Pick the low-hanging fruit first -- nothing succeeds like success!

1. Pick the low-hanging fruit first -- nothing succeeds like success!

2. Keep your eye on the ball --Don’t let the best become the enemy of the good!

3. Reform is dialectic, not mechanical: OED “progress take place more through ‘unbalanced’ development than comprehensive planning approaches….”

4. “Good water management is good politics” Reforms must provide returns for the politicians who are willing to make the changes….

5. = + Political order = river + dyke

6. Thus Three Gorges is as much about political symbolism as it is about flood protection and hydropower…

7. A typical rich country 1950 1975 2000 2025 2000 2000 2025 A typical poor country A typical middle-income country The overriding lesson:Be realistic, patient and persistent

8. The principles are known…. But there are no quick fixes…

9. Good ideas are often presented as silver bullets.. .. They then “fail”, and the danger is that the baby is then thrown out with the bathwater…

10. The challenge for the Bank on water resource management • Principles (Dublin/1993 WRMPP) matter and must be used as a filter to judge actions • Progress is sequential, slow and determined by broader political economy Therefore: “PRINCIPLED PRAGMATISM” as the form of Bank engagement

11. The Story Line • Water management and development are vital for growth and poverty reduction • The method for developing this Strategy • Better water management is essential • Most developing countries also need investment in priority water infrastructure • Tailoring the strategy to country circumstances • Summary and Next Steps

12. Many developing countries have high climatic variability …

13. And likely to become still more variable with climate change

14. And thus rising toll of droughts and floods.. With dramatic human and economic impacts..

15. Indian Minister of Finance “Every budget is a gamble on the monsoon”

16. While OECD countries have much of the major infrastructure needed (and sometimes too much!) the situation is radically different in most developing countries…

17. Endowments of water infrastructure….. US and Australia have ~5000 m3/cap; China has 2,400; India has 130 m3/cap Ethiopia has 50 m3/cap

18. Similar comparisons in major river basins in arid areas…. • Colorado, Murray/Darling… • have 900 days of water storage capacity • India and Pakistan… • have about 30 days of water storage capacity

19. Europe North America Asia (excl China) South America China Africa

20. Major conclusions: • For developing countries: • Improved management of resources and infrastructure are vital • Appropriate stocks of infrastructure are equally important at many levels……

21. And what about the financing of this infrastructure?

22. Bank’s borrowers are increasingly having to contemplate major inter-basin and sometimes inter-national transfer schemes

23. The proposed Red-Dead pipeline… • Red-Dead Pipeline • Purposes: • To restore the Dead Sea • To generation power • To desalinate water for cities Cost? ~$3 billion

24. EAST ASIA South-North Transfer Options Haihe Basin Yangtse Basin Cost? ~$40 billion

25. LATIN AMERICA Cost? ~$3 billion

26. AFRICA Lesotho Highlands Water Project Southern Africa Water Poor TVTS OVTS LHWP Water Rich Cost? ~$4 billion

27. In many developing countries the water crisis is a financing crisis…

28. Where is the money going to come from? • And what is the role of the World Bank ?

29. Total World Bank lending • Main messages: • Amounts are very large relative to official aid • Flows are volatile • Concentrated in middle income countries • Only about 5% to “high risk” hydro and 5% to water supply

30. The public sector will necessarily play the major role in much financing of water infrastructure… Public Private • Run of the river hydro • Thermal Power generation • Multipurpose dams • Solid Waste • Bulk water supply • Gas pipelines • Sewerage/Sanitation • Rural electrification • Passenger trains • Bus Transport • Metro • Rural water • Roads • Telecoms Rail Freights • Rural roads • Urban water supply

31. The last decade has largely been a “lost decade” • The combined effect of: • A naïve view that “the private sector will take care of infrastructure” and • Antagonism to infrastructure among advocacy NGOs, and support for those views by a number of developed country owners of the Bank….

32. … in recent years there have been major questions among the Bank’s owners about Bank financing of major infrastructure….. With Sardar Sarovar on the Narmada the poster case….

34. The sharp decline in the World Bank’s involvement in large dam construction in the developing world

35. Irrigation lending has declined sharply

36. As has lending for water and sanitation…

37. And most dramatically for hydropower 1200 1000 800 IBRD/IDA & Grant Comm Amt 600 400 200 0 90-92 93-95 96-98 99-01 02-04

38. View of the Bank’s borrowers? • Pride in improved performance in environmental and social quality of water infrastructure in recent decades

39. How performance has changed over time

40. What we heard from borrowers…. • Strong commitment to continued improvement • See complex infrastructure as a major area of World Bank comparative advantage..

41. The World Bank’s recent “Global Poll of 1000 opinion-makers” Message: Infrastructure is critical and the Bank is perceived as having a comparative advantage in infrastructure…

42. Most Important Sustainable Development Issue as judged by World Leaders 2004

43. And how has the World Bank been seen to respond to this?

44. Middle-income countries “with choices” find the Bank’s business processes rigid and unrealistic • Governor Tasso Jeressati of Ceara, Brazil: • “When I build a 10 meter high dam in the middle of the semi-arid, the Bank requires due diligence as though I were building Itaipu!”

45. A bigger problem for poor countries “without choices”

46. The Bank has become unreliable and risk averse: • “a risk multiplier rather than a risk mitigator”… • “Borrowers with choices” (the middle income countries) have largely disengaged from the Bank on these issues because they don’t believe we are realistic and practical • This leaves those with least capacity to meet standards that developed countries have never met, that developing countries with capacity cannot and will not meet WIDESPREAD PERCEPTION IN DEVELOPING COUNTRIES:

47. Feb 2003: New World Bank Water Strategy

48. Summary of main messages • Water management and development are essential for growth and poverty reduction – therefore critical for the Bank to be engaged in “all quadrants” • What is needed in developing countries is management AND development • The main management challenge is not vision but “principled pragmatism” • On development – the Bank needs to assist countries develop and maintain appropriate stocks of well-functioning infrastructure • The Bank has a comparative advantage in dealing with these complex issues, and there is strong demand for Bank engagement • The Bank will follow become a predictable, transparent partner which will re-engage with “high-risk/high-reward” infrastructure

49. Reaction of different groups to the proposed approach to Bank re-engagement with major water infrastructure?

50. Some forms of expression on these issues are more imaginative than others….