Urban Water Supply Sector Risk Assessment: Guidance Note

This sector guidance note seeks to increase awareness of risks that can reduce the benefits from operations in the urban water supply sector. It is meant for Asian Development Bank (ADB) staff involved in commissioning and/or undertaking governance risk assessments as required under ADB’s Second Governance and Anticorruption Action Plan (GACAP II). Risk, in the context of GACAP II, refers to the risk of reduced development effectiveness—that the development objectives of developing member countries (DMCs) and ADB will not be met, or will be adversely affected by poor governance, weakly performing institutions, or vulnerability to corruption. This guidance note aims to explain key sector features of urban water supply and identify entry points for mapping risks to development effectiveness in the sector. Generic risks are presented for illustrative purposes, and are not intended to be exhaustive.

This sector guidance note supplements ADB’s Guidelines for Implementing GACAP II. It does not replace the guidelines. The guidelines provide a risk management framework and map out the process for assessing, managing, and monitoring risks. This note is meant to help staff in tailoring the generic sector risk assessment terms of reference found in the guidelines (Appendix 4), to consider risk vulnerabilities specific to the urban water supply sector.

Section II of the of the Guidance Note describes the key features of the urban ater supply sector. Section III outlines sector risks that include GACAP II priorities of public financial management, procurement, and combating corruption. These priorities can be assessed within frameworks of (i) institutional features (policy, legal framework, and regulation); (ii) organizational aspects (planning, financial management, procurement, and human resources); and (iii) operations (water harvesting and storage, water treatment, distribution, and customer interface).