Leading By Example | A Kenyan Replicable Best Practice in Industrial Water Management

The Kenya Industrial Water Alliance (KIWA) recently organized a peer-2-peer learning exchange visit supported by 2030 WRG and GIZ-IWASP to share a unique best practice.

Red Lands Roses is a medium-sized flower farm producing roses exclusively for export. The company has invested in water-efficient technologies and operational approaches to reduce the volume of new water abstracted each day by recycling nearly all the water that is not either consumed or evaporated. Likewise, the minimal waste water produced is bio-organically treated before being released back into the environment.

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See below a short video story on the visit:

Kenya 2030 WRG Governing Board Endorses New Industrial & Urban Water Projects

The Kenya 2030 Water Resources Group Governing Board unanimously endorsed two project proposals within the industrial and urban water management workstreams aimed at improving reliable data collection of industrial water-use and addressing the challenge of non-revenue water (NRW), respectively. Following several months of bilateral engagements with stakeholders, the proposals outline fresh approaches to two intractable water management challenges: how to incentivize industries to invest in water conservation and efficiency technologies, and how to reduce national non-revenue water rates of up to 45%.

The economic growth targets laid out in Kenya’s Vision 2030 and President Kenyatta’s “The Big Four” agenda take for granted the long-term dependable availability of adequate and sufficient water resources – but this isn’t a given. Industry’s water demand is estimated to increase by 140% by 2030 amid a growing supply and demand gap that is projected to reach 63% in Nairobi by 2035.

Despite the sobering projections, making the business case for industries to invest in water conservation is a challenge for policymakers. Water is often perceived as cheap and its scarcity risks are not well understood. The challenge is complicated further by the lack of reliable data on industrial water-use. The little data that does exist is scattered among various institutions and not accessible at an aggregated level for decision making.

To overcome this, KIWA, in partnership with the Kenya Association of Manufacturers (KAM), the Water Resource Authority, and the Ministry of Industrialization, proposes to develop a browser-based platform to improve reporting, data collection, and benchmarking of industrial water use. By aggregating water utilization across industrial processes leading up to the discharge, the project aims to create more awareness about companies’ own performance with regards to local and international water-use benchmarks and hence be a driver for efficiency; provide a valuable source of information for planning and regulation authorities and water allocation plans; and deliver a sound foundation for evidence-based decision making and policy formulation.

Leveraging technology & innovative financing approaches to reduce urban non-revenue water (NRW)

Despite significant efforts, national NRW levels have stagnated between 42-45% throughout the last 10 years. The high level of physical and commercial water losses costs the country about KES 8 billion annually. Building on the experiences from blended financing and the on-going National Performance-Based Financing (N-PBF) initiative, the urban water management workstream project aims to support utilities in adoption of Performance Based Contracts (PBC) as a new approach to reduce NRW in partnership with private sector.

In a PBC approach, a private company is contracted to carry out a comprehensive program to cut water losses and is paid based on the performance achieved, while the ownership of the system remains in public hands. PBCs have proven to be 68% more effective than in-house NRW reduction programs, and proof-of-concept projects abound in locations ranging from the Bahamas, to Vietnam, to Bangkok, to Brazil.

A new approach with Performance Based Contracts

While PPPs can be applied through the entire water supply value chain ranging from abstraction, treatment and distribution, the PBC approach is being proposed to address NRW for urban water service providers (WSP) in Kenya because of three key reasons: first, reducing NRW offers a “cheaper” way of getting new water supply. Reducing both physical and commercial losses of water already in the distribution network delays the need for developing additional sources by optimizing what’s already treated and made available to consumers in the distribution network. Second, reducing NRW will contribute to the utility’s financial viability by maximizing revenues which support struggling WSPs to eventually climb up the creditworthiness ladder. And third, reducing NRW improves 24/7 reliability in water supply to consumers.

Moreover, PBCs-for-NRW reduction are an effective means of maximizing finance for development by structuring the joint ventures in such a way that the private party finances the NRW reduction investments up-front through own equity or a commercial loan or debt arrangements with local banks. The concept note proposes to identify and support preparation of 3-5 demonstration PBCs for PBC- NRW project design.

Next Steps

The proposals were put before the board during its second bi-annual meeting of 2018, chaired by the Hon. Simon Chelugui and Mr. Richard Fox, Chairman of the Kenya Flower Council and Director Sustainability with Flamingo Horticulture, standing-in for Mr. Vimal Shah. The board approved the projects to proceed according to the plans detailed in the concept notes, and has committed to support the initiatives in mobilizing political champions at national government and county governments levels.

Rewarding Water-Responsible Companies is Key to Success in Addressing Global Water Security

Karin Krchnak

By Karin Krchnak, 2030 WRG Program Manager

Over the past fifteen years, I have seen a rapid evolution in corporate actors in recognizing water risks to their operations. In response, some have taken measures to ensure that all water is returned to its originating watershed while making sure that returned water is as clean or cleaner than it was before. But to keep the momentum going, we need to think about how we can encourage and motivate companies that will push them to collaborate more with governments, other companies, and civil society toward realizing the Sustainable Development Goals (SDGs). Equally as important, we need to bring forward those companies that unfortunately have yet to prioritize water.

The positive feelings that come from rewarding good behavior are natural in humans. In fact, such feelings can do wonders. I see it every day with my own daughter; when she does well and gets recognition, she feels like she wants to, and can, do more.

In 2016, the 2030 Water Resources Group (2030 WRG) and its partners created the Blue Certificate, an initiative that is one of the workstreams of Peru 2030 WRG’s multi-stakeholder platform (MSP). Led by Peru’s National Water Authority (ANA), the program encourages companies in the private sector to assess the water footprint of their processes and become water-responsible companies.

Peru is a beautiful and amazing country with lush mountains and forests. But you do not have to go far out of Lima to see that it is water stressed. In fact, Peru ranks among the top 30 countries that suffer from chronic water stress. Approximately USD45.7 billion in investments are required by 2035 to meet Peru’s water needs. As is the case everywhere in the world, public finances can only do so much, and the private sector can play a transformational role in closing this infrastructure financing gap. It is therefore unsurprising that many governments stood up in 2015—when the SDGs were being adopted in New York City—and said that companies in the private sector are needed if we were to meet the SDGs by 2030.

It makes me so proud that in 2016 the Peruvian government and 2030 WRG co-developed the Blue Certificate program, whereby companies are awarded the Blue Certificate if they fulfill three criteria: (1) develop a Water Footprint Assessment following ISO 14046; (2) commit and accomplish water footprint reductions; and (3) set out and implement a program of shared value with the communities in the watersheds they work in.

I had the honor of joining the recent Award Ceremony in Lima, Peru, on 7th November when Compañía Eléctrica El Platanal S.A., Compañía Minera Coimolache S.A. (Buenaventura Group), Nestlé Perú, and Mexichem Perú were awarded the Blue Certificate. Four additional companies also received recognition for applying for the certification process. Fabiola Munoz Dodero, Peru’s Minister of Environment, spoke at the event, and highlighted the role the program plays in driving action for healthier watersheds in Peru. It is this kind of recognition by governments of the private sector’s role in improving water resources that gives me hope that we can make progress toward the SDGs.

But recognition must fundamentally be about results if we want to ensure that our water resources will, in fact, be better in 2030 in comparison with our current situation. To date, the Blue Certificate has resulted in a reduction of approximately 79 million liters of freshwater use per year and a reduction of approximately 137 million liters of non-treated wastewater discharge. Thirteen companies have already presented their Shared-Value Projects in: (i) efficient domestic water use; (ii) rural irrigation improvement; (iii) wastewater reuse in public spaces; (iv) and promoting a water conservation culture. The projects are expected to reach approximately 9,000 direct beneficiaries and 20,000 indirect beneficiaries. In addition to a focus on results, there needs to be a way for companies to keep active and motivate others. At the 7th November Awards Ceremony, Mexichem—the first company to be awarded the Certificate—renewed their commitment. Through this renewal process, I hope other companies will see that they too can make a difference in making their country more water secure and thereby their own operations more sustainable.

In the past, I have heard people say that there are too many competing initiatives in water. My first thought is often “really?” For a challenge as big and complex as water resources management, it makes sense to welcome the participation of every company—and other stakeholders—that wish to become better stewards of our shared water resources.

There is no silver bullet to solve our water problems. But if we can find a way to harness the passion and energy of everyone and bring together our efforts in true collaboration, we can create meaningful change. In closing, I would like to invite every company that wants to become more water responsible to learn more about what 2030 WRG can do to help them achieve that goal.

More information

Photo credits: COSUDE

Tanzania’s Multi-Sector Forum promotes water-smart infrastructure for a water-secure future

PRESS RELEASE

The Ministry of Water convened over 100 stakeholders in Dar Es Salaam mid-November for the second meeting of the annual Multi-Sectoral Forum for National Water Resources to chart a path towards the development of water-smart infrastructure to support sustainable growth in Tanzania. The forum, which brings together senior leaders from government, business, research institutions, and civil society, is the outcome of sustained collaboration between Tanzania 2030 Water Resources Group (WRG) and the Ministry of Water to bridge the coordination gap between the various authorities engaged in water resources management (WRM). Launched in October 2017, it aims to foster collaboration for the development of a more efficient and sustainable WRM sub-sector and unlock opportunities for expanding business and improving local livelihoods through strengthened engagement with the private sector.

Sufficient and reliable supply of water will be necessary to expand the manufacturing sector, increase hydropower generation and intensify agricultural production in line with the nation’s goal of achieving middle-income status by 2025. Despite having abundant water resources, extreme hydrological variability means that during dry periods demand for water exceeds available supply by 50%. Under a business-as-usual scenario and factoring-in economic growth projections, demand will exceed supply twice over during dry periods come 2035.

Offer tangible infrastructure support

Developing the necessary water infrastructure to expand the amount of land under irrigation, improve industrial water use, and increase hydropower production is a priority, said Eng. Mbogo Futakamba, Chairperson of the National Multi Sectoral Forum on Water Resources Management. There is a “need to spend as much resources to offer communities with tangible infrastructure support as is on capacity building, formation of institutions and other forms of software support that we have thankfully received from our partners” he said.

Over the course of the two days, the government emphasized the benefits of increased private sector participation to accelerate the development of infrastructure projects in the sub-sector and highlighted the Integrated Water Resources Management and Development Plans (IWRMDPs) as the key vehicle to guide policy and investment in infrastructure development to deliver water-security for people, business, and the environment.

Accelerating delivery of projects

To support the financing and delivery of initiatives included the nine basin-level IWRMDPs, four dedicated working groups on IWRMDP implementation, irrigation financing for smallholder farmers, water stewardship standards, and catchment-level dialogue will be established. In addition to coordinating the working groups, Tanzania 2030 WRG will work closely with private sector participants to identify and take advantage of opportunities to play a more active role in accelerating delivery of IWRMDP projects.

Increased access to irrigation solutions

During the event, Tanzania 2030 WRG provided updates on the progress of a flagship Irrigation Financing Initiative that it developed through the national multi-stakeholder partnership. If its full ambition is realized, the initiative will see a substantial increase in smallholder farmer’s access to irrigation solutions. This will be achieved by firstly, identifying and incubating qualifying irrigation projects so that they are ready for financing by the public and private sector; and second, improving stakeholder coordination in smallholder agricultural value chains which are damaged by high transactional costs that ultimately lead to market failure.

Pilot to increase productivity and decrease water abstraction

The project leverages 2030 WRG’s extensive network of public and private stakeholders to identify, prioritize, incubate, and package irrigation financing opportunities that meet the requirements of funding sources from the Tanzania Agricultural Development Bank (TADB) under its Rural Innovation Fund (RIF) program. A planned pilot project will incubate 30 irrigation projects, each targeting 100 farmers, over a three-year period. It is expected that farmers reached would increase their productivity by 30 percent while simultaneously decreasing water abstraction by 50 percent.

Deputy Permanent Secretary for the Ministry of Water Eng. Emmanuel Kalobelo called on attendees to work together to support the realization of the IWRMDPs.

“Projects identified in those Plans will only bear fruit with a joint effort of cross-sectoral collaborations and stakeholders participation” said Kalobelo. Their successful implementation “will affect nations’ plans for transformational development” and should be pursued “without further delay” he said.

Tanzania 2030 WRG has been working with the Ministry of Water on strengthening collaborative approached to water management in Tanzania since 2013. Together, Tanzania 2030 WRG and the ministry have fostered various national and catchment-level water stewardship and agricultural water efficiency initiatives to facilitate access to irrigation financing, promote water stewardship standards, improve catchment governance and restoration, and raise awareness around sustainable water management. Tanzania 2030 WRG looks forward to continued collaboration on the path to achieving water security for all.

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Media contacts:

Natasha Skreslet
2030 WRG Regional Communications Officer Africa
Nairobi, Kenya
nskreslet@worldbank.org

Alida Pham
2030 WRG Global Communications Officer
Washington DC, USA
apham4@worldbank.org

Photo by RAHIM ABAS KIOBYA on Unsplash

Faruque Hassan, Bangladesh 2030 WRG’s Steering Committee member, appointed Honorary Consul General of Greece

News source: Prothom Alo

Mr. Faruque Hassan, a member of Bangladesh 2030 WRG’s Steering Committee, was recently appointed by the Government of Greece as the Honorary Consul General of Greece in Dhaka, Bangladesh.

Mr. Hassan, who is currently the Managing Director of Giant Group, is an iconic figure in Bangladesh’s garment industry. He aspires to make Bangladesh’s readymade-garment (RMG) industry a role model of green industrialization and has played a crucial role in promoting sustainability in the RMG industry in Bangladesh.

As the co-chair of the Steering Committee of Partnership for Cleaner Textile (PaCT)—a joint project of the International Finance Corporate (IFC) and BGMEA—Mr. Hassan has been working to help reduce the water footprint of the textile industry in Bangladesh.

Since the time Mr. Hassan became a member of Bangladesh 2030 WRG’s Steering Committee, he has been a strong supporter of 2030 WRG’s work to improve water resources management in Bangladesh.

Read more here.

Tackling South Africa’s Water Challenges Through Innovative Partnerships

News source: NEPAD Business Foundation

Nick Prize Copenhagen_cropped

If South Africa maintains a “business-as-usual” approach to water resources management, it will face a 17% gap between water demand and supply by 2030. This supply-and-demand gap can damage economic growth and derail efforts to bring clean water and sanitation to its poorest communities.

The 2030 Water Resources Group (2030 WRG)—through South Africa’s Strategic Water Partners Network (SWPN)—has been facilitating collaborative action between South Africa’s Department of Water and Sanitation, the private sector, civil society, and other relevant stakeholders to address their common water challenges.

This innovative approach to addressing water security issues was recognized during the Partnership for Growth (P4G) Summit in Copenhagen, which took place on October 19 and 20, 2018. SWPN was one of the three partnerships that earned a 2018 State-of-the-Art Partnership of the Year Award. Nick Tandi, Africa 2030 WRG’s regional coordinator, accepted the award on behalf of SWPN. During the summit, Mr. Tandi addressed an audience of over 500 delegates hailing from different countries around the world, and spoke specifically about the need for stakeholders in South Africa to co-create solutions for South Africa’s imminent water challenges.

Read SWPN’s news release here.

Innovative PPP Model for Ganga wins World Bank Sustainable Development Award

The World Bank Group’s engagement on the development of an innovative Hybrid Annuity Model won the World Bank’s Sustainable Development Vice President’s Award in June 2018.  The model supports financing and sustainable operations & maintenance (O&M) of wastewater treatment plants in the Ganga basin with private sector participation. The engagement involved collaboration across World Bank, IFC and 2030WRG, taking the model from concept to implementation. Under this initiative, the 2030WRG has played a critical role in changing the mindsets of government leaders towards the role that private sector can play through pioneering PPP transaction models.

For a long time, public sector programs have failed to deliver the required impacts for Ganga rejuvenation.  As a paradigm shift, the government is inviting private sector to deliver performance assurances for municipal wastewater treatment through innovative Public Private Partnership (PPP) mechanisms.

PPP demonstration project

In 2015, the 2030 WRG started collaborating with the Ministry of Water Resources, River Development, and Ganga Rejuvenation (MOWR) in India to develop partnerships with the private sector and civil society for wastewater solutions in the Ganga basin. The 2030 WRG initiated a PPP demonstration project for the cities of Mathura-Vrindavan through multi-stakeholder discussions and pre-feasibility studies to assess the project scope, partnership approaches, and hybrid annuity-based PPP options for the development of sewage treatment and reuse infrastructure. Additionally, it supported stakeholder consultations on circular economy solutions, particularly with the local refinery for reuse of treated wastewater, as well as alignment amongst different levels of government, namely central government, state government and the municipality.

Changing mindsets

These catalytic efforts, supporting a shift in mindset of key government decision-makers towards PPP solutions, along with parallel engagements of the World Bank Group, resulted in the government retaining the IFC in early 2017 as Transaction Advisors for the first three PPPs (Mathura, Varanasi and Haridwar) under the national flagship Clean Ganga program.  The advisory team launched a competitive bidding process with the final funding structure, balancing public and market risks, which resulted in strong market response and multiple bids.  The government signed the first two concession agreements with private sector companies in October 2017, with the third one inked in June 2018.

Under the chosen Hybrid Annuity model*, the government pays 40 percent of the project cost linked to construction milestones. The remaining 60 percent is paid over 15 years as annuities to the private concessionaire along with operation and maintenance expense.  In addition to enhancing project viability for the concessionaire, the performance-linked payments ensure longevity of wastewater assets.

“2030WRG has played a strong catalytic role in unlocking PPPs for wastewater treatment in the Ganga.”
Dr. Amarjit Singh, Ex-Secretary, Ministry of Water Resources, River Development and Ganga Rejuvenation (retired in Dec 2017)

First PPPs in the water sector

As the first PPPs in this sector, these projects represent a significant paradigm shift towards sustainable, PPP-based wastewater treatment business models in India.  Building upon the momentum and the consensus created, the government has sanctioned additional PPP projects in the Ganges basin, leveraging the existing US$1 billion World Bank loan to mobilize private capital. Under its MOU with MOWR, 2030WRG has also supported water accounting frameworks to prioritize water efficiency and wastewater treatment and reuse, triggering a move from a linear to a circular economy.

8,000 million liters untreated wastewater per day

The Ganga basin, which covers more than a quarter of India’s land, is home to 450 million people. Population growth and rapid urbanization have placed unprecedented stress on water resources, leading to seasonal water shortages and water pollution. Estimates suggest that 8,000 million liters per day of untreated wastewater flows directly into the River Ganga.

“The first wave of wastewater PPPs for the Ganga basin exemplify World Bank Group collaboration, building upon World Bank’s overall PPP framework, 2030WRG’s stakeholder engagement process and IFC’s transaction advisory support.”
Junaid Ahmad, Country Director, India, World Bank

 

Glossary of terms

*A hybrid annuity is a type of insurance contract that allows investors to allocate funds to fixed-rate and variable annuity components as part of the same investment vehicle. Most hybrid annuities allow investors to choose how they want to allocate assets.

*An annuity is a financial contract written by an insurance company that provides for a series of guaranteed payments, either for a specific period of time or for the lifetime of one or more individuals.