Purpose of Initiative
In September 2002, the United States and Japan launched the Clean Water for People Initiative at the World Summit on Sustainable Development (WSSD) in Johannesburg. This partnership is designed to provide safe water and sanitation to the world's poor, improve watershed management and increase the productivity of water. The partnership will expand and accelerate international efforts to achieve the goals contained in the Millennium Declaration and implement the Johannesburg Plan of Implementation including halving, by 2015, "the proportion of people who are unable to reach or afford safe drinking water" and "the proportion of people without access to basic sanitation." The U.S. and Japan will strengthen their cooperation and pursue joint or parallel projects wherever possible.
Partners: The partners in USAID-JBIC Collaboration on Water are: United States (U.S. Agency for International Development (USAID), U.S. Department of State), and Japan (Japan Bank for International Cooperation (JBIC), Japan Ministry of Foreign Affairs)
Partnership Targets: The operating objectives of the USAID-JBIC Collaboration on Water are to:

• Select pilot countries with active JBIC and USAID programs.
• Identify activity areas of mutual interest within pilot countries.
• Refine and develop joint or parallel project proposals in each country.
• Review, approve and execute joint/parallel interventions in each country as developed.

Additionally, the partners have committed to semi-annual monitoring meetings to assess progress and determine future steps.

Progress Toward Targets
In 2003, JBIC and USAID selected three initial pilot countries: the Philippines, Indonesia, and Jamaica; and identified financing for water and wastewater infrastructure as a priority area for collaboration. In particular, the partners expressed interest in creating new ways for cities and towns in developing countries to gain access to financing to build infrastructure to supply basic services, such as access to clean water and removal and treatment.
In September 2003, U.S. and Japanese officials participated in a workshop held in Washington, D.C. on the U.S. State Revolving Fund model used at the state level to finance investments in water treatment and distribution and wastewater treatment by municipalities.

Since that time, the U.S. and Japan have been working through representatives in each country to identify specific opportunities to use the revolving fund model and other approaches to encourage private financing for local infrastructure projects. During the most recent partnership-monitoring meeting held February 25th, 2005, the following progress was reported and India was added as a pilot country:

The Philippines: In March 2004, the Philippines passed the Philippines Clean Water Act. To assist the Government of the Philippines in the development of Implementing Rules and Regulations (IRR) for this Act, USAID and the Japan International Cooperation Agency (JICA) coordinated assistance with the Philippine Department of Environmental and Natural Resources. In this partnership, JICA provided technical assistance in drafting the IRR while USAID supported a series of public consultations on the IRR. The IRR are scheduled for release in April 2005.

On October 12th, 2004, JBIC and USAID signed two Memoranda of Understanding (MOU) to work together on municipal water and sanitation infrastructure financing. The first MOU created the Municipal Water Loan Financing Initiative, a program to facilitate investment of private-sector funds in water and sanitation infrastructure projects. The second MOU agreed to explore a Philippine Water Revolving Fund's (WRF) feasibility and to conduct a USAID-funded study which has since yielded a number of possible WRF structuring options.

In February 2005, JBIC and USAID held a workshop with officials from the Government of the Philippines and the private sector to discuss WRF options and identify challenges to private sector participation in establishing the WRF. Workshop participants agreed to create a Steering Committee composed of representatives from the Government of the Philippines' finance and planning departments, the private sector, USAID and JBIC to develop a Design and Implementation Framework Agreement as the next step.

On March 3, 2005, a gravity type potable water supply system was inaugurated in the remote Philippine village of Chua on the island of Mindanao. The project, initiated in July 2004, is a partnership between the Embassy of Japan, which provided grant funding for the system, and USAID grantee Winrock, which oversaw installation of the system. Through this joint effort, 100 Chua households now have access to potable water.

Indonesia: A memorandum of understanding between USAID Indonesia and Japan Bank for International Cooperation (JBIC) was signed on June 9, 2005. This partnership supports a common agenda in the development of water resource management. It identifies water and waste management in Indonesia as an important link for collaboration.

The partnership will be implemented through USAID's ongoing Environmental Services Program (ESP) and JBIC's Medan Flood Control Project (MFCP). The new initiative is called the Medan Water and Waste Management Project (MWWMP) and will provide safe water and sanitation services to the urban marginalized communities in North Sumatra by improving drainage control and water and waste management. It will work in close collaboration with the local government, water and sanitation operators, NGOs and community members. The formalization of the MOU will be followed by an action plan that will outline the implementation process of MWWMP. The project will provide support until September 2008.

Jamaica: JBIC hosted a workshop in Jamaica in March 2005 to present several models for potential USAID-JBIC collaboration to the Government of Jamaica. Some models represent possibilities that JBIC loans to the Government of Jamaica could be combined with private investment supported by a USAID partial credit guarantee (see description under "resources") to finance priority water and sanitation projects. There has been active discussion regarding the establishment of a water revolving fund in Jamaica to stimulate private-sector participation in the water and sanitation sector. The policy and legislative frameworks are becoming more favorable for such an effort.

India: JBIC and USAID are now working together on improving access to water and sanitation services in the Bangalore metropolitan area, comprising Bangalore city and eight surrounding municipalities in the State of Karnataka, located in south India. JBIC committed funding to the "Bangalore Water Supply and Sewerage Project" in March 2005. This project is designed to increase water supply and improve sanitation in the Bangalore metropolitan area. Under the "Greater Bangalore Water Supply and Sewerage Project" in 2004, USAID guaranteed bonds issued by the Karnataka Urban Infrastructure Development and Finance Corporation to raise funds for water distribution systems in eight municipalities, which will use water transferred through the Bangalore water supply system financed by JBIC. Moreover, to ensure the efficient and effective implementation for water and sanitation services for the slum households in Bangalore metropolitan area, JBIC collaborates with the Cities Alliance through the USAID-supported Community Water and Sanitation Facility for the survey of social and physical conditions, community awareness-raising activities, and communication with beneficiaries and stakeholder institutions. JBIC and USAID are exploring further possibilities to collaborate in other cities in India.

Next Steps
JBIC and USAID intend to hold the next monitoring meeting late in 2005 and present a review of progress at the fourth World Water Forum in March 2006.

Resources
The Clean Water for People Initiative builds upon existing U.S. and Japanese activities in water resources management for developing countries. During WSSD in 2002, the United States announced the "Water for the Poor" signature initiative, committing to provide $970 million USD over a period of three years beginning in fiscal year 2003, for water-related projects developed through bilateral assistance programs. USAID Administrator Andrew S. Natsios announced in March of 2005 that the U.S. is ahead of target in meeting this commitment.

The Clean Water for People partnership is intended to promote collaboration through the use of existing U.S. and Japanese development assistance mechanisms. USAID technical assistance provides support in project identification, preparation, and implementation, and in developing long term financially viable operation and maintenance systems. An important component is ensuring inclusion of the poor and slum dwellers in water and sanitation service delivery, and ensuring sustainable finance and management. In addition to this grant assistance, the U.S. provides local currency investment guarantees to encourage private investment in water and other infrastructure services. The investment guarantees, also called credit guarantees, are provided through a USAID tool called the Development Credit Authority (DCA). USAID offers these partial credit guarantees to local financial institutions in developing countries to create a risk-sharing relationship between private financial institutions and the U.S. Government. The guarantees cover up to 50% of the loss on principal from a loan when the lender is not fully repaid. USAID provides guarantees to support private financial institutions in making loans for projects across a range of development areas, including water and sanitation infrastructure. By reducing the risk of loss, guarantees can help build the capacity of local financial institutions to lend to new sectors or underserved areas as well as develop new loan products. Japan supports the Clean Water for People partnership through grant and loan aid programs as well as technical cooperation with local municipalities, non-governmental organizations and the business sector.

Primary Points of Contact
U.S. Agency for International Development: Jeremy Hagger (Phone: 202-712-4923; E-mail: jehagger@usaid.gov),

U.S. Department of State: Ann Stewart (Phone: 202-647-1410; E-mail: stewartaw@state.gov)

Japan Ministry of Foreign Affairs: Masahiro Nishimura (Phone: 81 3 5501 8363; E-mail: masahiro.nishimura@mofa.go.jp)

Japan Bank for International Cooperation: Hiroyuki Kodera (Phone: 81-3-5218-3585; E-mail: h-kodera@jbic.go.jp)

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