News Release No:2005/061/SAR

Contacts:

In Islamabad: Shahzad Sharjeel (051) 2279641

Email: ssharjeel@worldbank.org

In Washington: Benjamin Crow (202) 473-5105

Email: bcrow@worldbank.org

            ISLAMABAD, September 19, 2005—The World Bank today shared its Country Assistance Strategy (CAS) for Pakistan’s water sector at a workshop.  The “near final draft” of the report, entitled “Pakistan’s Water Economy Running Dry”, takes a serious and candid look at the sobering as well as hopeful facts, and suggests four pillars that in World Bank’s opinion should form the basis of its assistance to Pakistan’s water sector from 2006 to 2010. 

“The modern history of water development and management in Pakistan is one in which the glass can be seen as more than half full”, said John Briscoe, lead author of the report and World Bank’s Senior Water Advisor for South Asia Region.  “But, as this Report will show, the glass can also be viewed as much more than half empty too.  Once again the survival of a modern and growing Pakistan is threatened by water.”

The “sobering facts” referred to in the Water CAS include:

• Water Stress; 
• No additional water to be injected into the system;
• High risk water environment; Large-scale degradation of the resource base;
• Groundwater is now being over-exploited in many areas, and groundwater quality is deteriorating;
• Flooding and drainage problems are going to get worse, especially in the lower Indus Basin;
• Climate change;
• Inadequate knowledge base;
• Much of the water infrastructure is in poor repair;
• The quality of project implementation is poor;
• The system is not financially sustainable;
• Pakistan has to invest, and invest soon, in costly and contentious new large dams;
• Poor governance and low trust;
• Water productivity is low  

              However, this does not mean that there is no glimmer of hope on Pakistan’s water horizon.  Some of the hopeful facts include: 

·         A well-established tradition and system of water entitlements;

·         Pakistan has largely avoided the trap of subsidizing electricity for groundwater pumping;

·         There is much scope for increasing water productivity; and

·         High returns to previous major water infrastructure

              Pakistan has overcome major water challenges in the past.  Pakistan has a remarkable history of successfully confronting major water challenges.  It has enormous human capacity to confront this next round of challenges, which can be pooled in four major categories;

·         Challenge 1 is to develop a world-class knowledge-based capacity for adaptive resource management and service delivery;

·         Challenge 2 is a financially feasible approach to maintaining and modernizing existing infrastructure and building needed new water infrastructure;

·         Challenge 3 is to put in place a modern set institutional framework, with the key task being the development and application of  instruments which will motivate sustainable, flexible and productive use of water; and

·         Challenge 4 is to trace a principled and pragmatic path for implementing this reform agenda over the coming decades

Pakistan is fortunate, too, in that it is not the first country in the world to face this daunting set of challenges. The experiences of other countries suggest that there are a set of “rules for reformers” in undertaking such a transition.  These rules include:

• Initiate reform where there is a powerful need and demonstrated demand for change;
• Involve those affected, and address their concerns with effective, understandable information;
• If everything is a priority, nothing is a priority -- develop a prioritized, sequenced list of reforms;
• Pick the low-hanging fruit first – nothing succeeds like success;
• Keep your eye on the ball – don’t let the best become the enemy of the good;
• Be aware that there are no silver bullets;
• Don’t throw the baby out with the bathwater;
• Treat reform as a dialectic, not mechanical, process;
• Understand that all water is local and each place is different – one size will not fit all;
• Be patient, persistent and pragmatic;
• Ensure that reforms provide returns to politicians who are willing to make changes; and
• Recognize that water, unlike electricity or telecommunications, is “far from simple commodity…”

             An important objective of the report is help define the water elements of the framework (Country Assistance Strategy) which will govern the relationships between the World Bank and Pakistan for the period 2006-2010.  The Federal and Provincial governments and the management of the World Bank all agree that water management is one of the central development challenges facing Pakistan, and that it is an area where the Bank has a long history and a strong comparative advantage.   This would mean that water-related lending for Pakistan would increase about 8 fold from the 2000-2004 period, and account for about $1 billion in the coming four years.  World Bank support would be based on “principled pragmatism” recognizing that reforms and investments must proceed in parallel.  Broadly speaking, Bank assistance would support four pillars of the water sector, as described below:

Pillar 1: Asset Development and Management:

Pakistan has a large endowment (with an estimated replacement value of US$300 billion) of water resources infrastructure, most owned and managed by the provinces, and much now quite old.  Bank-funded projects will make major investments in rehabilitation of some critical assets (including barrages) and will help put in place Asset Management Plans which will set priorities for asset rehabilitation and maintenance, make explicit the requirements for public and user financing, and develop efficient institutional arrangements for rehabilitating and maintaining this infrastructure. The Bank will also continue its support for developing and implementing a drainage and salt management strategy and investments – including small dams, minor irrigation and groundwater management – in barani areas outside of the Indus Basin.

One major issue that is likely to emerge in the period covered by this CAS is possible Bank engagement in developing and co-financing major new Indus Basin storage and hydro, if and when the Government makes such a decision.  The Government is actively addressing some of the major issues which have been raised about a new dam on the Indus, including transparent implementation of the 1991 Water Accord and environmental flows into the delta.   In discussions with the Government it has been agreed that the Bank could be involved, with the usual provisions that any such project met the Bank’s normal technical, economic, social and environmental standards, and that these investments were part of an overall program which included institutional reforms and investments at federal, provincial, canal command and farm levels to ensure better use of water. 

Pillar 2:  Water Resources Management

The Bank expects to support development of capacity at the provincial and federal levels for improving water and associated natural resource management capacity.   For surface water supplies a major emphasis will be building on Pakistan’s platform of defined water entitlements, making the administration of these more transparent and accountable, from the inter-provincial to the user levels.  For groundwater the Bank will support the development of the government’s capacity for knowledge generation, policy generation and management.  A major emphasis will need to be on developing a better understanding of salinity and formulation of salt management strategies.  For both surface and groundwater there will be an emphasis on incorporating environmental issues (including water quality, wetlands and environmental flows).  An important element of Bank support will be training of a new generation of multi-disciplinary water resources specialists and support for multi-disciplinary centers of excellence for water resources natural and social sciences.  

Pillar 3:  Service Delivery

The Bank expects to be heavily engaged in provincial- and city-level efforts to improve the quality, efficiency and accountability with which water supply, sanitation and irrigation services are delivered.   The Bank will emphasize the development of frameworks which encourage the entry of new players (including community organizations, and the small- and large-scale private sector), the use of contracts which specify the rights and obligations of providers and users and benchmarking for all water services.  The Bank will emphasize the modernization of infrastructure modernization – including canal re-modeling and the use of measuring devices – which are integral for moving to a more flexible, accountable, transparent and monitorable service delivery paradigm.

Pillar 4:  On-farm Productivity.

The Bank will continue to invest in the on-farm services (land leveling, watercourse lining, introduction of new technologies) which are essential for agricultural diversification and for improving the amount of crop, income and jobs produced per drop of water.  The Bank anticipates providing such support through its various lending instruments, including budgetary support for policies and prior actions that address key issues (Development Policy Lending) as well as through specific investment lending for infrastructure and institutional reforms.  Finally, given the major scientific, policy and implementation challenges ahead, the Bank, with partial support from the Government of the Netherlands, will mount a major program for providing analytic and technical support to the federal and provincial governments.