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Three for the price of two, 30% off, special offer – the importance of capital efficiency

Bill Kingdom's picture



In our daily lives we are bombarded by offers to get more for less.  And we respond accordingly as we strive to balance our household budgets. This saves us a few dollars here and there, perhaps hundreds of dollars on a big-ticket item, and we get to feel good about ourselves and our financial skills.

But when it comes to the millions of dollars invested in infrastructure around the world, do we have the same attitude towards buying more for less? This is a question that is difficult to answer.

As practitioners we often focus our attention on operational efficiency. What were this year’s costs compared to last year’s?  Is efficiency increasing or decreasing? There are suites of tools to give technical comfort to back up such assessments – from simple ratio analyses through to more sophisticated approaches such as econometric modeling and Data Envelope Analysis.

But what about capital efficiency? The assessment is not so simple as, in most cases, this is a prospective assessment – that is to say, a comparison of what was spent compared to a hypothetical of what might have been spent. It is rare to have a side by side comparison. Yet in the water sector, annualized capital costs can be equal to the annual operating costs. So, when we focus on operational efficiency, we are in fact only looking at half the story.

At the same time, we talk about mobilizing more finance to fill the gap between historic investment levels and projected investment needs. Yes, there will always be a financing gap in all countries around the world. However, whilst thinking about bridging that financing gap (“Maximizing Finance for Development” comes to mind), shouldn’t we also be thinking about how to reduce the financing gap by being more efficient in our use of capital?

Celebrating a clean beach, clean sheet in Durres

David Michaud's picture
Credit: Albanian National Tourism Agency
Summer after summer, hundreds of thousands of urban dwellers flock from Tirana, Albania’s capital, and beyond to the nearby city of Durres, on the Adriatic coast, to enjoy its beaches and laid-back atmosphere.

Over the years though, many grew increasingly concerned as the smell of raw sewer became more and more prevalent, and the beach was listed as an environmental hotspot. Last summer though, the smell was gone, and the Durres beach quality was upgraded to “good” status, to the delight of both beachgoers and local residents. A happy end to a long and complex story, as you’ll see.

Picture this – what it takes to create a calendar every year on water issues

Martin Craig Hall's picture


It’s often said that a picture paints a thousand words. If that’s true then, 18 years since its inception, the Water Cartoon Calendar has produced enough material for an epic series of novels. A fixture of our water and sanitation products every year since 2000, it features cartoons combining humor with serious messages about important issues.
 
The calendar began at the start of this millennium under the auspices of the Water and Sanitation Program (WSP). Last year, ten partner agencies and the World Bank’s Water Global Practice launched the new Global Water Security & Sanitation Partnership (GWSP), an integrated platform for working alongside countries as they rise to their next water challenge. The GWSP builds on the foundations of the WSP as well as its other predecessor, the Water Partnership Program (WPP), and the calendar continues this legacy.

Solving the water crisis in Beirut

Saroj Kumar Jha's picture
Patrick Abi Salloum / World Bank

In many ways, Beirut is the capital of resilience and generosity. Over the centuries, the city has embraced, and continues to embrace, civilizations and cultures of diverse backgrounds and colors, and today, it stands as resilient as ever in the face of subsequent protracted crises in its neighborhood. 

Despite all of their natural advantages, though, residents of Beirut are sorely lacking in one basic ingredient of life – water. Beirut’s roads attest to this reality, as they often get clogged with water tanks, whose roaring engines provide a backdrop to the sounds of the city. Lebanon’s severe water shortage affects 1.6 million people in Beirut and the Mount Lebanon area, but especially the poorest neighborhoods of the city where 460,000 residents living on less than $4 a day have to make do with only a few hours of drinking water each day. In some parts of the city, that can be as low as three hours a day in summertime, the peak of the crisis. 

Why do people live in flood-prone areas? Reflections from Dar es Salaam

Alexandra Panman's picture
Dar es Salaam’s growing population is increasingly at risk of flooding. Photo: Chris Morgan/World Bank

The Msimbazi River makes a volatile neighbor. With depressing regularity, the river breaks its banks and inundates houses built on its low-lying floodplains. During the 2014 rains, 600 houses were flooded in the riverine Kigogo Ward alone; thirteen of which were completely destroyed. Yet, as the floodwaters recede, people return.

“What is wrong with these people?” people often say. “They should not be there; they know it’s not safe!” Citizens, journalists, and policymakers, express disbelief that people relocated to safer parts of the city return to their former, flood-prone neighborhoods. So why do they do it?

Ghana’s challenges: Widening regional inequality and natural resource depreciation

Tomomi Tanaka's picture

The impact of growth on poverty in Ghana has slowed substantially over the years. Ghana’s largest fall in poverty, 2% a year, was experienced during 1991–1998. Between 2012 and 2016, the poverty rate declined by only 0.2% per year. The growth elasticity of poverty (percentage reduction in poverty for each percentage point in economic growth) has decreased, from −1.18 between 1992 and 1998 to −0.07 between 2012 and 2016. This may reflect the declining contribution of agriculture, in which the majority of poor households are engaged, the limited job opportunities for higher productivity in the services sector, and a largely capital-intensive industrial development.

A WASH response to Yemen’s cholera outbreak

Naif Abu-Lohom's picture

Editor's Note: 
The global water crisis is a crisis of too much, too polluted and too little. At the World Bank, our job is to find and implement solutions to tackle this crisis. In the “Water Solutions” blog series, you’ll read about World Bank-supported projects in different countries which demonstrated solutions to the world’s most pressing water issues, to fulfill our vision for a water-secure world.


 
Since 2015, when armed conflict began, Yemen's water and sanitation infrastructure has suffered significant damages. Direct attacks on the infrastructure have been exacerbated by the lack of energy (electricity and fuel), spare parts, operation and maintenance funds, and three years of unpaid salaries of civil servant staff. This confluence of factors has undermined the robustness of water and sanitation systems in Yemen and contributed to the worst cholera outbreak in history. According to the World Health Organization, as of November 11, 2018, 1,300,495 suspected cholera cases and 2,609 deaths have been reported.
 
The upsurge of cholera cases is attributed to several risk factors, including a disruption of basic water and sanitation services, contaminated water sources in affected communities, an inability to treat sewage due to non-functional wastewater treatment plants, and the absence of garbage collection systems. More than 70 percent of the population (22 million people) requires assistance to access safe drinking water and sanitation. Basic water supply, sanitation and hygiene (WASH) infrastructure is on the verge of total collapse, and many internally displaced persons (IDPs) are at a particularly high risk, due to overcrowded shelters and settlements with inadequate water and sanitation facilities.

A bird’s eye view: supervising water infrastructure works with drones

Pierre Francois-Xavier Boulenger's picture
Aerial drones have zoomed their way into almost every aspect of the modern world, and the development sector is no exception. In Kinshasa, the capital of the Democratic Republic of Congo, drones have become an indispensable part of a major water project supported by the World Bank.

Time to adapt to changing climate: what does it mean for water?

Greg Browder's picture

As COP24 in Poland reaches its mid-point, it is becoming distressingly obvious that reaching the Paris Agreement goal of limiting global warming to well below 2 degrees Centigrade will be extremely challenging.  Recognizing that millions of people across the world are already facing the severe consequences of more extreme weather events, the World Bank Group’s newly announced plan on climate financing for 2021-2025 includes a significant boost for adaptation.


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