The Sava and Drina River Corridor Initiative. Water Day European Commission/World Bank Brussels January 23, 2018

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1 The Sava and Drina River Corridor Initiative Water Day European Commission/World Bank Brussels January 23,

2 Sava/Drina River Basin Largest Danube tributary Second longest: 990km Catchment area: km2 Countries: 8 mill inhabitants Slovenia, Croatia, B&H, Serbia Montenegro Avg discharge: 1700 m3/s 2

3 Untapped potential of productive water uses and need for building resilience in the Sava and Drina Corridors GDP per cap Non EU members: US$5,000-6,500 EU members: US$13,000 (Croatia) - US$24,000 (Slovenia) Employment in Sava related Activities Provide 20.5% of employment in Serbia, 35.3% in Croatia and 54.4% in Slovenia Environment & Eco-tourism - SAVA: Expansive wetlands and riverine forests and 7 Ramsar sites (85,000ha) - DRINA: vast pristine mountainous forests and nature parks (Tara Canyon is a UNESCO Biosphere Reserve) Hydropower in Drina River Generates 1/3 of the hydropower in the Western Balkans Supplies 1/3 to ¾ of electricity of each country Irrigation Irrigated area declined in 80% since 90 s,increasing the imports of food. There is now a growing interest on expanding agriculture Navigation on Sava Annual freight carried decreased from 5.2M ton in 1990 to 0.5M ton in 2012 Bulk goods, container shipping and river cruising are growing markets 3

4 Western Balkan context Context Socialist/communist legacy Yugoslav collapse/ethnic conflict Fragile democracies, instability Small, open economies Proximity to European markets Lower cost, skilled labor force Abundant natural resources Risks Political volatility Global slowdown EU uncertainties Refugee pressures Social tensions Residual/frozen conflicts 4

5 Economic growth in the Western Balkans Before the 2008 financial crisis, Western Balkan countries grew faster than EU countries, while after the crisis, growth stagnated, and convergence stalled. A fragile recovery is observed today. The economic activity is expected to grow faster than the EU average during the next 15 years Real GDP per capita, % of EU average income per capita Real growth rate, percent Real GDP Growth, , Percent SEE6 EU 15 0 ALB BIH KSV MKD MNE SRB SEE e 2017p Source: World Bank staff calculations based on national statistical offices. Note: The regional total excludes Kosovo. Source: Data from national statistical offices and Eurostat (2015). 5

6 Employment in the Western Balkans Fragile Recovery of Growth and Employment Today Employment Index, Q2 2008=100 Unemployment rate (% labor force in 2015) BIH KOS MKD SEE6 SRB MNE ALB EU28 Unemployment rate, 2015 Youth unemployment rate, Sources: Data from national statistical office. Note: The regional total excludes Kosovo. Source: National statistical offices, Eurostat, World Bank staff estimates 6

7 Climate Change Southern Europe is one of the regions considered to be highly sensitive to climate change. Climate change forecasts suggest an increasing frequency of such as weather-related natural hazards such as floods and droughts among others Floods raise risks for life, assets, and economic productivity Droughts and heat stress will negatively affect agricultural production, biodiversity and fisheries, navigability of the river and energy generation, and will raise water demand. Thermal power plants depend on water resources for cooling purposes, and hydropower plants for electricity generation 7

8 Modernization of infrastructure and monitoring and forecast systems Low productive water uses Aged infrastructure as large investments were halted since 1990 Existing assets are not properly maintained nor modernized Outdated of meteorological and hydrological monitoring stations besides knowledge networks Low capacity to predict floods and droughts. Improved data will help identify trade-offs and guide decision-making towards cost-effective solutions 8

9 May 2014 Flood, largest flood in a century with disrupting losses 15% GDP 4.7% GDP 79 casualties Total damage HRV: 200 million National electricity generation in Serbia reduced to 50% of original capacity Dewatering flooded coal mines Serbia, 2014 Sources: RNA SRB (WB, 2014) & RNA BiH (WB, 2014) 9

10 RO BIA Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 EU Accession Process Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Nov-16 Jun-16 Nov-16 Potential Candidate SEE Progress Toward EU Accession Candidate Status Negotiations ALBANIA BiH KOSOVO EU Accession Process FYR MACEDONIA MONTENEGRO SERBIA Potential Candidate The Environmental acquis (Chapter Candidate Status 27) is one of the most demanding policy areas Negotiations Financial resources and institutional reform (incl. institutional capacity) are common barriers and explain the very low absorption capacity of EU funds in the region 10

11 Faster convergence towards EU living standards can be achieved by World Bank pillars of future cooperation and assistance (Source: C. Muller, WB, Tirana, August 2017) 1. Ensuring macroeconomic sustainability 2. Accelerate structural reforms to make the economies more competitive and attractive for investment 3. Deepening regional economic integration EU Berlin Process Trieste UK Enabling conditions 1. Stepping up regional cooperation as an essential condition for growth 2. Resolving outstanding bilateral questions in the interest of good neighborly relations and stability 3. Strengthening good governance and increasing prosperity via sustainable economic growth Action plan launched: Connectivity agenda (TENT-T Network, ICT, energy) UNECE (2016) The natural resources of the Sava River Basin contribute to a significant share of the economic activity, though there is a clear untapped potential for creating economic growth and expanding the job market 11

12 Regional Program for sustainable and water security water transboundary intreventions Countries are strongly inter-dependent on their water resources as the rivers flow across national and administrative borders Consensus that water dependent sectors need coordinated policies in terms of joint planning and decision-making, and in the near future, joint implementation Regional action will reduce costs (economies of scale) and enhance benefits (win-win solutions). Country-level activities tend to have a narrower focus, have different prioritization and can create risk of dispute Institutional technical readiness for implementing a more ambitious agenda of transboundary interventions 1 st and 2 nd Sava River Basin Management Plans Flood Risk Management Plan (National level and basin level) Strategic Joint Action Plan (Adopted by ISCRBC countries in June 2017) 12

13 World Bank Regional Engagements Sava Water & Climate Adaptation Plan for the Sava River Basin ( ) Joint Flood Forecasting and Management (WBIF funded) ( ) Drina Diagnostic Study and Policy Dialogue ( ) Investment Priority Framework (WBIF-funded) ( ) GEF/SCCF Regional Drina River Basin Management Project ( ) 13

14 Priority areas of support Priority sectors that require a regional approach in the Sava and Drina Corridors Navigation Protect & revitalize environmental assets Flood protection & drought preparedness Tourism Agriculture Hydropower 14

15 The cost-efficiency of integrating water resources investments Multi-purpose investment with better integration of different sectors and countries yields additional benefits. Economic viability should be evaluated by location ROOM for the RIVER (dredging, channelization, widening, groynes.. ) Enhanced navigability Faster controlled flood wave discharge in overflow areas Increased biodiversity in wetlands and riverine forests Nature development Tourism - Bosut tributary (Brezavo polje, Raca, Morovicko-Bosutsko sume, and Usce Drine) - Zasavica and Obedska bara reserves and wetlands 15

16 Rehabilitation and development of navigation on the Sava River Sava waterway is part of the TEN-T Network = Trans-European transport network Source: EC, December 2016 Rhine/Danube Work plan 16 The Rhine-Danube Corridor is part of TEN- T. is the main eastwest link between continental European countries along the Main and Danube rivers to the Black Sea by improved (high speed) rail and inland waterway interconnections.

17 Rehabilitation and development of navigation on the Sava River Sava Commission Classifications Pre-feasibility Study 2007 Feasibility Study 2008 EIA Study (Brcǩo Sisak) Pre-Feasibility Study Sava River Final Presentation Zagreb

18 Navigation Upgraded navigability will have major impact in reducing transport costs of containers, and mining, sand and agriculture products Volumes of traffic (2027 estimates) Would enable the expansion of riverine tourism coming from the Danube corridor

19 The basin hosts a pristine environment Protecting and restoring biological diversity in wetlands flood plain areas Largest complex of alluvial wetlands together with lowland forests along the Sava River Focal region selected by the Council of Europe s Pan-European Biological and Landscape Diversity Strategy 176 sites (17,231 km 2 ) of important biodiversity conservation 9 National Parks (incl Unesco Tara) 7 Ramsar sites (85,000 ha) Lonjsko Polje Nature Park in Croatia: 9-fold increase of visitors between 2001(2,500) and 2008 (21,000) Ramsar sites Contribution of tourism (2016) 19

20 Regional Program: overview This Program will support the regional cooperation among the five riparian countries to: i) capture economic development opportunities, and ii) accelerate integration and social development. Coordinated program of multipurpose and integrated interventions to enhance river s navigability, flood management, environmental protection and (eco-)tourism, will also contribute to the development of its hydropower and irrigation potential, and reduce risks associated to recurrent floods and droughts while improving environmental outcomes 20

21 Regional Program: institutional arrangements, roles and phasing Scope of cooperation 1. Sava and Drina riparian countries managing the interaction between regional development & national policies and interventions 2. ISRBC as central platform for discussion, technical analysis, and joint decision-making Three parallel phases with different time horizons Planning Feasibility studies and project preparation Actual implementation of investments Institutional set-up Accommodate responsibility and authority of respective governments and institutions at appropriate level (national bilateral trilateral regional) during planning and implementation of investments EU-WB coordination on flow of EU funding (Cohesion Funds and IPA II) and WB and other IFI

22 Comp 1: Sava River redevelopment Priority Area 1: Strengthening the Sava river basin planning and development system to guide decision-making on economic integration, management options and investments Priority Area 2: Improving navigability of the Sava water way Priority Area 3: Flood monitoring and management Priority Area 4: Protecting environment and adapting to climate change Priority Area 5: Development of sustainable river tourism Sava and Drina corridors seven priority areas Comp 2: Drina cascade Priority Area 6: Preparation of the Drina river basin planning and development plan to inform decisions on management and investments options Priority Area 7: Managing climate change impacts and risks mitigation to promote sustainable growth in Drina river basin 22

23 Timeline Two mutually parallel reinforcing lines of action Studies, analytics, TA, institutional strengthening Overall Sava river Flood Forecasting & Risk Mgmt WB6 Hydropower Strategy (EC) Flood Forecast and Alert Syst Flood mitigation measures 2 nd Sava Basin RBMP Preparation of Sava/Drina Corridor Program Phase II Implementation of Sava/Drina Corridor Program Phase II Drina River Investment preparation and implementation Drina Strategic Action Plan: transboundary IWRM CC pilots: Hydromet, Flood, Droughts Hydropower Strategy Sava River Drina River Irrigation Preparation of Sava/Drina Corridor Program BiH irrigation Development Project Sava Corridor Integrated Project (Investments): Nature, Navigation, Flood Mgmt and Tourism Drina Corridor Project (Investments) : CC Risk and Adaptation, Nature, and HP Cascade Redevelopment BiH irrigation Support Project Phase II Lim River Flood and Irrigation Development Project

24 Thank you for your attention!