IV.3 Assessment of Water Supply Options
Scoping Paper - Terms of Reference

1.0 BACKGROUND

1.1 Changing context and main issues

Although, municipal and industrial (M&I) water supply forms a relatively minor part of multipurpose dam development projects in terms of overall volume of water stored, the high priority given to water supply and high value of M&I water can form a significant element of a project’s benefit stream. In addition to the provision of bulk water, other related functions of dams include augmentation of low flows and improvements in river water quality in areas of high pollution or salinity.

The challenge for provision of water supplies in developing countries in the future is significant. World Bank estimates indicate that currently more than a billion people do not have access to an adequate supply of water and of those that do, access is often limited in time or quality. Significant population growth compounded by urban migration will intensify the situation. For example, the combined population of ten Asian cities which now exceed 8 billion people each, is projected to increase from 108 million to 175 million by 2020. Such an increase coupled with the low level of coverage in many developing countries will provide significant pressure for more storage in the future. Superimposed on the population increase is the higher rate of per capita consumption experienced as incomes increase, for example per capita M&I consumption in South Korea is more than five times that of Thailand. In many cases, expansion of groundwater sources has met increasing demands although the lowering of water tables raising questions of sustainability.

Efforts to address meet the burgeoning demand in developing countries have begun to focus on reducing losses and improving service delivery through greater accountability, but still there is a large proportion of urban poor who do not have access to piped services and who rely on vendors that charge considerably higher prices for water. The proportion of the income of such groups pay for water is significantly greater than for other consumers which raises a fundamental question of equity. In rural communities, a considerable part of women’s day is spent travelling to acquire water. Whereas local availability of water is a major concern in many developing countries, water quality is a more pressing concern in more affluent societies, with increasing higher standards. Improvements in quality is the focus of major investment programs.

The assumptions inherent in projections of future demand are an essential, but often subjective aspect of the process. Assessments of the pace of development and population increase, including effects of urban migration are fundamental starting points. Secondly, the level of development and its impact on per capita consumption have a major impact on demand, and thirdly, the success of demand and loss management programs is difficult to quantify.

In terms of introducing economic instruments to modify behaviour, considerable variability exists in tariff policy and its effect on consumption and demand. Allowing unrestricted market forces to dictate the price of water invites concerns on social grounds and contradicts the principle of water as a basic human right. Regulation of the industry and the introduction of lower rates for initial consumption to cover basic human needs and sliding scales of charges for higher rates of consumption are therefore being been introduced in many countries. Management of water supply has long been the responsibility of government run utilities, with little accountability and severe restrictions on investment resulting in low quality coverage and poor service. Recent moves into private sector management promise a new level of service provision, reduction in leakage and unaccounted for water, and a commitment to more efficiency. The extent to which service coverage under such systems will be widened to satisfy the needs of the urban poor is yet to be seen.

Inefficiencies of utilities in developing countries are now a major element of policy reform of the financing agencies in their support of new investments. Inadequate cost recovery of recurrent costs of water supply in developing countries is commonplace, leading to cyclical deterioration of infrastructure and service. Privatisation may be one option to increase accountability and service, but other approaches have also been implemented under prevailing management structures.

As pressure on existing sources of water intensifies, the search for alternatives also heightens. In addition to changes in policy framework, institutional and financing arrangements, attention is focussing on options such as desalination, water conserving technology, re-use, recycling, rainwater harvesting and information programs to raise awareness of the problems.

1.2 World Water Council Vision

Before focusing on the specific issues of options assessment for water supply as it relates to dam projects, it is necessary to examine a related initiative in the sector. In response to the intensifying concerns over water, the Fourth Global Forum of the Water Supply and Sanitation Collaborative Council (WSSCC) held in Manila in November 1997 endorsed a program to prepare a Vision for water supply and sanitation for the 21^st century (VISION 21). Since then, the process of developing VISION 21 has been integrated into the wider "Vision for Water, Life and the Environment’ being prepared under the auspices of the World Water Council and which is scheduled to be presented to the Ministerial Water Forum in the Hague in March 2000. The expectations of VISION 21 are to ‘put an end, through shared efforts, to the backlog in universal access to water supply and sanitation, while recognising the needs of all water stakeholders’(van Damme and Charterjee, 1999).

The exercise is intended to raise awareness and mobilise commitment to take action, accelerate collaborative actions to the goal of ensuing safe water and sanitation, and aims to initiate a participatory, people centred, people empowering process. VISION 21 will be prepared through three main activities. Firstly a social mobilisation process has been initiated to build from a series of local consultations to provide local visions by the end of May 1999 that are then synthesised into national, regional visions and finally a global vision through a series of meetings by October 1999. Twenty countries have embarked on this process. Secondly, a working group of more than 30 scientists, implementers and managers will prepare specific inputs and guidance on issues such as political commitment and support, integrated water, health and the environment, institutional issues, an economic, financial and technological framework, and international co-operation. The output of this Knowledge Synthesis Team will be available in May 1999 and will reflect what has and what has not worked and why. Thirdly, a number of international water associations, utilities and civil society groups will propose their visions for the future of water supply and sanitation which will be available in May 1999. The VISION 21 report is scheduled to be completed in December 1999 prior to presentation at the Hague consultation.

Given the considerable efforts directed towards VISION 21, the extent of consultations and inputs from professionals, there is considerable benefit in developing linkages with that process.

As discussed above, a significant amount of information from VISION 21 activities is scheduled to be available by the end of May 1999. At the same time, there are specific issues related to the planning of dam projects that need more focus than will be possible in the general VISION 21 process. A two stage approach is therefore proposed for this thematic review. Firstly, in parallel with VISION 21, examples of good practice for a range of policy, institutional, and technological options will be examined and assessed in relation to their role in future water resources development and dams in particular. The output of this stage will be also of value as an additional submission into the VISION 21 exercise. On completion of this assessment and after reviewing the findings of the VISION 21 interim outputs, the review will prepare recommendations for including assessment of options as part of the planning process, making clear the conditions within which such options would be appropriate.

Specific options to be covered under the thematic review as they might influence the planning of reservoir storage projects include:

• demand-side management including the effect of; pricing and governance aspects of M&I service delivery, the influence of loss reduction and other efficiency improvements, and conservation measures
• the importance of information dissemination to the reduction of consumption and measures to raise awareness and overcome indifference
• supply-side options including the effectiveness of conjunctive use of surface and groundwater resources, waste treatment and recycling in reducing surface water storage requirements, the scope for intermediate technologies such as rainwater harvesting and localised supplies, water leasing and marketing, dry year water banks, and desalinisation
• alternatives to providing additional storage capacity for improving water quality such as more effective pollution controls
• methods and assumptions for demand projection, particularly in transition economies moving from a low-income agricultural base to a middle or high-income industrial base.
• the decision making process related to demand and supply side management options including the influence of private sector financing, mechanisms to improve implementation
• description of the enabling conditions necessary for the transfer of good practice

Specific linkages will be developed with case studies that have a water supply function. Currently this effects the Glomma-Laagen and Volga. Recent major changes in policy and regulatory framework in South Africa, home of the Orange River Pilot Project will provide significant illustrations of demand reduction measures. Linkages with other dams in the cross check survey will be developed as appropriate

Primary linkages will be developed with other thematic reviews relevant to the planning cycle of water supply options including II.2 International Trends in Project Financing (related to procedures for assessing alternatives when dealing with private sector financing which may be tied to specific approaches); V.1 Planning approaches (how to incorporate options assessment); V.3 River basins institutional frameworks and management options (how to prioritise and integrate planning between sectors and improve water quality); and V.5 Consultation and decision making (procedures to facilitate community based options). Linkages need to be developed with the four other thematic reviews in group IV in terms of policies and procedures for options assessment,

The output of the study will be linked to two of the wider outputs of WCD, namely (i) the framework of options assessment and decision making by providing a more quantitative assessment of the effect and significance of options to be considered and examples of good practice, and (ii) to the criteria, guidelines and standards encompassing specific principles and policies to assess alternatives for the initial stages of water resources planning prior to a decision being taken on a dam project and options to be considered during the project cycle regarding the scope and operation of the project.

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