Environmental benefits and their costs : Istanbul sewerage project

NUMBER 34 *Precss Operations Evaluation Department October 1992 Environmental Benefits and their Cost: Istanbul Sewerage Project The Bank's constructive relationshiph me the static parts ot the waters of the organized implementing agency, with with Istanbu's unmicipal authorities, _olden Horn became anaerobic and autonomv in decision making, paid off. -stained over more than 20 y ears, built iie beaches of the Sea of Marmara be- iegrouinidwork for this successOill me higldcontaminated. Especallv The project was one of the largest ,,roiect, completed in 1988 but recentl in densely populated low-income ar- infrastructure projects ever launched in idited b OED.* The project zwoas inoti- 'aS, outoreaKs of often-fatal waterbome Istanbul. Its goals were to: ,,ated by1 concern for public health, par- diseases were common. icunlarl aong the citi's poor, but also extend the coverage of sewerage or enviroinental protection and im- 1978 Conference on Planning .ervices to reach 60 percent of ,rovement. Strong public and govern- ind Development of Community Wa- Istanbul's population, of whom 70 per- nent support was secured with the proin- er Supply and Sanitation launched an centwould be low-income people; .; otclearinm iup the Golden Horn and ambitious national effort to reach 100 reduce the amount of sewage dis- .ie shores or tile Sea of Mannara. The percent coverag for water supply by 'roect itself greatll/ increased public en- !1-)9A)andsewerageby2000. Turkey I lorn and the Sea of Marmara; roniental awareness and exeCratio,s. has inaLe remarkable progress toward * provide satisfactory sewage dis- these targets. Byv 1989.97 percent ot the posal by construction of pre-treatment Recenld, responaing to vpressure urban and 85 percent ot the rural popu- tacilifies and a deep submarine outfall ron the public and the scientiic C0111it- lation was served with water; c u per- main; ity, Istanbul has adopted veri strict cent ot the countrys population was trengthen ISKI's institutional ca- eaie disposal policies that place It in -en-ed with sewers,and 29 percent pacwv; and ,he roretront of environnental protection ith septic ranks. ensure financial self-sufficiency by -corldwidec. Butl unpiemecnting thcse 11oli- worlwid. Btt ;u!hie,entmi~thee Pll-introducing adequate water supply :es Zill reluire hige investnents. ISKI. Lroject goals, implementation and sewerage charges. I tanbur17111 water 1a sewvcrage authoritiu, San IIInresSie recorti of cost recove/ rorect preparation began in the ryter initial, largely procedural, no of self-finieancin from tarit ree'nuiias. 1970s; appraisal was not until delays, the project was implemented ,it growi arrears in tarit paenicts. December 1981. It took time fr the efficiently, on schedule and well within 'cer the last three ytears, CaSt a Sltl oveninent to enact le-islation creat- cost estimates. Designs and quality of "er the susdiltanbilitiy of ISKI's iont- in a water and sewerag construction were ot a high standard. :ousstitutionai format acceptable to the [SKI proved itself well able to maintain Bank. A new agency, Istanbul Water anrd e\pand its facilities. stanbul's rapid growth led to large an weraie Generai Direc- squatter settlements with inad- torate tIKI) was created to plan, de- equate and ill-maintained water -h! , COnSMrCt,and Operateall water -uprpl anci sewerage. Population, esri- - vpIvand sewera,e services inesn- :nated at 3.7 million in 1981, was pro- rearer Istanbul. L'iike the three vcted to increase to 7.8 million b 2000. g t r a t g A aste waters were discharged un- I o set water and sewerage tarifts with- ,reated into the Golden Horn, the Sea or o-toutsideapproval. TheBank'spa- tmrandthBo*et iistance o the eato t e armra,nd te Bsphous.Over lit bnseache o the reao of raa bel- Public information: ISKI and the Over the last three vears, however, municipality jointly conducted a sus- ISKI's accounts-receivable have in- tained publicity campaign on the creased much faster than sales. Cus- project and program. This was instru- tomers billed monthly (most residential mental in the general acceptance-thus consumers) have a 40 percent better far, at least-of the substantial tariff in- payment record than those billed quar- creases ISKI introduced to help finance terlv (mostly industries and institu- the project. tons); public institutions have an espe- cially poor payment record. Though Benefits: The project extended wa- exceptional profits were recorded i ter and sewerage services to an addi- 1990, ISKI's arrears threaten its credit tional 300,000 low-income people. The worthiness at a time when another am- environmental goal of improving water bitious investment program is planned quality in the Golden Horn and the Sea Several measures have been intro- of Marmara was achieved. The munici- duced to counter this problem but their pality reinforced the effects of the effects are vet to be verified. cleaner waters by beautifying the shore lines, relocating small and medium in- Environmental benefits, dustries away. This sound urban man- economic costs agement initiative made the results of the project more visible to local resi- The environmental focus within shuts. An effective dents and, importantly, to tourists. ISKI and central government environ- tion campaign mental agencies has steadily sharp- implemntation of thiq Tari*f: ISKI's tariff structure is ened, in response to increased public highlv progressive, with industrial and awareness of environental issues and commercial rates up to 130 percent of the stepped-up involvement of the In the context of ever-increasing residential rates, implying substantial Turkish scientific community: pressure for environmental protection cross-subsidization. Consumers using such policies cannot be faulted. less than 10 cubic meters a month do In mid-1991 Turkey's environmen- Progress, and public information cam- not pay for water, though they pay a tal authorities ruled that all waste paigns,to date have engendered high 100 percent surcharge for sewerage. waters must be fully treated before dis- expectations. Yet, given the recent Tariffs for households below the pov- charge into receiving waters. ISKI im- build-up of arrears, especially from erty line result in charges of less than 3 mediately adopted this policy, whose public institutions, the large invest- percent of household income and seem effects on the ongoing Bank-supported ment program cost may preempt the to be well accepted by consumers. project are still being discussed. Over resources needed to maintain existing the longer term, ihe policy will be ex- facilities. Development plans will Financing: At appraisal, the gov- tremely costly to implement. Given need to give full consideration to their ernment was expected to contribute Istanbul's topography, it will require a e people, the indus- $131 million to the project, with internal huge investments in complex and dis- tries, and institutions of Istanbul and cash generation placed at $3 million. In taut treatment facilities. But, to quote Turkey in general. fact, concerned about its growing fiscal one of ISKI's publications, "Our deficit, the government contributed administration's objective is to establish Turkevs investment needs in the only S38 million while ISKI contributed a chain of full treatment sector are becoming more complex S106 million (see Box). In 1988, ISKI plants... whatever the cost, in order to technically, environentally, and eco- adopted a policy of covering all opera- solve this environmental problem..." nomically. Selon of priorities and tion and maintenance costs, debt ser- judicious financial planning will be vice, and more than 45 percent of in- ISKI has also made a policy deci- very important. The Bank proposes to vestment costs, as covenanted in the ion to develop water supply and sew- maintain and strengthen its relation- loan agreement of a second, ongoing, erage services completely in parallel. If shipwith ISKI, with emphasis on fur- project which the Bank approved in tullv implemented, the policy will en- ther improvements in financial man- 1987. ISKI's high self-financing capacity sure the full public health impact of agement and performance. Sound has alreadv influenced water and sew- cean water supplies, and ensure equi- technical advice will continue to be erage polcies in Ankara and lzmir. table sevice to the poor. needd. )ff I,,", ! is L,.esigned to lielp intormink 11, andstalt ot new e%,ilLIation 'sndingsand recommendations tr the Bank's current and tLuftlre %% ork progms. it is proiced b% Hie )pnorns El mation Department or the Wr i Bank or distribution to He Bank's executive irctor, and staff. The views hiere are thiose ot the Operations EvlUation seatt and aourid not be attributed to the korld Bankor its affiliated organizations. 'lease address comments or en )rie; to t e managing etor, Rachel Weaving, T-O 15, World Bank. ext. 31719. October 1992