Water supply and sanitation in Ecuador

Policy

Responsibility for establishing sectoral policy is legally vested in the Subsecretaría de Agua Potable y Saneamiento" or Subministry of Potable Water and Sanitation under the Ministry of Urban Development and Housing. However, there is no clear definition of roles and responsibilities between various national and sub-national actors, nor is there an independent regulator of water supply and sanitation services. Stakeholders in the sector include the Ecuadorian State Bank, the Fondo de Inversión Social de Emergencia (FISE) or Emergency Social Investment Fund and several governmental ministries at the national, provincial and municipal level, among others.

While Ecuador has a National Water and Sanitation Policy, Política Nacional de Agua y Saneamiento under Executive Decree No. 2766 of 30 July 2002 it is set out in relatively vague terms and avoids a clear position on sensitive issues such as investment subsidies (by national and sub-national governments) and who should receive them.

Malecón 2000, next to Guayas river

A draft plan for a Water and Sanitation Sector Law was prepared, but has not yet been presented to Congress, given unstable political conditions.

An Interinstitutional Committee for Water and Sanitation acts as a forum for interchanging experiences in collaboration with MIDUVI.^[7]

Service Provision

In urban areas, municipalities are directly responsible for delivering the services. They can provide it themselves or through an autonomous municipal utility. In the capital Quito, water and sanitation services in the city itself and the rural parts of the municipality (canton) are provided by the metropolitan utility Empresa Metropolitana de Alcantarillado y Agua Potable de Quito (EMAAP-Q). In Guayaquil, the service was transferred to the private company Interagua under a concession in 2001. At the same time, the former municipal utility ECAPAG became the regulatory agency for the new private utility.^[8]

In rural areas, more than 5,000 Potable Water Boards provide the services. Most of them are left to their fate in abandoned conditions, due to very low tariff levels, negligence of care of the water sources and lack of an institution helping water boards since the dissolution of IEOS in 1992.^[9]

Tariffs, Cost Recovery and Affordability

A study commissioned by the government under financing by the World Bank concluded that nationwide, tariffs covered only about 2/3 of system operation and maintenance costs in 2001. National and sub-national (provincial and municipal) government transfers are required to cover the operation and maintenance gap and to finance coverage expansion.^[11]

Concerning the affordability of tariffs and ability to pay of user, in 1998 households that indicated expenses for water in the national living standards measurement survey, stated that on average they stood at 1.7% of their total expenses. This percentage is higher in urban areas (1.9%) than in rural communities with some basic infrastructure (rural amanzanado - 1.3%) and rural areas with scattered population (rural disperso - 0.9%). Within the poorest decile, this percentage is 1.9% on national average, but 3.3% in urban areas. The expenses include water which is bought from water tankers, but excludes expenses for sanitation.^[12]

Investment and financing

Since Dollarization in 2000, the US dollar is the official currency of Ecuador

Financing for urban and rural water supply investments is provided by a multitude of national and sub-national actors under different terms and conditions. Some favour participation by users and municipalities, but the majority provide assistance without requiring any contributions (assistencialismo) in a clientelistic manner, underestimating the importance of participation to reach sustainability of services.^[7]

In 2001, an Executive Decree was adopted by the government which created correlation between a tax on telephone calls and government transfers of funds for water and sanitary improvement to municipalities.^[10][13] The level of the transfers is higher for poorer municipalities, and – most notably – higher for those that improve operator performance or choose to delegate service provision to autonomous operators. The system of sub-national transfers thus provides incentives to improve both performance and more sustainable institutional arrangements at the local level.

From 1990 to 2005, US$409 million were invested in water supply and sanitation at the municipal level. As shown above, the funding reached its peak in 2002, when US$6.1 per capita were spent. However, the average investment p.a. was at only US$2.1^[14] Compared to other Latin American states like its neighboring countries Peru and Colombia, the investment level in Ecuador is low.^[15]

EMAAP-Q, the public enterprise serving Quito

The public water and sewer utility of Quito, EMAAP-Q, was turned around between 2000 and 2008, according to its general manager, Juan Neira. In this period water coverage in the city increased from 72% to 98% and sanitation coverage from 68% to 93%. A multistakeholder Fund for Water (FONAG) introduced innovative financing mechanisms to help protect watershed supply regions, promote conservation, and encourage public participation in valuing clean water.^[16] The company replaced its cumbersome manual billing system with an electronic billing system in 2008 under which an inspector, equipped with a portable computer, visit homes to read water consumption meters and immediately types and delivers the bill to users. Non-revenue water is said to have been reduced from 47.8% in 2000 to 30% in 2008 through the installation of household meters and the reduction of clandestine water connections. However, the performance indicators on the EMAAP-Q website show that non-revenue water was 38% in 2002 and 37% in 2006, with not data for subsequent years.^[17] Investments were financed by the Inter-American Development Bank under a US$170m project that closed in 2002,^[18] the Development Bank of Latin America under a US$25m project that was under execution in 2009 ^[19] and company funds. According to its website, the firm has obtained international awards for administrative excellence and the quality of services, such as the gold medal of excellence by the Corporación Ecuatoriana de Calidad Total in 2007 and the Arch of Europe International Quality Award for Technology in 2008, without specifying the details of the awards.^[20][21] In April 2009 there was, however, no independent confirmation of these awards on the Internet. The company showed an operating loss before interest of US$5.5m in January–February 2009, and needed a government transfer of US$6.3m in the same period to balance its books.^[22]

Interagua, the private concessionnaire serving Guayaquil

In Guayaquil, the largest port city in Ecuador, the services were transferred to a private operator, Interagua, in 2001. At that time, 50% of the city had only 10 hours service per day. In five years the company brought 24 hours service to all the city and served an additional 55,000 families, mostly low income in the southern part of the city.^[23] Access to water supply increased from 64 percent in 2000 to 72 percent in 2003, and access to sewerage has grown from 46 percent to 55 percent during the same period. Families were able to consume twice as much water while paying one fifth of what they paid before, when they bought it from vendors distributing it in tankers and charging $3.50 per cubic meter. Interagua charges only 34 cents per cubic meter for the first 15 cubic meters per month.^[24]

World Bank

In recent years, the World Bank has intensely participated in the development of key documents about Ecuadorian policies, including national policy of water and sanitation in 2002 and the innovative decree about transfers to the water supply and sanitation sector of 2005 as well as the draft plan for a Water and Sanitation Sector Law.

The World Bank Group contributed to the PRAGUAS project with a loan of US$48 million, paid by the International Bank for Reconstruction and Development.^[25]

Interamerican Development Bank (IDB)

The Interamerican Development Bank supported investments in the three largest cities of the country - Quito, Guayaquil and Cuenca - through ten programs with a total amount of US$400 million. In 2006, the IDB approved a new loan in the amount of US$62.25 million for the town of Cuenca.^[28]

European Union

PASSE is a program of the Health Ministry for the provinces of the central sierra region, which has received a grant from the European Union.^[4]

Belgium

Since 2003, the Belgian government has supported the Agua Potable para la Sierra Norte (APOSINO) or Potable Water for the Northern Sierra region, which is a technical assistance program in the provinces of Imbabura and Carchi.^[29]

International Organization for Migration

The International Organization for Migration (IOM) carries out a development program in rural areas and small towns in the northern region of Ecuador, called Northern Border Development Program. The program is financed by USAID, which has invested US$63m from 2001 to 2007.^[30]

CARE

The humanitarian organization CARE is working in 15 Ecuadorian provinces, concentrating on rural areas and especially on projects close to the northern and the southern border. CARE works closely with the municipalities. In the last 10 years, CARE has contributed to significantly increasing water coverage under a sustainability-driven approach.^[31]

Small NGOs

Numerous small non-governmental organizations (NGOs), such as Water Ecuador (formerly known as Agua Muisne), Fundacion Yanapuma, and Eden's Rose have addressed the issue of drinking water and sanitation on a local level and have worked with many rural coastal and Andean communities in Ecuador to develop water and sanitation programs where several of the larger organizations listed above have not yet reached.