FINANCING ARMENIA’S WATER SECTOR DEVELOPMENT
TendersInfo
January 12, 2010 Tuesday
Armenia is an economy in transition that faces considerable challenges
characteristic of countries that have shifted from a centrally-planned
to a free-market economy. In recent years, economic growth has been
considerable; however the country has a legacy of poor infrastructure
in the form of dilapidated and deteriorated water and sanitation
facilities, outmoded design and inability to effectively finance
running and maintenance costs. Even with the best predictions for
economic growth, Armenia will need significant time and levels of
investment to develop its water sector.
Most rural communities today in the Republic of Armenia have
little or no sustainable access to drinking water and sanitation
networks. Up to 40% of the rural population still collects its water
in containers from community taps or have no central source at all
requiring villagers to use wells, springs, or other sources. Those
that are supplied directly regularly suffer outages lasting up to
40 days. As expected, the public health impacts are considerable. In
2006, water-related health conditions such as dysentery affected 10%
of rural communities in Armenia. Agriculture, which accounts for 21%
of Armenia s economy, is also affected. Excess water leakage from
irrigation systems causes soil and soil nutrient loss, negatively
impacting the groundwater and river system.
The economic costs of continuously struggling with poor infrastructure
are also high for water utilities and for the country as a whole. Pipe
degradation causes 55-60% of water loss compared to 10-40% in most
developed economies. The World Health Organization estimates that
annually, 9983 million hours are lost to performing water duties
such as collection and 14.8 million days of school are missed due to
diarrhoeal illnesses in a number of East European countries including
Armenia.
Armenia is now addressing these issues. Water sector improvements
have been written into Armenia s laws in order to meet one of the key
Millennium Development Goals, set in 2000, to halve the proportion of
people without reliable access to safe drinking water and sanitation.
With the help of international financial institutions (IFIs), such
as The World Bank, the German Development Bank (GTZ), the European
Bank for Reconstruction and Development (EBRD) and USAID, Armenia
has invested in a number of development projects with a commitment
of over EUR130 million.
Estimating the cost of development of the water and wastewater sector
in Armenia is difficult but it is clear that massive further increases
in funding are required. Most experts agree that an increase from
the current level of 0.7% to 1.8%-2.7% of GDP (based on 2008 figures)
is required.