PakistanPakistan ’’ss WaterWater Economy:Economy: RunningRunning DryDry The World Bank October 2005 Written by John Briscoe, Usman Qamar, Manuel Contijoch, Pervaiz Amir, and Don Blackmore CCCooonnnttteeennntttsss Overview and Executive Summary..................................................................................4 I: Preface ........................................................................................................................ 20 II. The Challenges and Achievements of the Past: ....................................................... 23 The challenges .................................................................................................................................................23 The response – public infrastructure...........................................................................................................27 The response – private infrastructure..........................................................................................................32 The response – institutions ...........................................................................................................................36 III. The Challenges of the Present and the Necessary Responses ............................... 42 Adjusting to the needs of a changing Pakistan...........................................................................................42 Preparing for climate change ........................................................................................................................45 Adapting to scarcity: An imminent “water gap”........................................................................................48 Getting more product per drop: The “performance gap” ......................................................................50 Narrowing the “trust gap”.............................................................................................................................56 Maintaining the resource base -- groundwater...........................................................................................59 Maintaining the resource base – salinity management .............................................................................65 Reversing large scale environmental degradation ......................................................................................70 Living with floods...........................................................................................................................................75 Renewing existing infrastructure: Addressing the “maintenance gap” ..................................................78 Investing in priority new infrastructure.......................................................................................................80 IV: What needs to be done............................................................................................. 89 Principles for a modern institutional structure..................................................................... 89 Instruments........................................................................................................................... 90 Unbundling and Competition................................................................................................................................91 Regulation.................................................................................................................................................................93 Water entitlements...................................................................................................................................................95 Transparency............................................................................................................................................................99 Knowledge..............................................................................................................................................................100 Financing ................................................................................................................................................................101 What this means for Federal and Provincial Governments .................................................103 V: Principled pragmatism and “rules for reformers” ...................................................106 Rule # 1: Water is different.......................................................................................................................................106 Rule # 2: Initiate reform where there is a powerful need and demonstrated demand for change..................107 Rule #3: Involve those affected, and address their concerns with understandable information.....................108 Rule #4: Reform is dialectic not mechanical...........................................................................................................109 Rule # 5: It’s implementation, stupid.......................................................................................................................109 Rule #6: Develop a sequenced, prioritized list of reforms ...................................................................................109 Rule #7: Be patient and persistent............................................................................................................................110 Rule #8: Pick the low-hanging fruit first – nothing succeeds like success..........................................................110 Rule #9: Keep your eye on the ball – don’t allow the best to become the enemy of the good.......................110 Rule #10: There are no silver bullets .......................................................................................................................111 Rule #11: Don’t throw the baby out with the bathwater......................................................................................111 Rule #12: Reforms must provide returns for the politicians who are willing to make changes ......................111 VI: The Evolving Role of the World Bank...................................................................113 What the Bank has done in the past ..........................................................................................................113 Water Resources and Irrigation ...........................................................................................................................113 Hydropower ...........................................................................................................................................................125 Water Supply and Sanitation................................................................................................................................126 The Bank’s new Water Strategy..................................................................................................................128 An indicative World Bank water investment program for 2006-2010: ................................................129 The four pillars:......................................................................................................................................................129 The investment projects: ......................................................................................................................................133 Evolving priorities and the indicative Bank water investment program........................................................135 Pakistan Water Strategy page 2 of 140 Endnotes .......................................................................................................................136 Pakistan Water Strategy page 3 of 140 OOOVVVEEERRRVVVIIIEEEWWW AAANNNDDD EEEXXXEEECCCUUUTTTIIIVVVEEE SSSUUUMMMMMMAAARRRYYY Pakistan is one of the world’s most arid countries, with an average rainfall of under 240 mm a year. The population and the economy are heavily dependent on an annual influx into the Indus river system (including the Indus, Chenab, Jhelum, Ravi, Beas and Sutlej rivers) of about 180 billion cubic meters of water, most derived from snow- melt in the Himalayas, and most emanating from neighboring countries. Throughout history people have adapted to the low and poorly distributed rainfall by either living along river banks or by careful husbanding and management of local water resources. One of the greatest of human civilizations – the Indus Valley civilization (Harrapa and Mohenjo Daro) – flourished along the banks of the Indus. This precarious, low-level balance between man and water was decisively shifted with the advent of large-scale irrigation technology Figure S1: Pakistan from space in the 19th century. The Indus irrigation system became the largest contiguous irrigation system in the world. A shown in Figure S1, the desert literally bloomed, with irrigated agriculture providing the platform for the development of the modern economy of Pakistan. This hydraulic economy has faced and surmounted three massive challenges in the last half century. The first challenge arose because the lines of Partition Indus Afghanistan Jhelum severed the irrigated heartland of Punjab from the life- China Chenab giving waters of the Ravi, Beas and Sutlej rivers. In an Ravi unprecedented triumph of water diplomacy, Pakistani Beas engineers, together with their Indian counterparts and Sutlej the World Bank, negotiated the Indus Waters Treaty, Pakistan giving Pakistan rights in perpetuity to the waters of the Nepal