LATIN AMERICA INVESTMENT FACILITY (LAIF)
Contribution Request nr B1 to be presented by written procedure of the Operational Board in April 2012
Beneficiary Country / Colombia
Lead Finance Institution / Agence Française de Développement (AFD)
Other co-financier(s) / Latin American Development Bank (CAF)
Type of Contribution / TA and Studies
Amount requested (€) / 4.5 M€
Eligible Sector / Environmental protection
Integrated water resources management
Contribution to climate change mitigation/adaptation [1] / Rio Markers / Mitigation [2] / Adaptation [3]
0 / x / □
1 / □ / x
2 / □ / □
LAIF decision sought / Final Approval / Provisional Approval[4] / X
A. GENERAL PROJECT INFORMATION
I. Project description
(for projects for which contribution to climate change mitigation and /or adaption is a significant or principal objective, related aspects should be detailed in section III)
a) Title of the Operation: / Integrated water resources management (IWRM) in Colombia
b) Promoter / Beneficiary:
(name, status, activity, etc.) / Promoter: Agence Française de Développement (AFD)
Beneficiary: Republic of Colombia
c) Geographical coverage: / Colombia
d) Total cost: / Project components / EUR €/ML equivalent / Amount in Project Currency / Currency
Implementation of the IWRM sector policy and monitoring plan / 137.8
Studies and technical assistance / 4.7
Total project cost / 142.5
e) Project objectives:
Indicate their relation to
EU objectives / The project aims to enhance the development of the policy for integrated management of water resources (IWRM) in Colombia and particularly to accompany the implementation of its hydrologic plan on the horizon 2014. The main objective is to support the implementation of a sector framework favourable for financing investment projects in the water sector.
Specific objectives are:
- ensuring that the river watersheds selected for carrying out the actions have been prioritized
- provide to the autonomous environmental authorities (CAR) the technical and financial means of their policy (for example invoicing of royalties);
- Integrate risk management in the development planning for river watersheds;
- Ensure the implementation of participatory management of the river watersheds through watershed committees;
- Equip the Institute for Hydrology, Meteorology and Environmental Studies (IDEAM) with effective monitoring tools for resources in the priority areas.
The project will contribute to the protection of the environment (improvement of the quality of water resources) and improve the availability of water supply to the population (quantity) which will reduce water related conflicts among the local population.
f) Project description :
Activities, expected outcome, link to related projects, etc.
In this section, other related project features should be presented such as assessing the possible cross-border impact as well as the expected development impact and demonstrating beneficiary's ownership of the project (e.g. in line with domestic strategy, etc.). / Colombia is endowed with abundant water, but poorly divided. Lack of availability of this resource near agglomerations is compounded by its poor quality which leads to important tensions generating conflicts amongst water users.
The concerted usage of water based on a shared diagnosis by river watershed (ie IWRM) is partly included in the regulation text since 1993, however it is not operational. Indeed, the authorities in charge of implementing the project have implemented only a few management plans on river watersheds, often in non priority areas and the majority of times without articulation with the municipalities and departments in charge of a large part of the investments.
Since a few years the Colombian Government has undertaken a reform which basis is the IWRM policy. It was finally approved by all water stakeholders and the Government in 2010. Its implementation is the object of this project.
The project consists of 3 components:
(i)  Budget support policy for IWRM
(ii)  Monitoring the implementation of the IWRM policy through key indicators,
(iii)  Technical cooperation.
1. Budget support policy for IWRM:
The Ministry of Environment is in charge of defining the IWRM management policy. It shall establish the hydrological plan for the short-term to horizon 2014 in coordination with the National Planning Department (DNP) and after having negotiated with the representatives of the institutions and the water users. Thirty three environmental authorities (CAR) are in charge of the implementation of this plan, and the Institute for Hydrology, Meteorology and Environmental Studies (IDEAM) is in charge of monitoring the quality and quantity of water.
Municipalities are responsible for the management of water and sanitation public services, the definition of floodable zones and the treatment of domestic waste on their territory. Their action plans should be coherent with those established by the CAR.

IWRM management policy, approved by Colombia in 2010, is based on the principle of the management of resources according to 5 macro river watersheds represented on the map: The watershed of Magdalena and Cauca river (pink) includes 70% of the population in the country. Other macro watersheds are the Caribbean (orange), the river watershed of the Amazonas cross-bordering with Brazil (dark green), the Orinoco shared with Venezuela (clear green), and finally the Pacific (blue).
The first stage of the policy foresees to provide the guidelines for the organization of IWRM by hydrographical watersheds. The priority is the implementation of IWRM, which will be monitored by the Ministry of Environment, in the priority river watersheds located in the macro hydrographical watershed of Magdalena and Cauca rivers.
Major policy objectives are:
Objective 1: Supply - preserving ecosystems depending on water resources;
Objective 2: Demand – characterise, quantify and optimise water demand
Objective 3: Quality - improve the quality of the water;
Objective 4: Risks: integrating risk management in the IWRM system;
Objective 5: Institutional strengthening: improve the articulation between institutional actors and give them the means to fulfil its mission;
Objective 6: Governance: involve all stakeholders in the governance
The complete policy, adopted in 2010, requires for each objective actions planned not only at the level of the Ministry of the Environment but also at local environmental authorities level (CAR), and, in each case, detailed objectives and monitoring indicators.
The Hydrological Plan at short term focuses particularly on the priority of river watersheds and the organization by major river watershed, but also focuses on the improvement of the monitoring system of flows and quality of water managed by the Institute for Hydrology, Meteorology and Environmental Studies (IDEAM), updating of the inventory of withdrawals and sewage disposal in the priority watersheds for collecting fees. Finally the participative management contains awareness raising and the establishment of river watershed committees with a component of conflict management.
The budget support from the project will be used to implement the IWRM policy. The State plays a major role in the effective implementation of this policy. The amounts of the budget allocated to the water sector each year are the following:
Year Min of Envt Transfers Others Total
2009 32M€ 423M€ 157M€ 612 M€
2010 69M€ 467M€ 85 M€ 421 M€
2011 24M€ 478M€ 151 M€ 653 M€
2012 37M€ 509M€ 323 M€ 869 M€
The State foresees an increase of 'Other investments' for 2012 in order to implement its IWRM management policy.
2. Monitoring of the implementation of the IWRM policy through the key indicators.
In order to allow donors to accompany the implementation of this policy for 4 years, as well as ensuring that the priority objectives are well pursued, the Ministry of Environment and the National Planning Department (DNP) are compromised to provide each year a report on the implementation of the policy, including a selection of pertinent indicators for each environmental authority:
- Number of priority river watersheds identified,
- Number of priority river watersheds with a watershed committee,
- % of water users to regularise on the priority river watersheds,
- Number of water watersheds that have implemented the tools for conflict management,
- % of the priority river watersheds that have implemented an integrated management plan including risk management.
The dissemination and follow-up of this table among CARs should also allow to create emulation between these organisations.
Moreover, the progress status in the development of a national system for the measurement of water quality (IDEAM) will be transmitted annually, and as they are approved, the updated decrees concerning water management as well as the hydrological plan at short term related to the political horizon 2014.
3. Technical cooperation and pilot project
Under the impetus of the AFD and the Agence de l’Eau Adour-Garonne, a technical cooperation was initiated. A first, a 2 year technical assistance financed by the Adour-Garonne Agency (200000€) has been entrusted for 2012 to the International Office for Water, and will focus on four topics: (i) the governance of water agencies, the separation between the political role of the water watershed Committee and the executive and technical role of the water agency; (ii) the practical implementation of the recovery of the fee (weight of pollution, the inventory of withdrawals and sewage disposals, etc.) and the exercise of a water police; (iii) the extension of the network of water resource measurement and management of information among all institutions (meta data); (iv) the support to draft a strategic management plan for the macro watershed of Magdalena and Cauca rivers. This support will consist in sending experts to Colombia and organizing visits of Colombian authorities to France.
The contribution of the Latin America Investment Facility (LAIF) is necessary to scale up the technical assistance on these topics and to implement a pilot project that will be a reference for implementation of IWRM.
g) Expect impacts on climate change mitigation[5] and/or adaptation[6] / The project contributes to the adaptation to climate change, through the regulation of the water flow of watercourses and the reduction of inequalities in water resources allocation throughout the territory.
II. Macroeconomic and sector parameters
These parameters are intended to set out the environment in which the project will be implemented.
These should be outlined here only to the extent they are relevant for the LAIF support justification. This part should also include an ex-ante assessment of market conditions, subsidiarity aspects and potential crowding out of other sources of financing. / With a population of 46 million inhabitants, Colombia is a country with a highly urbanised territory, rich in natural resources thanks to the wide variety of geographical environments: Pacific coast, Caribbean sea, the Andes chain, the high-altitude ecosystems of "páramos”, “ the Amazonian forest, Guajira desert and in the plains of Llanos.
The rate of access to drinking water was 99% in urban areas and 73% of the rural and improves steadily since 1990. This very good rate of increased access is however masked by the important discontinuities of water supply throughout the day. Concerning the rate of access to sanitation, this is rather low, with 81% coverage in urban areas and only 55% in rural areas.
Water resources are abundant throughout the territory with more than 46 000 m3/yr/inhabitant (An area is considered to be arid beneath 1 000 m3/yr/inhabitant), but remain uneven. The quality of this resource, in particular surface water, is strongly degraded by domestic and industrial pollution generated by the major cities The water sewage tax used is low and is around 30%.
The institutional organisation in the water and sanitation sector in Colombia has been marked by the 1991 Constitution, which adopted two structural guidances: (i) Decentralisation brought by a desire to establish a local democracy so as to appease the endemic violence in the country, and (ii) the display of the inalienable rights, the right to a healthy environment: out of the 370 articles of the Colombian Constitution, 78 deal with environment.
The law 99 of year 1993, which defines the public sector organisation responsible for the management and preservation of the environment and renewable natural resources, and established the National System for the Environment (SINA) constituting the role of the Ministry of Environment as prescriber and regulator and 33 self-governing Corporaciónes Autonomas Regionales (CAR) responsible for environment management in their territories in the framework of the policy established by the Ministry. Thus, the CARs manage the rights of use of water, the normative concerning disposal in the air, the general protection of flora and fauna and specifically the administration of natural parks.
Their jurisdiction is limited in theory to the homogeneous zones in the hydrological, eco-systematic and political sense. In practice, the limits are more or less the departments. Corporations are administered by a Directorate Council, which gathers together the State, the concerned department and representatives of the municipalities that they are part of, and the users. Their role is to develop and implement environmental policy on their territory under the control of the Ministry of the environment. They also have the competence of the "environmental police" and have therefore to record offences done by environment users. These 33 CARs are distributed throughout the five water watersheds of the country.
The law foresees financing activities carried out by the environmental authorities according to the “polluter pays" principle. Thus the direct or indirect use of the atmosphere, water and soil for disposing agricultural, mining and industrial waste through waste water, solid waste, air, polluting or harmful vapours are subject to the payment of fees to CAR, to which the amount is based on a calculation of the economic impact of the lost value in the natural resource concerned. Similarly the extraction of natural resources must also be the subject to a fee paid to CAR.
As far as water is concerned, fees applied in 2008 by the CAR are (i) a fee for the extraction of water that represents only € 5 million for the whole country and collected only 40% of the total (II), the fee for pollution represents € 10 million and collected in 2008 only 78% of the total. These fees are collected by the water distribution services and transferred to corporations. Their amount represents only 1% of total invoicing from water and sanitation services.
For example, the main source of income for the CAR in Cundinamarca is the environmental tax. This represents approximately €50 million and 90% of CAR resources (75% by a single town in Bogota) and corresponds to the share of 15% of land tax levied by the municipalities. 5% are from hydro-power resources and 3% for water charges, the remainder is linked to expenses of irrigated perimeters and natural parks. This allocation of resources can be very different according to the different CARs, in particular to those who do not have big cities on their territory.