When residents tell tourists that it never rains in Lima, they are a mere .3 inches from the truth. One third of an inch of rain (about 6 mm), or a drop in the bucket, is the annual rainfall. Drought and El Niño conditions have long been a backdrop to everyday life in this city of nearly 10 million where the Andes meets desert and the land spills into the Pacific Ocean.
More than 1.5 million residents are underserved: They live without running water and with chronic shortages, often waiting for delivery trucks. Villa El Salvador, for example, began as a shantytown on the outskirts of Lima in 1970, and has been growing in colorful tenements up the eroded foothills ever since. But water there is still a luxury.
“Climate change is hitting hard and the future of water for Lima is in doubt,” said Carter Brandon, lead economist with the World Bank. “We don’t actually know what the climate impact is going to be. Or the city’s future growth either.”
Andean topology is so extreme that climate models can’t predict what will happen to rainfall. Lima’s future water security is of great concern to government officials, regulators, the water utility company SEDAPAL, and the people who live and work in this arid port city.
The World Bank has been investigating the need for robust decision making in Lima, and recently completed a comprehensive study of SEDAPAL’s $2.7 billion master plan for water resources to 2040. The Bank draws upon state-of-the art methods for Decision Making under Deep Uncertainty (DMU).
“We have to make decisions even when we don’t know the future,” said Laura Bonzanigo, World Bank economist specializing in DMU. “Through the DMU methodology, we can look at the range of possibilities and come up with minimum requirements to meet every possibility—robust decisions with no regrets.”
In spite of SEDAPAL’s Master Plan, key questions remained. Could the proposed investments ensure reliability in the face of deep uncertainties? Are they all required? What if there are delays? What is the best sequence so that investments ensure both “no regrets” and maximum future adaptability?
The study helped SEDAPAL revise its Master Plan of 14 large-scale investments by identifying projects that it can embark upon now, while preparing future actions adaptively as conditions evolve. When the World Bank team analyzed the 14 projects, they found that investments representing 75 percent of the proposed cost of the Master Plan ($2.0 billion) met water reliability targets just as much as the full $2.7 billion plan. More capital investment did not improve reliability. The study saved the city over $600 million.
Historically, utility companies are used to construction--pumping stations, dams, water treatment plans and tunnels through mountains. “But it turns out some of the most valuable things they can do are ‘soft.’ They can encourage water conservation and recycling. They can make ecological investments in the upper watersheds, working with farmers and ranchers. And they can do better water-quality monitoring with mining companies to protect water quality,” Brandon added.
For the first time, the utility is reaching out to nongovernmental organizations (NGOs) to protect watersheds and groundwater aquifers. It is also beginning to work with consumers to use less water per household, and exploring with the municipality ways to use recycled water for parks. The analysis has earned the confidence of regulatory and budget agencies. SEDAPAL has also requested further World Bank support, mostly in these areas that supplement more traditional “bricks and mortar” investments.
Engaging Peruvian NGOs is significant because they work closely with communities in upper watershed management (“green” infrastructure) and environmental monitoring. And the universities are important due to SEDAPAL’s interest in training others so the method can be widely applied in other cities under water stress across Peru and other Andean countries.
Decision-Making under Deep Uncertainty is an increasingly important tool for virtually any sector involving long-term planning and investments. Drawing from the Lima study, final workshop participants Argentina, Paraguay and Brazil have already approached the World Bank country offices to request support in the water sector. But other types of investment planning equally suited to this type of analysis are transportation, energy, flood management, and urban development.
A recently published report titled "Robust Decision-Making in the Water Sector: a Strategy for Implementing Lima’s Long-Term Water Resources Master Plan" includes more information on the Lima water study. The Bank has also released a new methodological book that helps program managers demonstrate the robustness of their projects, “Confronting Climate Uncertainty in Water Resource Planning and Project Design: The Decision Tree Framework.”