The project will support the Peruvian government's strategy of encouraging the efficient use of water resources and related ecosystems by adopting a participatory approach based on sustainability and equity.
Peru faces serious constraints on water supply along its Pacific drainage basin. This arid region has only 1.8 percent of the country's total water resources, yet is home to 70 percent of the population and produces 80.4 percent of the country's GDP.
The Chira-Piura, Santa, and Tacna watersheds face pressures typical of the Pacific drainage basin. These include water scarcity, droughts, floods and landslides in northern areas, water quality degradation due to the discharge of untreated wastewater, and a failure to recover the costs of operating and maintaining water infrastructure.
This project will address these problems by adopting an Integrated Water Resource Management approach for these watershed, implementing planning and management instruments in accordance with Peru's Water Resources Act and creating bodies to manage water access disputes; promoting a "culture of water" that ensures its rational use and conservation through consistent fees for water use; improving water quality and monitoring and control mechanisms; and creating resilience to the impact of climate change.
The IDB has previously supported Peru's water management efforts through a series of policy-based loans. The total cost of this project is $19,579,000; the Peruvian government will be providing $9,579,000 in counterpart funds.
The US$10 million IDB loan is for 25 years, with a 5 year grace period and an interest rate based on LIBOR.
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