Appendix W – Summary Poverty Reduction and Social Strategy 66 | GHD | Report for Asian Development Bank - TA 8306 RMI: Ebeye Water Supply and Sanitation Project, 23/15022 Ebeye Water Supply and Sanitation Project (RRP RMI 46346) SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY Country: RMI Project Title: Ebeye Water Supply and Sanitation Project Lending/Financing Others Department/ Pacific Department (PARD) Modality: Division: Urban, Social Development & Public Management Division I. POVERTY ANALYSIS AND STRATEGY A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy The project is consistent with RMI’s strategic development strategy, Vision 2018, for improved hygiene and sanitation and reliable and affordable water and sanitation infrastructure. The project is included in RMI Country Operations Business Plan 2013-2015, which includes a strategic focus on infrastructure development. The project is aligned with: (i) ADB’s Strategy 2020 to contribute to improved public health through water and sanitation investments, (ii) ADB’s Approach to Assisting the Pacific (2010-2014) to improve the supply and delivery of water and sanitation services, (iii) ADB’s Water Policy and Water Operational Plan 2011-2020 to increase efficiency and productivity in the delivery of water services and increase investments in sanitation and wastewater management, and the Kwajalein Development Plan “INKARE”. B. Poverty Analysis Targeting Classification: General Intervention 1. Key issues. Ebeye residents suffer a very high incidence of gastroenteritis and other waterborne diseases. The project impact will be reduced incidence of waterborne diseases. This reduction will be achieved by providing all residents with direct access to safe water and sewerage services and by enhancing public awareness of hygiene and water issues. The project will also assist the public utility company, KAJUR, to design and implement institutional reforms to enhance the financial and technical sustainability of the water supply and sewerage services together with the electricity services on which they depend. The result will be a healthier and more productive population with fewer private and public funds spent on medical services and fewer work and school days lost to illness. Reduction of income poverty will thus be indirect through greater lifetime productivity and earnings together with lower medical expenses. The project will reduce poverty of opportunity more directly and more dramatically. Ebeye is a very densely populated urban community where more than one quarter of all households are not connected to the public fresh water supply, more than one third are not connected to the public sewerage system, and less than half are connected to both systems. The unconnected households are almost entirely those that also suffer income poverty under which a quarter of all residents live on less than $1.00 per day with no significant subsistence income. The project will reduce poverty of opportunity by improving and extending potable water and sewerage services to all residents. The project will also help institute lifeline rates for potable water, for sewerage, and for electricity so that all households can afford at least the necessary minimum of these essential urban services. 2. Design features. The project includes six pro-poor design features. Firstly, the project will extend potable water and sewerage infrastructure to all areas of the community that currently lack that infrastructure, which generally means to the poorest areas. Secondly, the project will make the connections to residences that currently lack water and sewerage connections and will provide and install the necessary equipment so residents can use the services. Without such project support, the poorest people could not afford to connect to the services and thus would not receive the direct benefits of the project. Thirdly, the project will help design and institute a tiered system of residential pricing for potable water and for electricity that will provide lifeline rates for basic levels of usage together with higher rates for additional units. Sewerage will be charged at an affordable flat rate. Fourthly, the project will provide and install pre- pay meters for potable water (almost all residential electricity meters are already prepay) that will help households manage their water expenditure so as to prevent overspending and cutoffs of service that would otherwise result from unpaid water bills. Fifthly, the project will improve efficiency to make all three utility services more affordable overall and more sustainable. Finally, the project will help make KAJUR self-funding and thus reduce or eliminate external subsidies that are now passed on to wealthier consumers in the form of highly subsidized electricity, water, and sewerage services that the poor generally do not receive. The result will be a reapportionment of benefits in favor of the poor. II. SOCIAL ANALYSIS AND STRATEGY A. Findings and Social Analysis Key Issues Fifteen percent of Kwajalein households report no income and another 8% report less than $3,000 annual income. Thus, 23% of all households report incomes of less than $3,000 per year or less than $8.22 per day. At an average of 8.7 people per household, that means 23% of Ebeye residents live on less than $0.94 per day with little or no subsistence income and a very high cost of living. As a result, the bottom 10% of residences consume only 0.75% of the total electricity whereas the top 10% of consume 34.4%, and one quarter of all households are not connected to the public fresh water supply, one third are not connected to the public sewerage system, and less than half are connected to both systems. Unconnected households are almost entirely those that also suffer the greatest income poverty. Since poor households disproportionally go without potable water and sanitation, they likely also suffer higher rates of water borne disease. Wealthier households receive a greater share of the highly subsidized (but still substandard) water, sewerage, and electricity services whereas poor families generally remain unconnected (water and sewer) or can afford very little of the service even if they are connected (electricity). Even if the project extends water and sanitation infrastructure to areas that lack those services, poor households will not be able to pay the connection and equipment costs. Even if the project connects poor households, they still could not afford to consume much, if any, of the services at full cost-recovery rates and so would gain little or no benefit without lifeline rates. B. Consultation and Participation 1. Provide a summary of the consultation and participation (C&P) process during project preparation. The PPTA consulted with all major stakeholders, carried out a survey of all households, and carried out a water sales experiment covering a large sample of households to help determine ability and willingness to pay for improved water supply. The PPTA worked closely with the KAJUR PMU and the Project Steering Committee at all times and referred all major project design decisions to those bodies. 2. What levels of C&P are envisaged during project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment 3. Was a C&P plan prepared for project implementation? Yes Major technical design issues and options were covered and choices made during the PPTA. C&P activities will focus largely on notifying stakeholders prior to the start of agreed construction work and policy implementation, as well as on raising hygiene awareness. The project will also facilitate notice, consultation, and awareness activities relating to the rationale for and the setting of specific unit pricing regimes for potable water, sewerage, and electricity services— all of which will be determined by KAJUR. The implementation contractor will also consult with and seek permits from land owners prior to the start of any works. Adequate budget and consultant inputs are provided for the contractor to carry out that work in association with the PMU. The Project Steering Committee (PSC) will remain in overall control of project decision making. Community members sit on the PSC. The C&P plan will be incorporated in the project administration manual. C. Gender and Development Gender Mainstreaming Category: Effective Gender Mainstreaming (EGM) 1. Key issues. The project impact will be reduced incidence of waterborne disease and improved environmental conditions on Ebeye. The project outcome will be improved access to safe water and improved sanitation. Thus, the project will emphasize women-oriented health awareness activities. Accordingly, the overall impact of the proposed project will be greater for women and children than for the overall population as they are often more susceptible to the impacts of poor water quality and hygiene practice. Due to elimination of the large community toilet/shower/washing block in favor of residential toilet/shower/washing units, gender-specific hardware options and other design features and gender-specific design consultations are less significant, as the units will be in the individual household which is safer and more hygienic. Financing options for new residential water and sewer service connections and hardware is a poverty issue on Ebeye rather than a gender issue, and the project itself will finance all new residential water and sewer connections and equipment. Targeting women for training and