Upload
lekiet
View
224
Download
5
Embed Size (px)
Citation preview
Pakistan Development ForumIslamabad
April 27 2007
Pakistan: a hydraulic Pakistan: a hydraulic nationnation
Facing the 21Facing the 21stst CenturyCentury
a modern ‘hydraulic’ nation built on over 5000 years of ‘hydraulic civilization’
Facing the hydraulic challenges of the 21st Century
Facing the 21st Century: story line
1. 20th Century water challenges faced
2. Facing 21st Century water challenges
3. Track 1: Managing the Indus system for multiple stakeholders & objectives
4. Track 2: Developing the right Indus infrastructure well
20th Century water challenges faced
1. 1960 Indus Waters Treaty: national entitlement settled2. Instruments & institutions: management & development3. Coping infrastructure: link canals, storage, hydropower4. Waterlogging and salinity reversed5. 1991 Accord: Interprovincial entitlements settled, IRSA
established6. Major recent ‘points of light’ e.g.
1. Irrigation reform: irrigation management transfer2. Ghazi-Brotha: hydropower, social & environmental focus3. Mangla: good practice resettlement4. Draft National Water Policy:
India
PakistanIn
dus
Jhelum
Ravi
Sutlej
Beas
Chenab
Nepal
ChinaAfghanistan
The Indus Water Canal System at Partition in 1947
India
Pakistan
The Indus - The Treaty (1960)
India
Pakistan
The Indus - The Treaty (1960)
INSTRUMENTS ORGANIZATIONSEntitlement to Indus System Water: The IWT:• which enabled Pakistan to focus on development of its resources• which defined processes for conflict resolution
The Indus Commission
Allocation of budget for creation of major water and drainage infrastructure and new entitlements
Finance Ministry, WAPDA, (SCARP)
Entitlement for the Provinces: Eventually the Water Accord which defined (much less precisely than the IWT) who had what and how conflicts would be resolved.
IRSA (lately)
Entitlements to Canal Water: Warabandi – Provided irrigators with predictable entitlements
The Irrigation Departments and eventually farmers organizations
Entitlements to “unlimited” groundwater –implicit encouragement of “use whatever you can”
SCARP then mostly the private sector -- Pump providers and farmers
INSTRUMENTS ORGANIZATIONSEntitlement to Indus System Water: The IWT:• which enabled Pakistan to focus on development of its resources• which defined processes for conflict resolution
The Indus Commission
Allocation of budget for creation of major water and drainage infrastructure and new entitlements
Finance Ministry, WAPDA, (SCARP)
Entitlement for the Provinces:Eventually the Water Accord which defined who had what and how conflicts would be resolved.
Indus River System Authority
Entitlements to Canal Water: Warabandi – Provided irrigators with predictable entitlements
The Irrigation Departments and eventually farmers organizations
Entitlements to “unlimited” groundwater– implicit encouragement of “use whatever you can”
SCARP then mostly the private sector -- Pump providers and farmers
Key diversion infrastructure HAD to be developed in a decade; essential storage followed – high returns
0
500
1000
1500
2000
2500
3000
3500
Predicted Actual
mill
ion
1998
US
$
Power Irrigation
benefits from Tarbela 1975-1998
Source: WCD 2000
Arabian Sea
Link canals
The ‘twin menaces’: water logging & salinity
01234567
mill
ion
acre
s
0
20
40
60
80
100
% w
ater
logg
ed
Punjab Sindh Punjab Sindh
Source: Bhutta and Smedema 2005
Under control -in Punjab
Water entitlements
• The Water Accord of 1991: distribution between provinces: major achievement
• Distribution between canal commands within provinces...
• Transparency…
Punjab & Sindh: Irrigation Management Transfer: Empowerment of Farmer Organizations
A revolution: large & small
Facing the 21st Century: story line
1. 20th Century water challenges faced
2. Emerging 21st Century water challenges
3. Track 1: Managing the Indus system for multiple stakeholders & purposes
4. Track 2: Developing the right Indus infrastructure well
Emerging 21st Century water challenges
1. Seriously threatened water resource base1. Growing water stress – & little ‘spare’ water2. Degrading resource base: water quality, wetlands, the delta 3. Unmanaged & overexploited groundwater4. Climate change impacts
2. Deteriorating infrastructure assets: 1. Lost reservoir storage, reducing regulation capacity 2. barrages, canals3. Low productivity4. Financially unsustainable
3. Increased management needs yet, weakened capacity1. Slide from technocracy to complacency: ‘unpopulated addresses’2. loss of capacity = inadequate management of system3. Low water productivity
Source: www.UNEP.orgPakistan: one of the worlds most water-stressed countries
Declining per capita availability of water in Pakistan (cubic meters per capita per year)
Source: Amir 2005
Water scarcityWater scarcity
Water stressWater stress
Figure S6: Annual Canal Diversions and “Escapages to the Sea”
Source:: World Bank 2003
0
50
100
150
200
Flow
s (M
AF)
1975-76 1979-80 1983-84 1987-88 1991-92 1995-96 1999-00 2003-04Years
Figure 1 Annual Canal Diversion and Escapages to the Sea
Existing Canal Diversion Escapages to the Sea
Wetlands at risk Source: Zachariah 2005
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1960
1965
1970
1975
1980
1985
1990
1995
2000
2003
Tube
wel
ls (t
hous
ands
)
The growth in use of (unregulated) tubewells
Source: Steenbergen and Gohar 2005
Salinity management remains a major challenge
0%
20%
40%
60%
80%
100%
NWFP Punjab Sindh Baloch. Pakistan
Salt free Slightly saline Moderately saline Strongly saline
Environmental degradation
The Indus Delta
Growing cities
Figure 25:Accumulated effects of deglaciation on Indus river flows over ten decades
Rees et al 2005
Decade
Decade
Canals & barrages losing their design capacity...
0
5
10
15
20
25
1975 1985 1995 2005 2015 2025
Years
Stor
age
in M
AF
18 MAF
15.6 MAF
10. 4 MAF
7 MAF from Basha
2.9 MAF from Manglaraising
15.6 MAF from Tarbela Mangla and Chasma
12.8 MAF of current capacity
Increasing sedimentation and reducing storage capacitySource: World Bank 2003
0
5
10
15
20
25
0 10 20 30 40
Storage MAF
Storage-additional yield curve for the Indus
Source: Lieftinck, 1968
Current Current storage storage levellevel
Additional yield in MAF/year
Effect of loss of storage?
Low productivity: wheat yields per unit of land and waterSource: Ahmad 2005
012345678
Imperial Valley, USA Bhakra, India Punjab, Pakistan
Tons
/ha
0
0.2
0.4
0.6
0.8
1
1.2
kg/c
ubic
met
er
Tons/ha yield kg/m3
Facing the 21st Century: story line
1. 20th Century water challenges faced
2. Emerging 21st Century water challenges
3. Track 1: Managing the Indus system for multiple stakeholders & purposes
4. Track 2: Developing the right Indus infrastructure well
Track 1: Managing the Indus system for multiple stakeholders & objectives
1. Modern institutional framework for multipurpose system management
2. State of the art, multidisciplinary capacity and tools
3. Interprovincial trust in institutions, entitlements, equity
4. Sound finances within a business environment
High level Pakistani officials visit to Australia 9/06: at the National Water Commission
Australia institutional model: A. Guiding Principles
• Institutional elements:– Separation of
policy, service provision & regulation– Corporatization of water service provision
– Devolution of responsibility to lowest possible level
Regulator
Water entitlement
holder
Service provider
Entit
lem
ent r
egist
er
Operating licence
Supply contract
Australia Model: B. Strong Institutions at all levels:
• At Federal/National level: (National Water Commission)
• At the River basin Level (Murray Darling Basin Comm.)
• At State level– Government responsible for
policy and regulation function– Corporate bodies provide bulk
water service delivery
• At Irrigation district (or canal command) level– Corporate service providers
(public & private)
UsersUsers
Replace-ment
Interest
EfficientO & M
Financial Requirements
Who pays
TaxpayersTaxpayers
Australia model
Excess man-power
O & M
Replace-ment
Interest TaxpayersTaxpayers
TaxpayersTaxpayers
TaxpayersTaxpayers
UsersUsers
UsersUsers
No oneNo one
Current model
Financial Requirements
Who pays
Build/Neglect/Rebuild modelBuild/Neglect/Rebuild model
Facing the 21st Century: story line
1. 20th Century water challenges faced
2. Emerging 21st Century water challenges
3. Track 1: Managing the Indus system for multiple stakeholders & purposes
4. Track 2: Developing the right Indus infrastructure well
Track 2: Developing the right Indus infrastructure well
1. Coordinated system management 1. Surface and groundwater conjunctive use2. Expanded power generation3. Optimized storage operation for irrigation, power
generation, flood mitigation4. Sediment management5. Environmental flows
2. Benefit sharing1. Interprovincial mechanisms2. Community level mechanisms (beyond LA and R&R)
3. Financing major investments
Proposed dam sites on the Indus
1. Managing storage & sediment on the Indus
15
5
10Long Term Storage with Sediment Management
Long Term Storage Depletetion
Tarbela on line
Diamer Basha on line
Tarbela Flushing
DB Flushing
2000 2050 2100
0%10%20%30%40%50%60%70%80%90%
100%
0 1000 2000 3000 4000
Economically viable potential GWh/year
AfricaAfrica
North North AmericaAmerica
IndiaIndia
EuropeEuropeJapanJapan
ChinaChina
The development of economically-feasible hydropower potential in Pakistan in international context
South South AmericaAmerica
PAKISTANPAKISTAN
Source: World Bank 2003
2. Power generation in an “Indus Cascade”
River Flow
Ghazi Barotha
Diamer Basha
ROR3Tarbela
ROR1ROR2
8000-9000 MW max.??Head
Historical Investments
Kuznets Curve & adaptive investment
Low
environmental & social costs
Low
High
Adaptive Investment
No investment
Income Highincomes/benefits
New TechnologyEtc….
Good GovernancePublic Participation
Water & Water & Responsible Responsible
GrowthGrowth
Benefit SharingFlexible Design
Irrigated AgricultureFloodmngmt.
WatershedManagement
RegionalTransmissionSystem
LocalCommunityInfrastructure
HydrometSystem
Hydropower
From Single Output …
Growth PoleInvestments
to Multiple Interests
Energy for growth
Fisheries & aquatic ecosystems
Benefit sharing
• framework to maximize & distribute benefits across stakeholders
• Consider early in project conceptualization & design
• Involve stakeholders as potential beneficiaries • Improve methodologies & data to quantify
benefits• Ensure adequate institutions, policies &
capacity to realize benefits
REGIONAL LEVELIrrigationElectricityNavigation
LOCAL LEVELPublic healthElectrificationFisheriesMicro-projectsAgro-forestryDrinking water
Senegal River Basin Benefit-SharingJointly-owned infrastructure
Asset Holding Company
Operating Company
Provincial Govts. Municipalities
Management contract or concession
shareholders
bulk buyers (discos)
customers
Regulator
Consider institutional options to build trust & share benefits
Columbia Basin Benefit-Sharing
REGIONAL BENEFITSFlood managementHydropowerEnvironmental assets
LOCAL/NATIONAL BENEFITS“Micro projects”Environmental assetsHydropowerCapacity buildingColumbia Basin Trust
Affected people as shareholders
Hydro project finance: lessons from recent experience
• Tension between (short-term) financial viability and long-term economic benefit
– Question of how to finance non-revenue earning aspects of the project.
• Many financing instruments – both public and private - can be used across the full range of financing models (public/private distinction is blurred). – But lack of replicability of models from one
project to another– RISK is major issue for private sector
• Time taken to organise finance should not be underestimated
• For all financiers – project must meet international standards of sustainability
Gap between economics and finance
If there is a gap between economic and financial viability it can only be filled by:
– Introducing public subsidy in one form or another; and/or
– Restructuring the project to separate out the financially viable elements and secure a revenue stream.
Private finance is averse to risk
• The boundaries between private and public finance are not clear cut – private finance is not solely associated
with private development
• Private sector remains averse to risk – loading risk onto the private sector is
expensive and may derail a project
• Because of higher risk, Private sector is particularly averse to large/ multipurpose water projects – range of financing instruments needed– guarantees can reduce risk perception
• Private finance requires a secure revenue stream and an implementing agency in which it has confidence
Financing takes time to arrange
• Nam Theun 2 – cost $1.25 billion: 18 months to arrange – Large range of
players involved including two countries – but experience not atypical.
Other lessons –• International Financing Institutions offer a wide range of financing
instruments to suit most project structures, and can leverage other funds.
• In almost all projects the Public sector has large role to play in early preparation - and must play it well with good quality studies and analysis
• Exchange rate fluctuations remain a particular concern. This can be managed to some extent by using local currency funding wherever possible
• In some cases export credits can be an important source of debt financing, although the scope is limited for most water projects.
• Refinancing after a project is complete is relatively easy and can result in improved terms as the project then has an operational record and an existing revenue stream.
Conclusions: some thoughts from the World Bank
• Need for investment in management & reform
• Real appetite for Indus management reform
• Many & growing ‘points of light’
• Need for development partners to work together
PakistanPakistan’’s s Water Water
Economy: Economy: Running DryRunning Dry
19951995
Track 1: Indus Basin Managementsome early recommendations
• Strengthen Federal role by adoption of a National Reform Agenda to build trust, equity, capacity & efficiency
• Establish Indus Team in Ministry of Water & Power: expert foundation for reform agenda
• Enhance reform capacity & implementation in provinces
Track 2: Indus Basin Developmentsome early recommendations
Major new infrastructure must be economically sound & technically/ socially/ environmentally ‘do-able’, AND:
• Justification clear for all stakeholders• Planned as Indus system asset restoration & expansion, in
conjunctive operation with existing infrastructure, • Planned in context of climate change • Fiscal space grows without distorting other priorities• Environmental & social issues & consultation fully integrated
into decision making• “Giant projects”: financing very difficult, need blend of
multiple sources, confidence of all parties• Timeframe must be realistic: no short cuts
Indus21Managing a great river in 21st Century: growing demand & climate change
From the high Karkoram
Through a desert
To its delta & the Arabian Sea
Thank you!