Saturday, September 20, 2008

The Aquafund: IDB Takes Steps to Improve Sanitation in Latin America

Sources: Inter-American Development Bank, "IDB Offers Grants to Jump-Start Water and Sanitation Projects"; IRC International Water and Sanitation Center, "Caribbean: Addressing Sanitation Issues Critical"

On Friday, September 19th, the Inter-American Development Bank ("IDB") approved the creation of the Aquafund, a project that will disburse funds to Latin American governments that wish to improve their water and sanitation services. The Aquafund is designed in large part to help finance the early stages of water and sanitation projects. Once it starts to operate, the Aquafund will be able to quickly disburse funds to elligible governments. By 2011, IDB officials hope to reach out to 100 Latin American cities and 3000 Latin American rural communities.

The Aquafund will be a multi-faceted financing project. Starting now, the Aquafund will be able to disburse up to $15 million in grants drawn from the IDB's internal sources. In 2009, the IDB will also begin to match contributions that other countries make to water and sanitation projects. IDB officials predict that they will be able to provide up to $35 million in grants over the 2009 calendar year through the Aquafund. The project will also provide flexibility to governments who seek support from more than one lender, since it will allow governments who have secured Aquafund loans to seek additional loans from private parties.

Loans received through the Aquafund project will go to different components of water and sanitation projects. For example, governments will be able to use funds to finance preliminary studies to see whether certain projects will be feasible and to provide tecnical training to the individuals participating in the projects. Governments will also be able to use funds to strengthen or change the laws and regulations that deal with sanitation and water systems.

IDB officials hope that the creation of Aquafund will help Latin American governments develop innovative approaches to water and sanitation. Officials also plan to use the Aquafund as an educational tool. Starting in 2009, the Aquafund will finance pilot projects that Latin American governments will be able to use as models. One of the pilot projects that is in the works will focus on improving Latin American households' connection to local sanitation networks. Overall, the goal of the Aquafund will be to turn what have thus far been "proposals" for improved water and sanitation systems into sustainable projects that will improve Latin Americans' quality of life.

Discussion questions:

1- Many areas of Latin America, particularly rural and urban areas of the Caribbean, do not have access to proper sanitation and water systems. Why has it been so difficult for this region to establish sustainable sanitation systems? Will the new Aquafund project address the obstacles that these governments have had, or should the IDB consider other ways of addressing the water and sanitation issue?

2- Some would argue that improving the health of the Latin American population is a necessary first step to addressing the multiple issues that the region faces. Will developing the water and sanitation systems in Latin America help spur progress in the region's political, economic, and social systems?

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