan 2 0.50 0.7Cambodia 3 1.20 1.6China, People’s Republic of 22 13.84 18.6Cook Islands 2 0.54 0.7Fiji 3 1.55 2.1Indonesia 18 6.23 8.4Kazakhstan 1 0.60 0.8Kiribati 3 1.60 2.2Korea, Republic of 13 1.34 1.8Kyrgyz Republic 2 1.25 1.7Lao People’s Democratic Republic 9 2.63 3.5Malaysia 7 1.42 1.9Marshall Islands 2 0.35 0.5Micronesia, Federated States 2 0.84 1.1Myanmar 6 1.02 1.4Nepal 10 2.72 3.7Pakistan 13 4.54 6.1Papua New Guinea 6 2.65 3.6Philippines 23 10.41 14.0Samoa 1 0.11 0.1Solomon Islands 2 0.17 0.2Sri Lanka 8 3.28 4.4Thailand 22 8.35 11.2Tonga 1 0.10 0.1Viet Nam 8 4.62 6.2

Total 195 74.40 100.0

For more information visit or call the OperationsEvaluation Department, ADB.

Operations Evaluation DepartmentAsian Development Bank6 ADB Avenue, Mandaluyong City0401 Metro Manila, PhilippinesTelephone: 632-632-4100FAX: 632-636-2161

Internet: http://www.adb.org/evaluation

contents · contents abbreviations 2 foreword 5 introduction 7 impacts 8 institutional efficiency,...

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