2. Multi-level water governance in Peru

There is a consolidated legal framework in relation to water management in Peru. The relevant legislation for water resources management and the protection of aquatic ecosystems stems from the 1993 Political Constitution of Peru, affirming the promotion of the sustainable use of natural resources and the right to the protection of health (Articles 7, 66 and 67). The National Environmental Policy (Supreme Decree No. 012-2009-MINAM) is the reference framework for sustainable development, taking into account international treaties, commitments and declarations endorsed by Peru in environmental matters. Peru has been endowed with specific water-related legislation since 2009. The Water Resources Law (No. 29338/2009) and its implementing regulation (Supreme Decree No. 001-2010-AG) set the legal and institutional framework for water resources management. It also established the National Water Resources Management System (SNGRH) and its planning instruments (see below). State Policy No. 33/2012 on Water Resources (Acuerdo Nacional, 2012[1])1 is the political and technical instrument that acknowledges water as part of the public domain and recognises the human right to water and sanitation, following the United Nations (UN) Assembly Declarations in 2010 and 2015. It also highlights the relevance of implementing integrated water resources management (IWRM) in order to guarantee the equitable and sustainable use of water nationwide.

The IWRM in Peru is implemented through the National Water Resources Management System (Sistema Nacional de Gestión de los Recursos Hídricos, SNGRH) (Figure 2.1). The SNGRH is the set of institutions, principles and norms allowing for the articulation and co-ordination across public and private entities to meet water demands, avoid conflicts, carry out projects, etc. It is embodied in the National System of Environmental Management (Sistema Nacional de Gestión Ambiental, SNGA). The SNGA comprises the SNGRH but also the National System of Natural Protected Areas, the National System of Environmental Assessment and Control, the System of Environmental Impact Assessment, and the National System of Environmental Information. In principle, the SNGRH ensures the integrated, participatory and multi-sectoral management of water to promote its sustainable use, conservation and quality. It also implements, oversees and evaluates compliance with key planning initiatives, such as the National Water Resources Policy and Strategy (Política y Estrategia Nacional de Recursos Hídricos, PENRH) and the National Water Resources Plan (Plan Nacional de los Recursos Hídricos, PNRH) at all levels of government, fostering stakeholder engagement and co-ordination across all members.

The SNGRH is formed by different ministries, regional and local authorities, water user organisations and civil society groups. The National Water Authority (ANA) is the governing body of the SNGRH, which is composed of: the Ministry of the Environment (MINAM); the Ministry of Agricultural Development and Irrigation (MIDAGRI); the Ministry of Housing, Construction and Sanitation (MVCS); the Ministry of Energy and Mining (MINEM); the Ministry of Production (PRODUCE); the Ministry of Health (MINSA); regional governments; local governments; water user organisations; water and sanitation service providers (Empresas Prestadoras de Servicios de Saneamiento, EPs), municipal operators [Unidades de Gestión Municipal], specialised operators [Operadores especializados] and community-based organisations [Organizaciones comunales]); organisations representing farmers, peasant communities and native communities; and other public entities linked to water resources management and water services delivery such as the National Superintendence of Sanitation Services, the economic regulator of sanitation services (Superintendencia Nacional de Servicios de Saneamiento, SUNASS), the Peruvian National Service for Meteorology and Hydrology (SENAMHI), the Supervisory Body for Investment in Energy and Mining (OSINERGMIN), the Agency for Environmental Assessment and Enforcement (OEFA), the National Service of Environmental Certification for Sustainable Investments (SENACE), the Directorate-General for Captaincy and Coast Guard of Peru (DICAPI) and sectoral environmental authorities.

Two main tools are part of the SNGRH: the National Policy and Strategy on Water Resources and the National Water Resources Plan.

  • State Policy No. 33/2012 on Water Resources is the benchmark to develop the water resources management instruments that complement the scope of the Water Resources Law. On this basis, the National Water Resources Policy and Strategy (PENRH) (Supreme Decree No. 06-2015-MINAGRI) is one of the main planning tools considered in the SNGRH. The PENRH comprises “principles, guidance, strategies and public policy instruments guiding actions to be taken both by the public and private sectors to meet water demand of the country in the short, medium and long term”. The 2015 PENRH includes 5 policy pillars or axes, 18 intervention strategies and 85 action lines formulated on the basis of the analysis of the current situation of the country’s water resources.2 The five water policy axes are quantity management, quality management, opportunity management, water culture management, as well as climate change adaptation and weather and climate extreme events. The main objective of each axis is to ensure the satisfaction of current and future water demands, as well as to ensure water conservation, the quality of available water resources and its efficient and sustainable use, according to social, environmental and economic criteria (ANA and MINAGRI, 2016[3]) .

  • The 2015 National Water Resources Plan (PNRH, Supreme Decree No. 013-2015-MINAGRI) is the strategic planning instrument for the implementation of the PENRH. It is formulated on the basis of diagnosis at the basin level and contains the financing gaps to be bridged so as to meet water demands in the short (2021) and medium (2035) terms. Investments are grouped into 30 programmes aligned with the abovementioned policy axes and intervention strategies set up in the PENRH. Beyond those planning instruments that stem from legal provisions (i.e. Art. 99 of the Water Resources Law), other planning efforts have been recently delivered with the support of multilateral and bilateral donors, such as: the hydro-economic analysis and prioritisation of water resources (by the 2030 Water Resources Group hosted by the International Finance Corporation-IFC and currently by the World Bank); or the financial assessment of water projects in Peru and the implementation of priority projects (by the Global Green Growth Institute, GGGI, a treaty-based, international, inter-governmental organisation).

The territory of Peru is administratively divided into departments, provinces and districts. It is currently composed of 24 departments and 2 provinces with a special legal status – the Constitutional Province of Callao and the Province of Lima – as well as 196 other provinces, which as of mid-2016 were further divided into 1 874 districts. A process of regionalisation, which also comes with relevant levels of decentralisation and devolution, is underway. This process, which is expected to be confirmed through binding referenda, is mainly supported by fiscal incentives, with the aim of creating new regional entities through merging departments (OECD/ECLAC, 2017[4]). As such, the administrative decentralisation process has fiscal and economic consequences, such as the transfer of a share of the revenues collected via the so-called mining exports excise (canon minero) to regional and local governments. This has led to an increase in municipal and regional fiscal resources and investments.

The section below will describe in-depth who does what at different levels of government in the water sector (Figures 2.2 and 2.3). At the highest level, the Presidency of the Council of Ministers, beyond co-ordinating national and sectoral policies, deals with social conflicts that relate to the water sector, amongst others. The Ministry of Economy and Finance, in particular through the Agency for Private Investment Promotion, promotes public infrastructure works in water resources management and sanitation services. Regarding water resources management, the National Water Authority (ANA) is the governing body, while the Ministry of the Environment and the Ministry of Agricultural Development and Irrigation, where ANA is located, are key institutions for water resources management. The Ministry of Housing, Construction and Sanitation is the governing body for sanitation, while SUNASS is the decentralised public regulatory body responsible for regulating, supervising and assessing the provision of urban and rural water and sanitation services. The Ministry of Health and the Ministry of Development and Social Inclusion also contribute to the national policies in relation to safe drinking water and sanitation.

The PCM or Cabinet Office is the body responsible for the co-ordination of national and sectoral policies that are the responsibility of the country’s executive power and for the co-ordination with other state powers (legislative and judicial), constitutional bodies, regional and local governments and civil society.3 The PCM has legal powers for the modernisation of administration, territorial development, decentralisation, spatial demarcation, public dialogue and social consultation, digital government, communication of the policy actions of the central government and other powers assigned by law.4 Through its Secretariat of Social Management and Dialogue (SGSD), it collects information, classifies and addresses a range of selected social conflicts dealt with by the cabinet itself, including on water use. Beyond the PCM, other institutions in the country (such as ANA, the Ministry of Mining and Energy, a Special Attorney for Environmental Crimes and the Ombudsman Office) also gather information systematically on social conflicts around water use.

The MEF is the governing body in terms of economic and financial policy at the national and sectoral levels and different government scales. It is in charge of the administrative systems of the public budget, the Treasury, public debt, national accounting and public investment. The MEF is at the core of decisions on public financing, as it allocates fiscal budget, promotes private engagement in the sanitation sector, through the Private Investment Promotion Agency (Agencia de Promoción de la Inversión Privada, PROINVERSION). It administers the consolidated system for the registration, evaluation and monitoring of public investment (Invierte.pe, former National System of Public Investment or Sistema Nacional de Inversión Pública, SNIP), the debt of public companies with the National Housing Fund (Fondo Nacional de Vivienda, FONAVI) and the National Superintendence of Customs and Tax Administration (Superintendencia Nacional de Aduanas y de Administración Tributaria, SUNAT).5 The Ministry of Economy and Finance set up a programme of incentives to improve the municipal management of public services. The incentives are released upon the achievement of results (Presupuesto por Resultado: Outcome-oriented Budget). While this mechanism is not linked to the National Sanitation Plan, it is worth noting that the Ministry of Housing, Construction and Sanitation (MVCS) awards incentives based on results in relation to the implementation of the National Urban Sanitation Programme and the National Rural Sanitation Programme.

The Agency for Private Investment Promotion, PROINVERSION, is responsible for implementing national private investment promotion policies. PROINVERSION mainly promotes private investments in public services and public infrastructure through public-private partnerships (PPPs), either led by public or private initiatives. It also provides assistance to subnational public entities, upon request, and information services to investors, and helps create an attractive environment for private investments. Beyond PPPs and similar contractual arrangements, PROINVERSION also promotes the participation of private companies in the development of public infrastructure works (in different sectors, including water resources management and sanitation services) which are performed by subnational levels of government through a mechanism called Works for Taxes. This is a unique mechanism in Peru and its adoption is currently being explored by other countries in the region such as Colombia.

ANA is the governing body for integrated water resources management (IWRM) policy. It is a specialised technical and regulatory body with its own budget and legal status. It was created in March 2008 by Legislative Decree No. 997. ANA is the governing body of the SNGRH and is as such responsible for its operation and co-ordination across its members. It elaborates, manages, executes and supervises the National Water Resources Policy and Strategy, devises regulations and establishes procedures for integrated and multi-sectoral management of water resources (both surface and groundwater). Its decision is binding for approval of Environmental Management Instruments (Instrumento de Gestión Ambiental, IGA) related to water resources.6 A significant number of public entities related to water resources management co-ordinate their actions with ANA:7 the National Superintendence of Sanitation Services (SUNASS), the National Meteorology and Hydrology Service (SENAMHI), the Supervisory Body for Investment in Energy and Mining (OSINERGMIN), the Agency for Environmental Assessment and Enforcement (OEFA), the Directorate-General of Captaincy and Coast Guard of Peru (DICAPI), and other sectoral, environmental authorities and water and sanitation service providers (EPs).

ANA is a deconcentrated body, providing coverage to the 159 river basins in Peru (ANA, 2014[5]). It does so by means of a central headquarters in Lima and 14 regional offices or Administrative Water Authorities (Autoridades Administrativas del Agua, AAAs),8 responsible for 14 wide hydrographic regions, 71 Local Administrative Water Authorities (Administraciones Locales del Agua, ALAs) and 13 River Basin Councils (Consejos de Recursos Hídricos de Cuenca, CRHC). The Ministry of Foreign Affairs participates in and co-ordinates with ANA on the management of the 34 transboundary watersheds (OECD/ECLAC, 2017[4]) and the necessary work in international conventions and other agreements.9

ANA leads the Nationally Determined Contribution (NDC) on Water. The NDC Water aligns with the UN Sustainable Development Goals (SDGs) and identifies specific objectives and indicators that will be reported to the United Nations Framework Convention on Climate Change (UNFCCC) by 2025 and 2030. It also identifies the enabling conditions that are required (financing, information, capabilities, regulations), the roles and functions of the different actors involved in promoting and informing adaptation measures that include actions in each of the four specific subcomponents to increase water supply, achieve greater efficiency of use and better water management in a context of climate change. The NDC Water is carried out under the leadership of ANA and the technical support of MINAM, along with the participation of MIDAGRI, MINEM, the MVCS, the National Civil Defense System (Instituto Nacional de Defensa Civil, INDECI), SERNANP INAIGEM.

MINAM is involved in water resources management (both surface runoff and groundwater) and multi-purpose water infrastructure. MINAM has responsibilitiesin protecting headwaters, issuingissues opinions on environmentally vulnerable areas,10 promoting watershed protection and preservation,11 and developing strategies and plans for the prevention and adaptation to the effects of climate change on water availability at the local, regional and national scales.12 The ministry develops, conducts, supervises and executes the National Environmental Policy.13,14 It is the governing body of the National Environmental Management System (SNGA), within which both the National Water Resources Policy and its strategy and the National Water Resources Plan are elaborated.15 MINAM is responsible for approving and overseeing the application of environmental prevention, control and restoration instruments related to control of the reclamation and reuse of wastewater effluents, amongst others.16 MINAM is the governing body in ecosystem services.17 It is responsible for designing, regulating and furthering policies, legal standards and procedures for the development, implementation and supervision of the Ecosystem Services Compensation Mechanism (Mecanismo de Retribución por Servicios Ecosistémicos, MERESE). Along these lines, according to the regulation of Law No. 30215 (Supreme Decree No. 009-2016-MINAM), “water regulation” and “natural risk regulation” are ecosystem services liable to participation in MERESE. In some cases, while legal powers are with ANA, there are overlapping competencies between ANA and MINAM on site.

SENAMHI, SENACE and OEFA are bodies attached to MINAM. SENAMHI is the National Meteorological and Hydrological Service, which is in charge of generating and providing meteorological, hydrological and climatic information and knowledge in a reliable, timely and accessible manner. SENACE is in charge of environmental impact assessment studies, regulated in Law No. 27446,18 of public, private or mixed capital investment projects that involve activities, constructions, works and other commercial and service activities that may cause significant environmental impact, also in terms of use of water resources. The Agency for Environmental Assessment and Enforcement (OEFA) and the ANA evaluate Environmental Quality Standards (ECA) for natural water bodies. More precisely the OEFA determines the quality of natural bodies, coordinating it supervision with the ANA. The Directorate-General for Environmental Health and Food Safety (Dirección General de Salud Ambiental e Inocuidad Alimentaria, DIGESA) evaluates the quality parameters of water for human consumption. MINAM chairs the National Wetlands Committee, a multi-sectoral commission that promotes the sound management of wetlands19 in addition to the implementation of the commitments of the Ramsar Convention. MINAM provides technical assistance and support for the development of a number of relevant regional or co-operation planning tools (Box 2.1).

MIDAGRI, through ANA, is the governing body and the highest technical-legal authority of the SNGRH and more specifically in terms of water resources management.20 MIDAGRI is thus the entity to which ANA is attached. MIDAGRI issues the supreme decrees proposed by ANA in order to regulate the integrated and multi-sectoral management of water resources.21

MIDAGRI implements a number of financing mechanisms for water management projects. These include the Sierra Azul Fund Implementing Unit, which aims to increase irrigation water security through the natural retention and harvesting of water from the high Andean agricultural and highland areas, favouring primarily those farmers with lower levels of income, in a situation of poverty and extreme poverty. This fund finances infrastructure and irrigation investment projects, irrigation modernisation and water retention and harvesting interventions, within the framework of the National Multi-year Programming and Investment Management System (Invierte.pe). This fund is intended to contribute to closing gaps established by the sector in Ministerial Resolution No. 493-2019-MINAGRI.

The MVCS is the governing body for sanitation,22 but also housing, construction, spatial development and urban development. It has exclusive power over the development, planning, co-ordination, implementation and overseeing of national specific and related policies in relation to sanitation services as public service (Figure 2.3). In particular, it fosters efficient management and delivery of services by providers through the Sanitation Sector Capacity-building System (SFCS) and related mechanisms, determines through norms and plans how to close the gaps in infrastructure and promotes quality and sustainability in the delivery of sanitation services, including wastewater treatment.

The MVCS leads, manages and administers the Water and Sanitation Information System (SIAS),23 which contains sectoral information on the infrastructure and management indicators of sanitation services in urban and rural areas. The Rural Water, Sanitation and Hygiene (WASH) Information System (DATASS), which started in 2014, is led by the MVCS with the collaboration of the MEF and Ministry of Development and Social Inclusion (MIDIS). Prior to its implementation, there was very poor information on rural WASH. Currently, a virtual platform with 9 000 users provides information on sanitation services in around 100 000 population centres. Regional and local governments are responsible for information collecting, entering and upgrading (under Legislative Decree No. 1280). The objective was to promote the use of information decision-support systems in the rural sanitation sector, hence paving the way for the identification of coverage gaps (MVCS, 2018[8]). DATASS Geographic Information Systems (GIS) includes information from MINAM, MIDAGRI, DIGESA, SUNASS, the Technical Agency for the Administration of Sanitation Services (OTASS) and the MVCS (MVCS, 2019[9]).

The National Sanitation Plan is the main instrument for the implementation of the sectoral public policy to achieve universal coverage of sanitation services. It contains, among others, information from the Regional Sanitation Plans on the existing gaps, establishing the programming investment. The plan is prepared for a time span of five years and is updated annually. Its compliance is mandatory by the sanitation service providers (EPs). The 2017 National Sanitation Plan24 establishes that SUNASS is responsible for making the necessary provisions aimed at promoting, designing and implementing MERESE. A mid-term evaluation of the 2017-21 National Sanitation Plan has been carried out, which mostly shows that targets for 2019 were not met and also points to a failure in achieving targets for 2020 and the bicentennial of the Independence of Peru (2021). Emergency Decree No. 011-2020 aims at closing gaps in the water and sanitation sector, whilst delivering a sustainable and quality level of service, and managing services in an efficient way.

Together with the Ministry of Health (MINSA), the MVCS works for the implementation of the strategy to increase the share of rural households with access to chlorinated water in the rural areas of Peru.25 The Water for All programme, created in 2007,26 had the objective to provide low-income households with adequate sanitation services, potable water and sewerage. The National Rural Sanitation Programme (Programa Nacional de Saneamiento Rural, PNSR), created in 2012,27 aims to serve the neediest rural populations with comprehensive, quality and sustainable water and sanitation services. Within the framework of the PNSR, the MVCS co-ordinates with the Ministry of Economy and Finance (MEF) by means of the Incentive Programme for Municipal Management Improvement and Modernisation (PI) (see section below on co-ordination mechanisms).

OTASS, attached to the MVCS,28 promotes and implements the policy of the MVCS regarding the management, administration and provision of sanitation services. It was created in 2013, though it became operational in 2015 as a consequence of weaknesses detected in the management and administration of public water and sanitation service providers (EPs), many of them being insolvent by then. OTASS is also mandated and empowered to take control on public EPs under municipal ownership in case of financial and operational insolvency, so as to improve their performance. OTASS is funded through transfers from the central government (Treasury), donations from international development aid, external debt, directly collected revenues, and occasionally from the private sector (through Works for Taxes and PPPs).

In 2017, OTASS assumed new powers, providing technical assistance and transferring resources to water utilities, in order to recover their operational capacity.29 In this context, 19 companies joined a Transitional Support Scheme (Régimen de Apoyo Transitorio, RAT), due to the deterioration of their financial status, and are undergoing bailout by OTASS. There seem to be some positive outcomes, since water supply was available on average by 2.1 hours/day more. Yet, financial profitability has gone from -5% (2017) to + 1% (June 2019). Nevertheless, OTASS has detected that water utilities in areas of higher water stress and facing frequent water shortages are often obliged to carry out outlawed initiatives to secure water availability. Under these conditions, water utilities have even had to incur additional costs.

SUNASS is the decentralised public regulatory body responsible for regulating, supervising and assessing the provision of urban and rural sanitation services. It was created in 199230 as an attached body to the PCM with the legal status of internal public law and administrative, functional, technical, economic and financial autonomy.31 Its main duties are to guarantee a quality level of service for urban and rural water supply and sanitation users. SUNASS regulatory functions were substantially enlarged both spatially and in terms of duties.32 Up to 2016, SUNASS was responsible for supervising urban water utilities in cities with more 15 000 inhabitants; after 2016, small cities and and rural sanitation services providers were also included. In terms of duties, SUNASS is now covering also the demarcation of the boundaries of the areas for the provision of services33 the evaluation of service providers, as well as the supervision and auditing of compliance with their legal and technical obligations (see Chapter 4).

MINSA, through the Directorate-General for Environmental Health and Food Safety (DIGESA), regulates and monitors the compliance in terms of quality parameters of water for human consumption.34 In fact, DIGESA is the technical and regulatory body on the quality of water for human consumption but monitoring and surveillance are carried out by the regional governments (Supreme Decree No. 031-2010-SA approving the regulation of water quality for human consumption). MINSA also oversees and monitors water quality for human consumption in water supply through different quality indicators (microbiological, parasitological, physical and chemical ones).

The MIDIS is the governing body of national policies that promote development and social inclusion and is responsible for interventions in terms of investments in sanitation services in rural areas and for the maintenance and rehabilitation of water and sanitation systems, as per Supreme Decree No. 18-2017-VIVIENDA.

CRHCs are ANA bodies created at the initiative of regional governments. They are created in order to achieve meaningful and permanent participation of stakeholders in the planning, co-ordination and agreement for the sustainable use of water resources in their respective areas.35 The CRHCs are comprised of representatives from ANA, regional and local governments, water users (agricultural/non-agricultural), professional associations, universities, farmers and indigenous communities and operators of special projects of water infrastructure. Additionally, as appropriate, it includes a representative of the water transfer areas (giving and receiving basins), a representative of peasant communities, a representative of Indigenous communities, a representative of special projects that operate public water infrastructure and a representative of the Ministry of Foreign Affairs. Ordinary and extraordinary sessions of CRHCs are convened by the Technical Secretary in co-ordination with the Chairperson of the Council. In areas where there are no CRHCs, ANA’s deconcentrated bodies may create specialised multi-sectoral task forces (Grupo Especializado de Trabajo Multisectorial, GETRAM), which offer spaces for co-ordination of analysis and planning of actions that address the water issues in the basin. Seven such task forces (four in the Pacific hydrographic region – Ancash-Pacífico, Chao-Virú, Chaparra-Acarí and Ica) and three in the Amazon hydrographic region – Alto Amazonas, San Martín and Ucayali) have been set up.

ANA plans to create 28 councils overall, of which 12 have already been created and 3 were ongoing36 before the COVID-19 pandemic (ANA, 2018[10]) . The CRHCs already created are located in Caplina–Locumba, Chancay-Huaral, Chancay-Lambayeque, Chillón-Rímac-Lurín, Chira-Piura, Jequetepeque-Zaña, Mantaro, CRHC Pampas, Quilca-Chili, Tambo-Santiago-Ica, Tumbes and Vilcanota-Urubamba. In turn, CRHCs under creation are located in Mala-Omas-Cañete, Tambo-Moquegua and Titicaca. Further, a hydrographic sub-unit in the Amazon has been created within the scope of Rio Mayo (Figure 2.4).

The main management tool of the CRHC is the Water Resources Management Plan (Plan de Gestión de Recursos Hídricos de Cuencas, PGRHC, the Spanish acronym for RBMP). It is drafted with the active engagement of the members of the council, within the frame of the PENRH and the National Plan for Water Resources. Likewise, the water resources management plans, in aspects of water resources conservation, must be consistent with the objectives of creation and conservation objects of protected natural areas, as well as with the Master Plan for Protected Natural Areas. River Basin Management Plans build on a commonly accepted principle in international water policy: that the river basin should be considered as the basic territorial unit for water management planning.37 From 2010 to 2015, RBMPs were implemented in six selected pilot river basins in the Pacific watershed within the framework of the Water Resources Management Modernisation Project (WRMMP) funded by the World Bank and the Inter-American Development Bank (IDB): Chancay-Huaral, Chancay-Lambayeque, Chira-Piura, Locumba-Sama-Caplina, Quilca-Chili and Tumbes. Annually, the CRHC elaborates a Water Use Plan (Plan de Aprovechamiento de Disponibilidades Hídricas, PADH), on the basis of the assessment of the availability of water resources. To this end, a task force is formed by the Technical Secretary of the Council of Water Resources of Cuenca (Chair), local water administrators (ALA representatives), a representative from the operators of each major and minor water infrastructure, a representative of SENAMHI in the area and the Regional Director of Agriculture.

Regional and local governments participate in the management of water resources and are represented both on the Board of Directors of ANA and in the River Basin Councils.38 In terms of irrigation, regional governments carry out control and surveillance of water use, by monitoring water conveyance by users’ organisations or other operators under the regulations issued by MIDAGRI. They also promote and implement projects and works dealing with irrigation and its improvement and soil and water resources management and conservation. According to the Article 141 of Law No. 27972, local governments have competencies in the sustainable management of water resources, in order to tackle environmental degradation, as well as poverty and social issues.

In terms of water services, regional and local governments39 are responsible for ensuring the efficient provision of water and sanitation services.40 By law, regional governments hold responsibilities in: drawing up, approving and evaluating regional sanitation plans and policies; promoting technical assistance; providing technical and financial support to local governments for services delivery; collecting data and upgrading water supply and sewerage infrastructure and services management indicators. In turn, local governments should: manage public domain assets for service provision; set up Municipal Technical Areas (Área Técnica Municipal, ATM) in charge of monitoring, supervising and providing technical assistance and training to sanitation services providers; allocate financial resources for investments in sanitation infrastructure in the Concerted Municipal Development Plans (PDMC) and local participatory budget as set up in the National Sanitation Plan (Plan Nacional de Saneamiento, PNS); finance and co-finance investments for the maintenance and replacement of sanitation infrastructure in rural areas; collect data and input them into SIAS.

GORE are structures for implementing the decentralisation policy reform agenda between national and regional governments and decentralising and monitoring reform efforts (PCM, 2017[11]). GORE seem to have been useful to speed up sanitation projects (170 projects by 2017) and for strengthening the implementation of MERESE (Government of Peru, 2016[12]). Currently, Peru is in the process of implementing Regional Development Agencies (Agencias Regionales de Desarrollo, ARD), starting with Tacna.

Water user organisations are non-profit organisations of natural or legal persons, which channel the participation of water users in the multi-sectoral management and sustainable use of water resources. The purpose of water user organisations is to channel the participation of water users in the multi-sectoral management of water resources, representing and defending their rights and interests. They promote the efficient and sustainable use of water resources (Article 13 paragraph 13.1 and Article 14 of Supreme Decree No. 005-2015-MIANGRI).

Water operators are public or private entities that provide the surface water supply service or the groundwater monitoring and management service, through the operation and maintenance of the hydraulic infrastructure. They are responsible for responding in a timely manner to the requests and claims submitted by the users of the service (Article 3 paragraph 3.1 of Chief Resolution No. 327-2018-ANA). They also collect water charge revenues (retribuciones económicas por el uso del agua) and transfer them to ANA. It is their duty to preserve and protect water resources linked to water infrastructure.

Small farmers and Indigenous peoples are both represented in the Board of Directors of ANA and on the CRHC. They participate in the elaboration of River Basin Management Plans (PGRHC), as established by Art. 18 of the Regulation of the Water Resources Law.

The OECD Principles on Water Governance provide a reading template through which assess the water governance system at various levels of government (OECD, 2015[14]) (Box 2.2). Using this guiding framework, some of the key challenges in water governance in Peru are analysed below.

Peru has a complex institutional setup for water management. The institutional framework is linked to quite a solid legal framework, especially after the passing of the Water Resources Law and its regulation in 2009. Most challenges remain as to the implementation of that legal framework to improve integrated water resources management (IWRM). These challenges are described below.

The role of water resources management from a multi-sectoral perspective could be refined and clarified in practice, beyond the legal dimension of the allocation of legal powers. The effectiveness of the SNGRH, as a multi-sectoral platform and as co-ordination mechanism between different actors of the integrated water management system, is in question. Strengthening the management of SNGRH entities and capacities, both technical and human, could help to drive forward-looking policy development, planning and implementation, to ensure effective, equitable and sustainable management of water resources in a multi-sectoral fashion. Currently, the lack of regular meetings and unbalanced participation of water users in the SNGRH, beyond the agricultural sector, hinder such goals and reveal a weak leadership and convening power of ANA governing board.

The place of ANA as a governing body is undisputed but a number of doubts emerge as per its actual delivery. The year 2008 was a tipping point in water resources management in Peru with the passing of the Water Resources Law and the creation of ANA to oversee its implementation and become the regulator of water resources management. On paper, ANA responds to international best practice in the sense that it is a multi-sectoral body (thus overcoming sectoral biases), fosters the participation of stakeholders, deepens the decentralised management of natural resources and acknowledges water as a social and economic good. Several doubts remain, though, regarding the integration of sectoral policies. But in practice, there are two main considerations regarding ANA’s activity. The first is related to deconcentration at the territorial level: while that process is aimed at enhancing the subsidiarity principle, it generated multiple overlaps and redundancy across accountable authorities and a situation with inadequate capacities and resources in deconcentrated entities with subsequent dysfunctionalities of water management and implementation deficits at the regional and local levels. An additional consideration is that ANA operates under the line of the Ministry of Agricultural Development and Irrigation, something that is increasingly questioned by a number of stakeholders due to the cross-cutting nature of water resources management and related difficulties to manage trade-offs among competing water uses given the large share of water for irrigation in Peru, as in many other countries. The cornerstone of any effort to strengthen water management and policy lies in the redefinition and empowerment of ANA, which includes either obtaining higher levels of autonomy from MIDAGRI or being institutionally reassigned, working on the factual autonomy of river basin organisations, securing financial resources for the cost-effective implementation of their mandate and ensuring adequate co-ordination with ministries and other relevant public bodies.

Overlaps, duplications and grey areas in regulations and implementation are the consequences of complex relationships across national institutions and levels of governments. In rural sanitation, for example, water and sanitation services are the responsibility of local authorities. As the governing body of the sector, the MVCS finances projects presented by subnational governments, as well as formulates and implements them in urban and rural areas. The MVCS implements a national programme for rural sanitation services since 2012 to provide sanitation services to rural populations. Previously, activities related to rural areas were led by the National Rural Water Supply and Sanitation Project (PRONASAR). MINSA, in turn, has an overseeing function. It monitors the quality of drinking water from a public health perspective but is not accountable for the planning and execution of sanitation policies. In fact, MINSA, through DIGESA, monitors the quality of water for human consumption but that competency is shared with regional governments. This already sophisticated framework is reinforced by the activity of multilateral development banks (mostly the IDB, in what concerns rural sanitation) and, above all, a bilateral development agency (Swiss Agency for Development and Cooperation, SDC) that developed long ago a full-fledged framework for interventions on rural sanitation, in co-ordination with infrastructural investments via the National Rural Sanitation Programme (PNSR). Despite this level of complexity, remarkable gaps remain in rural areas in terms of the coverage and sustainability of services. Rural areas are lagging. The creation of OTASS was an important innovation included in the 2013 Sanitation Services Modernisation Law. In 2017, the framework law transferred most of its functions to SUNASS, creating questioning from OTASS about the legitimacy and efficiency of SUNASS to fulfil some of the functions.

In many countries, a significant mismatch has been observed between administrative boundaries (regions, municipalities, other sub-national divisions) and hydrological units. This feature, which can also be observed in Peru, precludes the adequate implementation of water and other public policies and becomes a source of conflict between elected representatives. The latter is the case in Ica and Huancavelica, where there is an imbalance in water resources between the upper and lower basin and dissention between departments (Annex A). Conflicts can also rise across water management authorities or a wide range of water users, such as between the concessionaire companies in Project Olmos and small farmers in the Olmos Valley or the headwaters, or between farmers and citizens and mining companies in a number of examples (Annex B). Identifying and addressing gaps, trade-offs and conflicts of interest is of chief importance since these obstacles to vertical policy co-ordination are especially relevant when the level of autonomy of river basin authorities is still limited, at best (unlike in France with water agencies or in Spain with hydrological confederations, Box 2.3).

Basins have been identified as the relevant management units in Peru; yet, some challenges remain, mostly as to the delineation of those basin districts (especially in the headwaters) or the actual use of planning instruments (not just from a hydrological viewpoint). The delineation of headwaters has become a relevant challenge, with consequences on investments in natural infrastructures. Law No. 30640 from 2017 establishes technical criteria for the identification and demarcation of basin headwaters. ANA is currently developing a methodological framework setting technical criteria for the identification, demarcation and zoning of headwaters of the Pacific, Atlantic and Lake Titicaca watersheds. Several stakeholders have suggested that ANA should clearly define the technical criteria to qualify the levels of environmental vulnerability of headwaters, and based on this, establish the most appropriate protection measures according ad hoc. As of June 2019, 42% of the basins had been identified and delineated within the framework of Law No. 30640 (ANA, 2019[17]). Although this effort is widely considered as a promising one, some doubts have been expressed in relation to the lack of expertise and experience of ANA to tackle some of the challenges as to the demarcation of headwaters and the need to factor a very wide diversity of aquatic and terrestrial ecosystems in the assessment framework (Chirinos, 2018[18]).

The creation of CRHCs in Peru is a positive, yet insufficient step. The River Basin Councils (CRHCs) were created initially on a pilot basis, with the support of the WRMMP, co-funded by the IDB and the World Bank. Despite their consultative nature and substantial deficits in terms of financial sufficiency and capacity, this type of concertation of stakeholders, as an embryo of multi-stakeholder platforms that could give rise in due course to river basin authorities, is essentially of an unprecedented nature in Latin America. Although it is early for a comprehensive assessment of their effectiveness, some issues deserve attention:

  • Where they exist, river basin management plans are overall poorly implemented and enforced.

  • Although legal amendments ensure the presence of the urban water and sanitation sector, there tends to be an over-representation of agricultural users within the councils. Also, there might be a risk of political capture due to the fact that the regional government is the presiding body.

  • The financial capacity of CRHCs is acknowledged to be insufficient and leading to a lack of capacity development, both in terms of technical knowledge and human resources. The Technical Secretaries that provide technical support to the CRHCs are funded against ANA’s budget. A methodology for setting charges for water use and treated wastewater discharge was also defined. The collection of these charges currently accounts for a large share of ANA’s revenues, which includes the administrative costs of ANA headquarters in Lima, its decentralised offices (ALAs and AAAs) and the basin councils. For the implementation of the Water Resources Management Plans in each basin, CRHCs receive funding from regional governments, local governments and relevant sectoral bodies of the central government, as well as, occasionally, from private parties, as part of a number of PPP arrangements (i.e. works for taxes, PPP contractual arrangements, etc.).

  • CRHCs lack staff and personnel. Technical Secretariats, designated via public tender by ANA, fulfil the functions of technical support to CRHC members but they have limited human resources. This is not the case for the councils in Chancay-Lambayeque, Chira-Piura or Quilca-Chili, which seem to be performing at reasonable levels.

A common failure in water policy is that of confusing means and ends, in other words, policy instruments and policy goals. In such cases, water policy ends up being an impact remedial effort rather than a proactive and pre-emptive policy that anticipates risks and opportunities. The case of Peru testifies the implications of an inadequate insertion of sustainable water resources management in the overall social and economic development strategy of the country. Nevertheless, Peru has made progress in defining concrete goals to address the effects of climate change on water resources within the framework of the Paris Agreement, which led Peru to establish 31 climate change adaptation measures with the objective of increasing the availability of current and future water for multi-sectoral uses of water.

The country shows evidence of a very high number of intense trade-offs between sectoral policies, across territorial development, urban development, mining and energy, agriculture, biodiversity conservation, forestry, etc. In particular, there is no national land use policy (although there are legal provisions on territorial development) and the lack of co-ordination with the economic sectors is a serious hindrance to effective water resources management. Generally, manufacturing industries, including agro-food companies, have not been showing meaningful efficiency in water use. For example, in Pisco (Ica Region), every year during the dry season, water stress affects the provision of drinking water for the population. However, despite such a deficit, most farmers continue to use flood irrigation techniques. Thus, regulatory requirements regarding the efficiency of water use are prevailing only in the supply of drinking water for the population (as regulated by SUNASS), rather than for other productive sectors that, as is the case of agriculture, consume the largest volume of water. However, agro-exporting companies are subject to strict international certifications on the efficient use of water

Water resources and water services plans are neither adequately implemented, nor connected to one another although some recent progress was observed, for instance as a result of Supreme Decree No. 029-2018-PCM by the National Centre for Strategic Planning (Centro Nacional de Planeamiento Estratégico, CEPLAN), which approves the National Policies Regulation, seeking to strengthen the implementation of national policies. Along these lines, all national entities must identify and update policies within the framework of their legal powers, seeking, among others the articulation with other sectoral or multi-sectoral policy frameworks, in order to enhance the efficiency of intervention models, promote synergies and avoid significant overlaps. There is also a need to align a number of planning instruments including the following: the National Sanitation Plan, the National Water Resources Plan, plans related to anaemia and chronic malnutrition, as well as plans against parasites.

The lack of policy coherence across water and related domains leads to unintended outcomes. Measures leading to strong incentives to increase water consumption in certain sectors, in an unintended way, contrast with the use of water charges to incentivise water savings in those same sectors. For example, this relates to the impacts of environmentally harmful subsidies at different levels as well as deficiencies in bulk water pricing (i.e. water abstraction and pollution fees by ANA) and other water pricing instruments (tariffs for major and minor infrastructure use, household water tariffs, etc.). Another example is the existing link between treated (and untreated) wastewater effluents and the agriculture sector. Although Legislative Decree No. 1280 establishes that EPs may trade treated (and untreated) wastewater effluents under (non-regulated) market criteria, so that there is technical and economic efficiency as a country in the reclamation and reuse of regenerated water, this requires linking it to water use regulations for irrigation purposes.

ANA faces important capacity gaps from a financial, human and technical standpoint. Although engineering profiles are relatively abundant, planning and policymaking ones are not. Furthermore, the institutional capacity to deal with problems and needs is developed through deconcentrated bodies (14 AAAs and 71 ALAs) for the 159 hydrographic units of the nation. Financial constraints explain part of the deficit in such deconcentrated units (see below on funding gap). Deficits in capacity are even more evident when it comes down to River Basin Councils, although this may also be explained by the low level of commitment of some regional governments and local authorities in the implementation of the national plan and the adequate fulfilment of the functions of River Basin Councils. Over the years, ANA has been gradually implementing capacity building programmes for all SNGRH actors. ANA, through the civil service programme SERVIR promotes merit-based hiring among its public officers. The ANA Area of Water Culture (one of the strategic axes of the national plan) also supports training for high-level officers in decision-making.

Capacity gaps also exist in MINAM and across authorities in relation to the implementation of the Ecosystem Services Compensation Mechanism (MERESE). Whilst ANA was created out of the former National Institute on Natural Resources (INRENA), MINAM emerged as Peru’s first ministry of the environment more than ten years ago. Both administrations can therefore be considered to be very young institutions, thus, to a large extent, at the beginning of a learning curve. Regarding the implementation of MERESE, there are several capacity gaps. On one side, there are institutional lock-ins linked to the capacities of organisations and institutions involved, such as instability and high rotation of policymakers in some regional and local governments and in the organisations and institutions that participate in the development of MERESE (Boards of Directors of EPs, or the Boards of Directors of Sanitation Services Administrative Boards [Juntas Administradoras de Servicios de Saneamiento, JASS], etc.). On the other hand, there are technical lock-ins in terms of knowledge gaps, in particular regarding the operation and/or management of a MERESE project due to the lack of or incomplete information and the design of natural infrastructure projects. As an illustration, part of those deficits adds to constraints in the Lima Water and Sewerage Service (Servicio de Agua Potable y Alcantarillado de Lima, SEDAPAL), for instance, for the lack of delivery of projects against the revenues collected from MERESE for Greater Lima. In order to provide tools that facilitate the design and implementation process of the MERESE, the MINAM recently approved “Guidelines for the Design and Implementation of Remuneration Mechanisms for Ecosystem Services” (R.M. No. 014-2021-MINAM).

Other national institutions would also benefit from further investment in capacity building, especially for the implementation of plans at the subnational level. The Directorate of Sanitation at the MVCS, for example, does also require a larger number of human and financial resources in its different areas, to carry out adequate monitoring and to design and implement encompassing measures under the National Sanitation Policy. Assistance would be required for the implementation of the 24 Regional Sanitation Plans, containing the investments in the three levels of government for closing infrastructure gaps linked to sanitation. However, various strategies have been applied for better compliance with actions, such as remote technical assistance, a limited number of trips to the field, articulation with other MVCS programmes or the creation of work teams with related entities.

In terms of water and sanitation services, capacity deficits in service operators are also critical. Performance evaluations of water utilities (EPs) carried out by OTASS and SUNASS reveal that the performance of those companies is unsatisfactory and not necessarily sustainable. Poor coverage levels come along with concerns over services quality and sustainability, especially in rural areas, which adds to the critical financial situation of a large share of EPs. To a greater extent, problems mainly arise in the segment that serves small cities, which also face problems of economies of scale and scope. Water distributed to the population in small cities may not always be safe since disinfection is not applied on a permanent basis. In addition, service operators show serious deficiencies in commercial, operational and administrative management, since they lack a commercial cadastre. There is no continuity in the management and preservation of commercial information of services, nor supply cuts due to non-payment, which generates high non-revenue water rates.

Likewise, the economic and financial situation of the majority of EPs does not allow them to set up the necessary investments to achieve universal coverage. The assessment carried out by OTASS shows that 25 EPs recorded net losses in 2016 and 8 companies had profits that did not exceed PEN 60 000 (approximately USD 18 000). Additionally, it should be noted that a group of EPs are currently in the Transitory Support Regime of OTASS, providing technical assistance and transferring resources to water utilities, in order to recover their operational capacity. Most providers lack the institutional, operational and financial capacity to take care of the delivery of sanitation services by themselves. Cost-recovery rates are very low. SUNASS drafts and approves a Tariff Review study that integrates an operational and investment plan and a financial plan for EPs. EPs have an Optimised Master Plan (PMO), which is a long-term planning tool with a 30-year horizon that contains the programming of investments in conditions of efficiency and the financial and economic projections of the efficient development of operations. The PMO include a diagnosis of long-term availability and demand leading to an investment plan for bridging gaps and ensuring the sustainability of services. The abovementioned financial plan, currently not in place, was structured around the objective of complying with one of the key principles of economic regulation: that of financial viability. According to this principle of financial feasibility, the regulator establishes a certain rate that guarantees that revenues for EPs allow for the recovery of the economic and financial costs required for its efficient and sustainable operation, based on the quality and service levels set by SUNASS, as well as for the replacement of assets (mostly infrastructures) at the end of their useful life, an aspect that proves challenging in Peru and other countries. This has not prevented many EPs from suffering from cashflow and solvency constraints. Within the context of its new mandate and through a resolution of its board (028-2018-SUNASS-CD), SUNASS approved, in July 2018, the methodology to fix a household payment (cuota familiar) for the delivery of water and sanitation services in rural areas.

Inadequate technical solutions are observed for certain geographical areas, in particular in rural areas. Technical records of investments in water and sanitation do not follow a uniform criterion for urban and rural areas, due to the absence of standardised investment instruments that, based on technical and least-cost criteria cost, allow for efficient investment decisions for the sector. As a result, the investments made do not have the expected economic and social return since they are oversized and, in some cases, developed without any sustainability criteria. Therefore, these investments become idle and the operator does not have the ability to operate and/or properly maintain ageing infrastructures. In rural areas, the MVCS has established a technical design standard with technological options for sanitation systems in rural areas, with the objective to define the final designs of sanitation technological options, criteria for choice, design and delivery mechanism (Ministerial Resolution No. 192-2018-VIVIENDA). Yet, further dissemination and training actions in the use of this standard are necessary in order to ensure that project designs for rural livelihoods are effective and sustainable. Another difficulty is that of the capacity of communal water supply organisations, where the personnel is voluntary and endowed with very low administration, operation and maintenance capacity.

Information is scattered and fragmented in different institutional silos, which hinders its effective use for policy and decision-making. Water Resources Law No. 29338 created the National Information System of Water Resources, partly to address fragmentation issues in data collection and encourage the interoperability of data of specialised entities in the field of water resources. In terms of environmental enforcement, the Interactive Portal for Environmental Enforcement (PIFA) and the Agency for Environmental Assessment and Enforcement (Organismo de Evaluación y Fiscalización Ambiental, OEFA) contain and publish information related to water evaluation and monitoring.41

The significant lack of models of robust climatological forecasts at the basin level prevents the development of river flows forecast, which would, for example, improve flood warning systems in the main basins of the country. Information on vulnerability to hazards associated with climate change has been developed at the sectoral level (e.g. agriculture, industry), which clearly prevents an integrated approach. Flood events and landslides have become more frequent and intense events, which happen in the absence of adequate early warning systems, a problem that is also being observed in a number of cases of eutrophication and proliferation of cyanobacteria. The nationally determined contribution (NDC) on Water will progressively increase co-ordination through its 4 components and the focus on 31 adaptation measures to be implemented in a shared responsibility with regional and local governments. This includes, for example, the modernisation of the granting of water use rights in basins especially vulnerable to climate change, incorporating climatic scenarios as well as the implementation of early warning systems for floods, droughts, landslides and dangers of glacial origin.

Despite recent progress, water databases are incomplete, hydro-meteorological data are still in analogical format and digital information needs to be reviewed for consistency and quality assurance (World Bank, 2017[19]). Data collection on volumes of water withdrawn (delivered and used) is often quite opaque. Reporting by water users and infrastructure operators, as established by law, is not carried out in a timely manner or information is not exhaustive for data collection and management (metering, quality monitoring systems, etc.). The Water Resources Management Modernisation Project in Peru, set by the World Bank in support of ANA, has made a crucial contribution to improving the knowledge and information base on water management in the country. It mainly applies to the six pilot basins in the Pacific watershed, where river basin management plans were designed. Even in those basins, though, some doubts remain as to hydrological balances or prioritisation of investments. Outside those basins, available water resources information is still weak. The lack of reliable information jeopardises attempts to diversify water supply sources, as in the case of the reclamation and reuse of regenerated wastewaters. Generally, mechanisms to enforce water rights show much leeway for improvement. ANA’s ability to control and reallocate resources is thus compromised.

Information on rural water and sanitation services have been increasingly collected but challenges remain. The Rural WASH Information System (DATASS) presents some overlaps with other information systems such as the Water and Sanitation Information System (SIAS). In some cases, there are also some conflicting criteria and methods across systems (including classification typologies). DATASS does not provide the same completeness of data throughout the country: while some regions have managed to bridge information gaps; others are still in process. This information asymmetry has an impact on the quality of the sector diagnoses and consequently on the quality of the policy responses. The Ministry of Health leads the information system on water quality for human consumption (though DIGESA) and the health status of the drinking water infrastructure. The DIGESA information system provides real-time information on all regional micro-networks and health networks, thus contributing to decision-making for prioritising investment on drinking water.

The lack of information on groundwater resources is quite a challenge in some cases, which translates into problems in the enforcement of groundwater use rights, with illegal wells springing up. This is not only relevant for the adequate management of this back-up resource but also for compliance with the groundwater management and monitoring service tariff established by SUNASS in Greater Lima (SEDAPAL) and, in the near future, in La Libertad (SEDALIB), Ica and Tacna, for instance, which primarily rely on groundwater to sustain agricultural activities. The Ica Valley, Villacurí and Yarada are among the most overexploited aquifers in Peru, in productive areas that contribute to a large extent to Peru’s agricultural gross domestic product (GDP) and exports.

There is a diversity of funding gaps in Peru, some relating to the ability to ensure the necessary investments (in terms of upfront capital investment) or to sustain programmes and projects in terms of operational expenses; and others relating to how cost-recovery is conceived and ensured, following the principle that water should fund water. In Peru, it is also of paramount importance to strike the balance between resources made available at the central level and revenues and expenditures at the subnational levels. Peru has rules for the promotion of investment, such as the Law for the Promotion of Investments for Economic Growth and Sustainable Development, No. 30327, which includes provisions for the simplification and integration of permits and procedures, as well as investment promotion measures.

Funding constraints can actually be observed at the level of two of the regulating entities: ANA and SUNASS (OECD, 2016[20]). As per ANA, three funding sources are available: central government’s regular budgetary sources, revenue collection from water abstraction and pollution fees (following the rates approved every year for surface and groundwater and for agricultural and non-agricultural users) and funds or donations being made by third parties (multilateral and bilateral development organisations and others). According to the Water Resources Law, payments should cover the costs of IWRM to be implemented by ANA. However, this is hardly ever the case. To determine the value of those fees,42 which are paid to ANA as a result of using a public-domain resource, there is a methodology to be approved by ANA through a resolution (RJ 457-2012-ANA). These fees are levied per cubic meter of water used whatever the form of the user right granted. Beyond collecting fees for water abstraction and pollution, by the Water Resources Law (Art. 15.4), ANA approves the tariffs for the use of water infrastructures. Revenues are mainly used mainly to cover the costs of operation and maintenance.. Regulation of the referred law43 stipulates that water infrastructure operators present their proposals for rates in accordance with the technical and economic guidelines established by ANA.44

Some improvements have been made recently to achieve water quantity and quality objectives. Payments for groundwater are gradually being implemented, with some environmental criteria being factored in (e.g. water availability to somehow reflect scarcity, level of pressures and aquifer status). Besides, surface water use also entails specific coefficients to reflect water availability and type of use. Groundwater uses are regulated through different coefficients on the basis of the specific aquifer status (underexploited, in equilibrium, overexploited). Every year’s supreme decree also sets up “flat rates” for certain uses and sources, provided that the abstraction volume is lower than a certain threshold. Treated wastewater discharges are also set up for domestic and industrial discharges (sanitation and others, including from purification plants and brines from desalination of brackish and saltwater; energy; mining; agro-food; industry; fishing) and according to the environmental quality standards of the receiving water body (ECA-Water 1, 2, 3 or 4). Flat rates are also set up for specific cases (e.g. rural areas).

According to ANA, revenues collected from the abstraction and treated wastewater discharge fees in 2017 amounted to roughly USD 50 million, out of which 23% corresponds to discharges of wastewater effluents and 77% to withdrawals, 23% to groundwater use and 77% to surface water use, 15% to agricultural uses, 85% to non-agricultural ones (ANA, 2019[21])). Under the provisions of Article 95 of the Water Resources Law, these payments should cover the cost of IWRM for which ANA is responsible, along with the recovery and the remediation of environmental damage caused by whatever discharges or abstraction beyond sustainable rates. The OECD (OECD/ECLAC, 2017[4]) had already observed that in previous years those revenues had proved insufficient to cover its regular operational costs. ANA’s Strategic Plan 2018-21 considers the need to increase the fees rates, although the impact of this measure might be limited unless more provisions on the monitoring of payments are made, especially from agricultural users (ANA, 2017[22]). There is a need to disclose how the revenues are being used in order to determine if the objectives included in the Regulation on the Water Law are being fulfilled, in terms of improvements in the availability and quality of water resources.

The National Water Resources Plan established an investment programme, demanding an investment of PEN 53 909 million (USD 46 640 million) towards 2035 (ANA, 2013[23]). Funding gaps prevent the securitisation of water use rights for agriculture of 1 632 076 hectares in 36 835 irrigation blocks, requiring an investment of approximately PEN 93 million to legalise water use rights for public water supply purposes of 89 777 population centres (with 5 000 inhabitants) and the same number of licenses with an investment of PEN 180 million, among others.

With regards to SUNASS, the main sources of financing for its regulating functions are revenues from collecting drinking water rates (see Chapter 4). This incorporates the costs of conservation and recovery of ecosystem services provided by ecosystems, which integrates wastewater treatment costs to protect receiving bodies such as rivers, lakes, oceans, etc. In addition, SUNASS is funded from revenues collected through the service tariff for monitoring and management of groundwater, by non-agricultural users with their own wells (which should allow for the conservation of aquifers in order to guarantee the provision of the drinking water service especially in cases of extreme events). Finally, SUNASS is funded from transfers made by the central government through the Ministry of Economy and Finance (MEF). Since 2017 and because of the new functions of SUNASS concerning small cities and rural areas, the MEF has been transferred funds for the progressive implementation of the new role of SUNASS and the compliance with national policy. SUNASS does not receive funds from the National Rural Sanitation Programme, whose objective is to bridge gaps in rural areas.

Long terms investments in the drinking water and sanitation sector have sometimes downplayed the need to ensure the financial sustainability of infrastructure investments. The National Sanitation Policy includes Policy Axis 2 on Financial Sustainability, which aims to ensure the generation of financial resources and their efficient use by EPs. Provisions are made for planning long-term water, sewerage, wastewater treatment services investments from the national, regional and local levels. Furthermore, financial resources are allocated according to a multi-annual investment plan and national goals. National resources are made compatible with resources available at the regional and local levels. Over the last few years, these investments have been driven by the policy priority of closing water and sanitation services gaps but this has sometimes downplayed the need to ensure the financial sustainability of infrastructure investments. Part of those self-sufficiency concerns are explained by low levels of tariff rates. It has proved difficult to convey the idea that a progressive structure of tariffs would largely help ensure a sustainable collection of revenues to meet cost-recovery targets and to enable cross-subsidies schemes for low-income households.

Many water utilities are not able to cover operational costs. According to the National Sanitation Plan 2017-21, among all EPs in the country, SEDAPAL had registered a positive operational margin in 4 consecutive years (19.92% in 2015, 23.75% in 2014 and 16.86% in 2013 and 3.69% in 2012). This situation reveals that rates are not covering costs systematically. In some other cases, rate increases, if any, are absorbed by costs that rise at a faster rate. Regional sanitation plans also contain an ad hoc chapter with a financial plan; this shows the main sources of financing. Each of the regional governments should have a regional sanitation plan with a lifespan of three years. This plan is prepared based on the multi-year investment programming by the MVCS. The plan must be updated periodically.

There is a lack of adjustment between the average time of approvals and the temporal scale of needs once projects have been included in the public investment system. This has been pointed out by PROINVERSION as one of the weaknesses in the investment framework in Peru (former SNIP, current Invierte.pe) is the 7-year average time of approval and the temporal scale of needs. Furthermore, a significant degree of fragmentation of projects in the assessment procedure has been observed. It has also been suggested that co-ordination should be strengthened between FED (Outcome-oriented Fund for the Stimulus of Performance at the social level), FONAVI (National Housing Fund) and PROINVERSION.

Overall institutional capacity in the water management sector is still developing. Fundamentally, there appears to be a mismatch between the sophisticated legal framework and the capacity of Peru’s institutions to implement it. The lack of capacity contributes to and is compounded by a lack of clarity around roles and responsibilities, undermining the road to the achievement of Peru’s ambitious water supply and sanitation (WSS) goals. For example, both the Ministry of Housing, Building and Sanitation (MVCS) and the Ministry of Development and Social Inclusion (MIDIS) have roles in rural sanitation: while the MVCS leads on policy setting and investment in the sector, the MIDIS works through its International Co-operation Fund for Social Development (Fondo de Cooperación para el Desarrollo Social, FONCODES) to channel development assistance funds to programmes targeting poor rural populations, including supporting local governments with basic WSS services (MIDIS, 2019[24]). A detailed analysis of the regulatory obstacles is available in Chapter 4.

Progress in terms of IWRM at a river basin scale is needed to prevent, mitigate and manage social conflicts. There are currently two main approaches to dealing with social conflicts, which follow different conceptualisation, methodologies and typologies. On the one hand, the Ombudsman (Defensoría del Pueblo) classifies social conflicts according to areas and features (socio-environmental, national government issues, regional government issues, local government issues, community, territorial demarcation, labour, illicit coca cultivation, electoral disputes). Some doubts remain as per the availability of an updated and upgraded methodological approach to social conflict identification and management. On the other hand, the National Office for Dialogue and Sustainability (Oficina Nacional de Diálogo y Sostenibilidad ONDS (linked to the PCM) identifies eight types of conflicts related to the following activities/sectors: mining; energy; hydrocarbon; hydrological; informal/illicit mining; territorial demarcation; agriculture, forestry and coca cultivation; and labour. Further, the Ministry of Mining and Energy also has a specialised unit to address conflicts linked to mining activities.

The representation of various categories of stakeholders in River Basin Councils should be improved for greater citizen trust and government accountability. The creation of CRHCs has made some space for wider stakeholder engagement, including in the negotiation and definition of their priorities or demands. Ad hoc working groups on water availability, water quality, financing, research, water culture and risk management also add value in terms of inclusiveness and accountability. The participation of critical stakeholders, such as small peasant communities, needs to be improved, as they are clearly under-represented despite their critical role in the conservation of headwaters (ANA, 2017[25]; 2017[26]). Further, technical secretariats within the River Basin Councils need to improve co-ordination with ANA’s decentralised bodies (AAAs and ALAs). Not all entities with representatives in the working groups are formal members of CRHCs.

The implementation of MERESE provides a good illustration of the potential leeway for improvement in terms of accountability. By definition, success in the implementation of MERESE is highly dependent on political decisions at different levels (across sectors and levels of government). Critical decisions can happen in state institutions and grassroots organisations, such as the boards of irrigation districts, the peasant communities or the boards of directors of water utilities (as the signing of the agreement depends on the social acceptance of MERESE interventions). Nationwide, there is a clear lack of installed capacity in terms of human resources in EPs to deliver MERESE. Due to a lack of will between parties and the absence of seamless channels of communication and dialogue, some of these schemes for payment of ecosystem services tend to be compromised. Further to improving the actual implementation of MERESE, unlocking some of the prevailing obstacles, it seems imperative to develop communication mechanisms that allow those paying to know where and how their contributions would be invested. For instance, there is significant distrust between the drinking water users, actually paying MERESE in their water bill with the relevant EPs, and the EPs themselves in terms of the use of the funds raised. There is also a mistrust from farming communities and agricultural users to accept projects supported by public or private funds, which creates delays or in some cases prevents the implementation of the project itself.

Water governance plays a critical role in enhancing water security in Peru. Water is a valuable economic asset and a driver for social development, among many other things. Water security directly contributes to fostering the establishment of a competitive export-oriented agricultural sector, increasingly inserted in the global economy, the potential expansion of a modern mining and energy industry, or the rapid urbanisation process. Likewise, water security also drives growth as it is of chief importance for the entire production system to the induced demand of services associated with economic activities and the delivery of linked commodities and services.

Peru’s challenge is very much one of progressing from approaches driven by crisis management to water resources management rather than driven by risk and opportunity management within a context of increased uncertainties and the need for climate change adaptation. The current economic downturn and the associated fiscal consolidation effort, in a context of global pandemic and health crisis, both contribute to reducing public funds availability to supporting new grey infrastructural development, ad hoc responses to droughts and floods as well as water conflict management through additional subsidies or other short-term expansionary fiscal policy measures.

Enhanced water governance, is a means to an end. It is not important in itself but only as a result of the benefits it delivers and not only in terms of improved environmental quality but ultimately of social well-being. In Peru, the challenge in terms of water governance is very much one of improving social responses to water scarcity and wider water-borne risk mitigation whilst increasing the resilience of social and economic development.

Based on the specific characteristics of the legal and institutional framework of Peru, on existing approaches to water management, both as a resource and as a service, and on international best practices, the section below suggests ways forward to:

  • Progress towards a holistic and integrated approach to water security.

  • Ensure sufficient capacity in terms of numbers of staff and qualification profiles at the national, regional and local levels.

  • Strengthen the information and knowledge base about current and future risks of pollution, droughts and floods.

  • Enhance strategic planning for more effective public investment.

  • Redesign economic and financial incentives.

  • Engage stakeholders in defining the acceptable levels of water risk.

Peru should ensure that forms (e.g. governance structures such as ministries etc.) follow functions (e.g. water as a driver to sustainable development and economic growth). This implies that regardless of its institutional attachment, ANA should strengthen its multi-sectoral character. This would entail the following actions:

  • Raise the profile of water policy both at an executive (i.e. Cabinet Office, Vice-presidency, etc.) and legislative level, avoiding restructuring legal powers across public agencies and ministries’ portfolios as a mere administrative change (e.g. the overall ministerial attachment of ANA). Regardless of its location and belonging in the Cabinet, ANA should have direct, effective and high-level access to inter-ministerial policymaking at the national level and should be strengthened in different ways to be recognised by all water users and all policymakers as the reference for water policy, as it is the case of the National Water Agency in Brazil, for instance (Box 2.4). ANA should perceived by all interested parties as an independent “honest broker” and that the attachment and status of ANA in the overall governmental setup should support this.

  • Clearly distinguish between those legal powers in ANA that have to do with water for irrigation and those that clearly demand a strong multi-sectoral approach.

  • Improve representation of connected policy areas within different institutions (in particular ANA, DIGESA, water utilities and the CRHC, as well as in similar bodies in other policy areas and in local and regional governments). Potential indicators to evaluate progress could be the number of effective meetings of the National Water Resources Council a year and the seats for non-agricultural users in the National Water Resources Council.

  • Set up formal mechanisms for sectoral co-ordination, for example through the operationalisation of a memorandum of agreement with ANA. For example, in Australia, the National Water Initiative (NWI) was developed in 2004 as an inter-governmental agreement whereby commitments to reach targets related to the efficient and sustainable management of water are made across levels of government and closely monitored.

A second way forward is to further integrate policies related to all the water realms (glaciers, river ecosystems, coastal areas and marine ecosystems), under the umbrella of climate change adaptation (CCA) and disaster risk reduction (DRR) policies, with a clearer approach to social-ecological resilience. A National Strategy or Blueprint for Long-term Water Security within the context of climate change could provide additional (internal and external) consistency to current policies and planning efforts, as well as connecting water policy in a much more explicit way to other sectoral policies and climate change mitigation and adaptation efforts. For example, the Delta Programme is a national programme to ensure water security in the Netherlands in the long term, for the next 100 years, and to make sure it keeps being a safe and attractive place to live and work for present and future generations (Box 2.5).

Third, to progressively move away from crisis management towards risk and opportunity management, exploring complex linkages between sectoral policies (with emphasis on the nexus water-energy-mining-food-climate-biodiversity), through:

  • Enhancing water demand management, from a nexus approach, measuring the number of intersectoral links identified and the high-level initiatives to promote dialogue across crosscutting issues. MIDAGRI, the MVCS, MINEM, MINSA, and PRODUCE could co-ordinate sectoral policies and mainstreaming water policies. The MINAM could take responsibilities to make this happen.

  • Considering the inclusion of tariffs in other sectors that are dependent on water resources for sustainability (power generation, agriculture) to effectively recover the costs associated with (consumptive and non-consumptive) water uses.

  • Strengthening an integrated approach for relevant public health issues, such as child anaemia and illegal mining through joint initiatives from the public sector (MINEM, MIDIS, MINSA, MINAM, etc.).

Complementing traditional supply augmentation projects with major water use efficiency improvements and nature-based solutions is also much needed. There is more to be done in contemporary water policy rather than working with long-term availability in mind, with a bias towards supply augmentation or traditional flood management. The timely development of natural or conventional infrastructure, or a hybrid approach, might in principle avoid critical situations due to lack (or excess) of water. Indeed, considering hybrid and adaptive approaches to infrastructure development (combining grey and natural-based solutions) could be achieved through:

  • Ensuring that reconstruction plans with changes include the obligation to execute a percentage of nature-based actions within the grey infrastructure projects under the responsibility of the MVCS and the PGRHC.

  • Including the obligation to consider a natural infrastructure component that is integrated into the grey infrastructure components in the PGRHC and the grey infrastructure projects in charge of the competent sanitation authorities.

  • Developing the analysis of water risks at the basin scale for the effective use of MERESE funds and that allow making decisions on prioritised basins for the design and implementation of natural infrastructure.

  • Initiating a process of evaluation and documentation on the results and performance of the natural infrastructure interventions in terms of the desired hydrological result.

Peru’s water resources management strives to diversify water supply sources (via water reuse and saltwater and brackish water desalination), in addition to considering surface runoff and groundwater (including joint management of these). Additional supplies to cope with temporary shortages should be considered, whilst also promoting the substitution of the most vulnerable water supply sources in order to reduce overexploitation. The latter should be done through the diversification of water supply sources but also water demand management schemes. For both, refining pricing schemes to redesign incentives is critical. It would also be helpful to engage more closely with the academia and research institutions for fostering research and technological development on alternative water supply sources for different purposes (e.g. seawater could be useful for coastal areas from Tacna to Tumbes, lacking water but not quality soils).

Another priority is to strengthen the link between water resources management and water supply and sanitation services to avoid a decoupled policy approach. Examples of suggested actions in this area could be:

  • For ANA to build or upgrade a national water resources plan based on long-term scenarios (including climate change ones) and risk assessments (30+ years) and developing, together with SUNASS, a national inventory of water resources that are suitable for drinking water production. The strategic plan could take the form of a thorough review of the PNRH and put in place a more concerted action towards improved resilience and long-term water security within the context of CCA efforts, building on the opportunity provided by the Intended Nationally Determined Contributions (INDC ) process to strengthen co-ordination, which has ben set in place since the Paris Agreement in 2016. The strategic plan could take the form of a thorough review of the prevailing PNRH and could put in place a more concerted action towards improved resilience and long-term water security within the context of CCA efforts, building on current INDC by MINAM, a process that is intended to strengthen co-ordination, also benefitting from the approval of the Framework Law for Climate Change (LMCC). For example, the California Water Plan Update (2018) is the most recent of the state’s strategic plan for sustainably managing and developing water resources for current and future generations. The water plan is much more than a planning or guidance document as it provides a policy forum for elected officials, agencies, California Native American Tribes, resource managers, businesses, academia, stakeholders and the public to collaboratively develop findings and recommendations that inform decisions about water policies, actions and investments. The plan is a key tool for strengthening these partnerships.

  • For the ministries active in rural areas (e.g. the Ministry of Social Development and Social Inclusion), with whom SUNASS had little to no contact when its functions were limited to utilities in urban areas, to establish effective co-ordination between water management and access to quality water services. There are many co-ordination mechanisms in Peru (Box 2.6); however, it would be key to improve the representation of connected policy areas within different institutions (in particular ANA, DIGESA, water utilities and CRHCs as well as in similar bodies in other policy areas and local and regional governments). An enduring mechanism for incentivising inter-governmental co-operation is needed to improve planning and strategic investment, basin management and regulation of water services amongst others.

The country would benefit from strengthening capacity and institutional memory by providing staff who have relevant competencies with strong incentives to remain in their positions and thus reduce staff turnover at both the central government and local levels (CRHCs, WSOs and AAAs). Within capacity building initiatives, a multidisciplinary approach should be taken so as to strengthen the understanding of the complexity of water resources management. Capacity building is also needed to make the existing river basin management plans fully operational. A stronger regional or local political leadership in the CRHCs should be coupled with adequate human and technical resources, as well as access to government finance and subsidies conditional on effective design and implementation of PGRHCs and sanitation plans. It would be advised to carry out a review of resource needs for water resources management across all involved authorities, including an assessment of the scope for rationalisation and elimination of overlapping tasks, and to consider how these needs can be financed, either through user charging or public funds.

Practical steps could be the following:

  • Continue the process of creation of the 29 CRHCs.

  • Enhance the level of autonomy of river basin authorities.

  • Improve (quantity and quality) of the personnel and their skills. For example, a change in the training of engineers and professionals is needed to make possible a quicker, well-informed assessment that also allows for decision-making based on expert knowledge when data is missing, etc.

  • Focus on communal organisations (e.g. JASS), where the personnel are voluntary, unpaid and with very low administration, operation and maintenance capacity.

  • Promote professional management preventing political capture of public utilities.

  • Reduce instability and high rotation of policymakers in local and regional governments

To support the development of river basin plans, the AAAs should build long-term scenarios at the level of river basins and their sub-basins based on water balances and taking account of possible or expected developments in land use, economic activity, climate and demography in the basin. Since 2014, hydrological measurement networks have been modernised, automating the registration and data transmission processes. With projected increases in drought and flood risks, investment in policy-relevant indicators will become even more important. However, national water indicators may be less meaningful in the case of a large country like Peru, characterised by a high diversity of bioclimatic zones, hydrological regimes and water demands. Hence, national averages may hide serious water-stress conditions at the regional, basin-level scale. Accurate water balances at the basin level should therefore become a priority. Having reliable and quality assured water data and measuring water stress at the water basin scale and aggregating at the national level on this basis would constitute an improvement in this regard. MINAM, ANA and SUNASS could collaborate to:

  • Continue promoting measurement networks to get accurate water balances at the basin level.

  • Have reliable and quality assured water data, especially for groundwater resources.

  • Increase the granularity of data at the subnational level: a country-scale indicator may mask serious water-stress conditions at the regional, basin-level scale.

  • Reduce asymmetry or lack of information due to institutional silos or malfunctions in the allocation of legal powers and administrative co-ordination mechanisms.

  • Provide mechanisms to monitor payments, especially from agricultural uses.

Strategic planning can be a significant lever to simplify and accelerate public investment procedures and align them better with decision-making schemes. It is particularly key to streamline investment evaluation procedures within the National Multi-year Programming and Investment Management System (Invierte.pe) to minimise obstacles, as compared to conventional infrastructure projects. While several schemes are in place for the conservation of biodiversity and ecosystem services, ranging from legally protecting headwaters to MERESE, natural infrastructure would allow for synergies between sectoral policies: forest, spatial development, water. As such, specific regulatory measures could be applied to allow streamlining investments in natural infrastructure by approving alternative routes to the public investment system.

For sanitation, financial incentives could also be considered for local governments to comply and adhere with department sanitation plans, for instance by modulating access to governmental grant finance accordingly. An example of an effective capacity-building programme across levels of government is the National Water Management Pact in Brazil (Box 2.7). The EU supports the implementation of policies and legislation by providing financial incentives to member states, applying ex ante conditionality that each country must fulfil in order to qualify for financial support. In particular, the following should be considered:

  • Increasing municipal and regional fiscal resources and investments, for instance by transferring a share of the revenues collected via the so-called mining exports excise (canon minero) to regional and local governments.

  • Simplifying and accelerating public investment procedures and align with decision-making schemes to maximise timelines and co-ordination. An example of such an approach could involve matching the Optimised City Masterplan, which includes investment projects, with the municipal sector plan, which includes urban development projects. It is critical to note that Resolution No. 004-2019-EF/63.01, which approved the General Guidance for the Identification, Formulation and Evaluation of Investment projects, establishes that all investment projects need to follow the same investment assessment cycle. It is also important to establish that, in solidarity with other stakeholders in the basins, the EPs maintain the responsibility of investment in addressing water risks for the provision of the public service they provide and that the optimised masterplan be co-ordinated with instruments and public management plans in the watersheds to ensure the financing of interventions in natural infrastructure based on needs.

  • Creating strong financial incentives for local governments to comply with and adhere to department sanitation plans, e.g. by modulating access to governmental grant finance accordingly.

  • Following uniform criteria for investments in water and sanitation for urban and rural areas, that is standardised investment instruments that, based on technical and least-cost criteria cost, allow for efficient investment decisions for the sector.

Further engagement with the private sector is also needed, through strengthened public regulation towards guaranteeing the public interest and improving the connection of research, technological development and, above all, innovation in the water sector, which has become a priority. There has been significant progress in co-operating with the private sector through shared value initiatives promoted by multilateral donors and national organisations. However, the most proactive private partners seem to be facing a number of constraints in terms of investment procedures, risk management facilities, project appraisal and procurement. Insights from multi-stakeholder platforms should be accounted for to ensure more beneficial inputs from the private sector, beyond prevailing mechanisms (i.e. PPPs, works for taxes, etc.). The following actions can be considered by the MEF, MIDAGRI, MINEM and the MVCS:

  • Create fiscal incentives or expand Works for Taxes schemes.

  • Remove harmful subsidies.

  • Promote private investments in public services and public infrastructure through PPPs, led either by public or private initiatives.

  • Provide information services to investors and help to create a conducive environment, attractive for private investments, improving information sharing across public policies.

  • Improve the temporal scale of project evaluations in the public investment system (Invierte.pe).

  • Avoid fragmentation of investment projects.

  • Strengthen co-ordination between FED (Outcome-oriented Fund for the Stimulus of Performance at the social level), FONAVI (National Housing Fund) and PROINVERSION.

  • Promote a framework for PPPs for water and resilience projects – while developing a new asset class (e.g. natural infrastructure).

Economic and financial incentives should not only strive to raise revenue but also consider water quantity and quality objectives while taking into account distributional effects. As such, improving pricing schemes, with emphasis on bulk water pricing (ANA’s water abstraction and treated wastewater discharge fees) would contribute to adapting water availability and demand, especially in the most water-stressed basins. In turn, this would guarantee additional supplies to cope with temporary shortages, whilst promoting the substitution of the most vulnerable water supply sources in order to reduce overexploitation. More specifically, this improvement should contribute to pricing access to non-conventional water sources in a way that induces farmers to signal their responsible use of groundwater resources under their control. This would lead to an increase in resilience through increasing water security for urban uses by reducing shortages of water for irrigation, via relaxing surface water abstraction. A likely outcome would also be the increase of buffer stocks in the medium term (by an excess supply of non-conventional sources in normal periods) and in the longer term (by allowing better conservation levels in aquifers).

Setting an opportunity cost for groundwater overexploitation would allow to regain control of groundwater resources. The prevailing groundwater management and monitoring tariff is a relevant milestone. These include considering incentives for more efficient abstraction and consumption of groundwater use, more ambitious monitoring initiatives, analysis of behavioural patterns of groundwater users, expanding the micro-metering of groundwater use, controlling informal users, fostering reclaimed wastewater reuse or connecting the groundwater tariff to the MERESE, as in the case of the Lima region. However, without making more information available about current trends of groundwater resources (both in terms of availability and quality), the tariff is likely to have limited impact. Furthermore, this tariff is not currently levied on agricultural users. Aquifers are being used de facto as an insurance policy with no role whatsoever for the financial sector as yet. In the future, if such an opportunity cost on groundwater use is foreseen nationwide, there would be an opportunity to stabilise farmers’ income in dry periods through reducing incentives to extract from already depleted aquifers and providing incentives to signal a responsible use of aquifers. This would ensure collective control of aquifers, as compensation in dry periods might be contingent on the proof that no overdraft occured in a particular irrigation district.

While redesigning economic and financial incentives, no one should be left behind and distributional effects should be considered. Protection of consumers and low-income farmers is an essential part of IWRM that is lagging. Peru does not yet have enough tools to protect consumers or rural livelihoods in general, even though there is legislation available. New tools to protect low-income households and small-scale subsistence farmers should be created, mostly through focused subsidies on demand and measures beyond water policy that address the actual societal challenge, namely poverty and social exclusion. For example, the following could be considered:

  • Reinforce the role of CEPLAN.

  • Promote coverage and sustainability of services in rural areas.

  • Explore a progressive structure of tariffs as the best way to ensure a sustainable collection of revenues to meet cost-recovery targets and to establish cross-subsidies schemes for low-income households.

  • Define operational mechanisms for the fair compensation of benefits to those who are directly linked to the fulfilment of the objectives and results of the projects in the basins.

The OECD Guidelines on Corporate Governance of State-Owned Enterprises give concrete advice to make state-owned enterprises more competitive, efficient and transparent (OECD, 2015[35]). Examples of consultation bodies can be found in the Essential Services Commission of South Australia, the Customer Forum in Scotland, the Local Public Services Consultation Commission in France.

Bringing stakeholders together to agree on acceptable levels of water risks for the community would give ANA an extremely powerful “entry point” on the ground and allow it to play its full role as a water authority. Important investments (e.g. mining investments) for the Peruvian economy have been missed for lack of prior agreement on such acceptable levels of risks. The risk-based approach would also mitigate the risk of having to resort to the Water Conflict Adjudication Court to resolve appeals against administrative decisions emanating from ANA. CRHCs, despite their consultative nature and significant deficits in terms of financial and technical capacity, have experience in engaging stakeholders. However, the representation of various users and their voice in the planning and management of water resources should be carefully considered to avoid the risk of capture by some categories (i.e. agricultural users). As such, it would be important to:

  • Strengthen the engagement of regional and local authorities and their commitment to the implementation of the national plan and the adequate fulfilment of the functions of River Basin Councils.

  • Improve co-ordination between technical secretariats and AAAs and ALAs in working groups.

  • Improve the social legitimacy of charges (develop communication mechanisms that allow those paying to know where and how their contributions would be invested).

  • Convene a national summit gathering national, provincial and local governments and policymakers.

  • Complete the process of setting up multisector working groups (GETRAM) with the inclusion of regional governments.

An example of stakeholder engagement for water policy is the EU Better Regulation Guidelines. Following the adoption of the 2015 Better Regulation Guidelines, the European Commission has extended its range of stakeholder engagement methods to enable stakeholders to express their view of the entire lifecycle of a policy, including water policy (fitness check of the Water Framework Directive -WFD and Flood Directive- FD).


[1] Acuerdo Nacional (2012), Política de Estado sobre Recursos Hídricos, Secretaría Ejecutiva del Acuerdo Nacional, Perú, https://www.ana.gob.pe/sites/default/files/politica_de_recursos_hidricos_33_documento.pdf.

[7] Albán Contreras, L. (2017), El Fondo del Agua Quiroz-Chira: Un mecanismo de gestión para los ecosistemas de montaña de Piura, Perú - Sistematización de la experiencia, Naturaleza y Cultura Internacional and Andean Forests programme of the Swiss Agency for Development and Cooperation (COSUDE), https://cooperacionsuiza.pe/wp-content/uploads/2017/02/faqch-final-web.pdf.

[13] ANA (2020), Consejos de Recursos Hídricos de Cuenca, https://www.ana.gob.pe/nosotros/planificacion-hidrica/plan-gestion-cuencas (accessed on 18 March 2021).

[17] ANA (2019), “Autoridad Nacional del Agua informa sobre proceso de zonificación de cabeceras de cuenca, noticia (11 junio 2019)”, Autoridad Nacional del Agua, https://www.ana.gob.pe/noticia/autoridad-nacional-del-agua-informa-sobre-proceso-de-zonificacion-de-cabeceras-de-cuenca.

[21] ANA (2019), Compendio nacional de estadísticas de recursos hídricos 2017 (SNIRH), Autoridad Nacional del Agua, https://www.ana.gob.pe/publicaciones/compendio-nacional-de-estadisticas-de-recursos-hidricos-2017.

[10] ANA (2018), Memoria Anual 2017, https://repositorio.ana.gob.pe/handle/20.500.12543/2442 (accessed on 12 March 2021).

[25] ANA (2017), Gestión integrada de recursos hídricos en el Perú: Consejos de Recursos Hídricos de Cuenca, avances y retos para la gobernanza hídrica, Autoridad Nacional del Agua, http://repositorio.ana.gob.pe/handle/20.500.12543/681.

[2] ANA (2017), Marco de Gestión Ambiental y Social del Proyecto de Gestión Integrada de los Recursos Hídricos en Diez Cuencas Hidrográficas (Código SNIP N° 302961), Autoridad Nacional del Agua, https://www.ana.gob.pe/proyectos-ana/pgirh.

[22] ANA (2017), Plan Estratégico Institucional–PEI 2018-2021, Autoridad Nacional del Agua, https://www.ana.gob.pe/sites/default/files/archivos/manager/2018-10/PEI%202018%20-%202021_FINAL.pdf.

[26] ANA (2017), “Representatividad y poder de decisión en Consejos de Recursos Hídricos de Cuenca Perú”, Autoridad Nacional del Agua, https://www.riob.org/sites/default/files/IMG/pdf/JAVER_-_PRESENTACION_BRASILIA_JRP.pdf.

[5] ANA (2014), “Protocolo para la prevención y gestión de conflictos sociales vinculados con los recursos hídricos”, Autoridad Nacional del Agua, http://repositorio.ana.gob.pe/handle/20.500.12543/216.

[23] ANA (2013), Plan Nacional de Recursos Hídricos del Perú: Memoria, Autoridad Nacional del Agua, http://www.ana.gob.pe/sites/default/files/plannacionalrecursoshidricos2013.pdf.

[3] ANA and MINAGRI (2016), Priorización de cuencas para la gestión de los recursos hídricos.

[34] BCG Foundation (2016), “The Brazilian Progestão, a national agreement for managing freshwater resources”, https://www.centreforpublicimpact.org/case-study/brazils-national-pact-for-water-management/.

[18] Chirinos, K. (2018), “Implicancias de establecer un Marco Metodológico para identificar, delimitar y zonificar las cabeceras de cuenca en el Perú. Análisis de la modificación del artículo 75º de la Ley de Recursos Hídricos”, PUCP, Facultad de Derecho, Perú, http://tesis.pucp.edu.pe/repositorio/bitstream/handle/20.500.12404/13733/Chirinos_Espinoza_Implicancias_establecer_marco1.pdf?sequence=1&isAllowed=y.

[31] EC (2018), “Mission-oriented R&I policies: In-depth case studies”, Case Study Report Delta Plan/ Delta Programme (The Netherlands), European Commission.

[12] Government of Peru (2016), Se destrabaron 170 obras de agua potable y alcantarillado en beneficio de un millón de Peruanos, https://www.gob.pe/institucion/presidencia/noticias/9416-se-destrabaron-170-obras-de-agua-potable-y-alcantarillado-en-beneficio-de-un-millon-de-peruanos (accessed on 15 March 2021).

[32] Government of the Netherlands (n.d.), “National Delta Programme 2021, Staying on track in climate-proofing the Netherlands”.

[24] MIDIS (2019), Quiénes Somos?, http://www.foncodes.gob.pe/portal/index.php/nosotros/quienessomos3.

[6] MINAM (2011), Conversatorio internacional: Mecanismos de financiamiento para la conservación de los ecosistemas y la biodiversidad, http://repositorio.ana.gob.pe/bitstream/handle/20.500.12543/4433/ANA0002933.pdf?sequence=1&isAllowed=y.

[9] MVCS (2019), DATASS - Modelo para la toma de decisiones en saneamiento, https://datass.vivienda.gob.pe/ (accessed on 15 March 2021).

[8] MVCS (2018), DATASS: Modelo para la toma de decisiones en Saneamiento. Sistema de Diagnóstico sobre Abastecimiento de Agua y Saneamiento en el Ámbito Rural, Ministerio de Vivienda, Construcción y Saneamiento, https://cooperacionsuiza.pe/wp-content/uploads/2018/11/DATASS-Modelo-para-la-toma-de-decisiones-web.pdf.

[20] OECD (2016), Regulatory Policy in Peru: Assembling the Framework for Regulatory Quality, OECD Reviews of Regulatory Reform, OECD Publishing, Paris, https://doi.org/10.1787/9789264260054-en.

[35] OECD (2015), OECD Guidelines on Corporate Governance of State-Owned Enterprises, 2015 Edition, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264244160-en.

[14] OECD (2015), OECD Principles on Water Governance, OECD, Paris, http://www.oecd.org/cfe/regional-policy/OECD-Principles-on-Water-Governance.pdf.

[16] OECD (2015), “OECD Studies on Water, Country profile, Spain”, OECD, Paris, https://www.oecd.org/spain/Water-Resources-Allocation-Spain.pdf.

[36] OECD (2015), OECD Water Governance Principles (brochure), OECD, Paris, https://www.oecd.org/gov/regional-policy/OECD-Principles-on-Water-Governance-brochure.pdf.

[27] OECD (2015), Water Resources Governance in Brazil, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264238121-en.

[29] OECD (2014), Water Governance in the Netherlands: Fit for the Future?, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/9789264102637-en.

[28] OECD (2013), Water and Climate Change Adaptation: Policies to Navigate Uncharted Waters, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/9789264200449-en.

[15] OECD (2011), Water Governance in OECD Countries: A Multi-level Approach, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/9789264119284-en.

[30] OECD (n.d.), Country Profile: The Netherlands, OECD, Paris.

[4] OECD/ECLAC (2017), OECD Environmental Performance Reviews: Peru 2017, OECD Environmental Performance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264283138-en.

[33] P.A.C. Libanio (2017), “Promoting and assessing water governance at subnational level: The experience of Brazil’s National Water Management Pact”, Water International, Vol. 42/4, pp. 385-399, https://doi.org/10.1080/02508060.2017.1328638.

[11] PCM (2017), Peru: A Reliable Partner for the OECD, Gobierno de Perú/GIZ/World Bank, https://sgp.pcm.gob.pe/wp-content/uploads/2017/05/brochure-PERU-OECD.pdf.

[19] World Bank (2017), Project Appraisal Document on a Proposed Loan in the Amount of us$ 40 Million to the Republic of Peru for a Peru Integrated Water Resources Management in Ten Basins Project (April 05, 2017), Report No: PAD2104, World Bank, Washington, DC, http://documents.worldbank.org/curated/en/634181493604098313/pdf/Peru-Integrated-Water-Resources-Mngt-in-Ten-Basins-P151851-PAD-04112017.pdf.

Additional references

ANA (2017), Plan Estratégico Institucional–PEI 2018-2021, Autoridad Nacional del Agua, https://www.ana.gob.pe/sites/default/files/archivos/manager/2018-10/PEI%202018%20-%202021_FINAL.pdf.

ANA (2018), Memoria Anual 2017, Autoridad Nacional del Agua, https://hdl.handle.net/20.500.12543/00.12543/2442.

ANA/MINAGRI (2016), Priorización de Cuencas para la Gestión de los Recursos Hídricos, https://www.ana.gob.pe/sites/default/files/publication/files/priorizacion_de_cuencas_para_la_gestion_de_los_recursos_hidricos_ana.pdf.

OECD (2011), Water Governance in OECD Countries: A Multi-level Approach, OECD Studies on Water, OECD Publishing, Paris , https://doi.org/10.1787/9789264119284-en.


← 1. The national agreement was signed in 2002 by all the political forces represented in Congress, civil society members and the government, to build consensus on state policies and contribute to a shared vision of the country.

← 2. It is based upon a previous draft from 2009 (R.J. No. 0250-2009-ANA) and a series of subsequent validated versions (2011, 2012 and 2013).

← 3. Art. 17, Law No. 29158: Organic Law of the Executive Power, LOPE.

← 4. PCM ROF, Supreme Decree No. 022-2017-PCM.

← 5. Supreme Decree No. 18-2017-VIVIENDA

← 6. Within the framework of the National System of Environmental Impact Assessment (SEIA) and in accordance with the provisions of Article 53 of the Regulation of the SEIA Law, as well as the provisions Article 81 of Law No. 29338 on Water Resources.

← 7. Article 19, Regulation of the Water Resources Law.

← 8. Created by ANA’s Resolution No. 546-2009-ANA on the basis of MINAGRI-ANA, 2009.

← 9. Articles 11, 87 and 90 of the General Environmental Law, No. 28611, regulate the integrated management of transboundary natural resources and inland waters, noting that the state promotes and controls its sustainable use and creates strategic alliances for this purpose, considering compliance with national environmental norms.

← 10. The protection of headwaters is promoted by ANA, MINAM, the MEF, MIDAGRI and MINAM through a working party for the preparation of a Methodological Framework for Technical Criteria for the Identification, Delimitation and Zoning of Headwaters of Basins, as established in Law No. 30640, highlighting, among the contributions of MINAM, the insertion of the ecosystem approach in environmental vulnerability and the zoning of the headwaters of the basin, supported by the National Ecosystem Map, which will allow reaching a consensus for the good of the country.

← 11. Art. 84, Water Resources Law.

← 12. This is done in co-ordination with ANA and with the scientific support of the National Institute for Glacier and Mountain Ecosystem Research (INAIGEM), the Research Institute of the Peruvian Amazon (IIAP) and the Geophysical Institute of Peru (IEP), all of them under the institutional umbrella of MINAM.

← 13. Supreme Decree No. 002-2017-MINAM.

← 14. The MINAM is responsible for proposing environmental targets and ensuring the protection of the environment and the conservation of natural resources within the framework of the National Environmental Policy. This is done through its main directorates-general, DG Policies and Regulation on Building and Sanitation (DGPRCS), and the attached Directorate of Sanitation, DG Programmes and Building and Sanitation Projects (DGPPC) and DG Environmental Issues (DGA). The Directorate- General for Environmental Issues (Dirección General de Asuntos Ambientales, DGAA) is the body responsible for setting environmental objectives, drafting guidance and strategies for the development of the MINAM’s legal powers, ensuring the protection of the environment and the conservation of natural resources within the framework of the National Environmental Policy.

← 15. Art. 12, Regulation of the Water Resources Law.

← 16. Supreme Decree No. 18-2017-VIVIENDA.

← 17. Art. 12 Law No. 30215.

← 18. Amended by Legislative Decree No. 1078 (Article 2).

← 19. For the preparation of the National Inventory of Wetlands, a working group has been created. It is composed of the Ministry of the Environment, the National Water Authority, the Forest and Wildlife Service, the Research Institute of the Peruvian Amazon and the Institute of the Sea of Peru, and is chaired by ANA, with the task of defining the “General Guidelines for the preparation of the National Inventory of Wetlands”. The purpose of this process is to generate information on the distribution of wetlands in the country, which, together with the inventory of water sources, will allow adequate decisions to be made for the management of these strategic ecosystems. To date, a number of pilots of the methodology have been implemented in different basins of the country, pending the definition and approval of the guidelines to steer the realisation of this important planning and management instrument at the national level.

← 20. Law No. 31075, Law on the organisation and functions of MIDAGRI (23 November 2020).

← 21. Article 13, Regulation of the Water Resources Law.

← 22. As set up in the Legislative Decree No. 1280 (Framework Law for the Management and Provision of Sanitation Services – hereinafter Framework Law), sanitation services include the following: drinking water supply, sewerage, wastewater treatment and sanitary disposal of excreta).

← 23. Legislative Decree No. 1280.

← 24. Numeral 3, sub-section 7.1 of Article 7 of Supreme Decree 019-2017-VIVIENDA on the regulation of the Framework Law of Management and Delivery of Sanitation Services.

← 25. Ministerial Resolution No. 078-2019-VIVIENDA.

← 26. Supreme Decree No. 006-2007-VIVIENDA.

← 27. Supreme Decree No. 002-2012-VIVIENDA.

← 28. Supreme Decree No. 006-2019-VIVIENDA.

← 29. Enactment of the new Framework Law for the Management and Provision of Sanitation Services, via Legislative Decree No. 1280 in 2016 and its regulation (Supreme Decree 019-2017-VIVIENDA) Art. 8, Regulation of the Framework Law for the Management and Provision of Sanitation Services, Supreme Decree No. 019-2017-VIVIENDA.

← 30. Legislative Decree No. 25965.

← 31. Law No. 27332, Framework Law of Regulatory Agencies of Private Investment in Public Services, Supreme Decree No. 042-2005-PCM.

← 32. With the enactment in 2016 of the new legal framework of sanitation services (Framework Law for the Management and Provision of Sanitation Services, Legislative Decree No. 1280 and its Regulation: Supreme Decree No. 019-2017-VIVIENDA) derogated the 1994 General Law of Sanitation Services and the 2013 Law of Sanitation Services Modernisation).

← 33. Service area: “the zone under the responsibility of a provider for supply sanitation services. It also includes the potential area in which efficient services could be provided efficiently” (methodology for establishing the areas for provision of services, Resolution No. 13-2020-SUNASS-CD).

← 34. Supreme Decree No. 031-2010-SA.

← 35. Article 20, Regulation of the Water Resources Law, Supreme Decree No. 001-2010-AG, with competencies clearly defined in its Part II, Chapter IV.

← 36. Resolution No. 575-2010-ANA, following the General Guidelines for the Creation of River Basin Councils as well specific guidelines for their internal regulation, as established in Resolution No. 290-2012-ANA.

← 37. Art. 194.1 of the implementing regulation of the Water Resources Law: Supreme Decree No. 001-2010-MINAGRI.

← 38. In accordance with their organic laws, the Water Resources Law and its Regulation, as in Art. 15.

← 39. In accordance with Article 141 of Law No. 27972, Organic Law of Municipalities, municipalities located in rural areas, in addition to basic competencies, are in charge of those related to the promotion of sustainable management of natural resources: soil, water, flora, fauna, biodiversity, in order to integrate the fight against environmental degradation with the fight against poverty and the generation of employment, within the framework of concerted development plans.

← 40. Framework Law for the Management and Provision of Sanitation Services (Legislative Decree No. 1280) following the Organic Law of Regional Governments No. 27867 and the Organic Law of Municipalities No. 27972.

← 41. Within the framework of the National Water Resources Information System, specific agreements were signed with the data producers, such as: the National Service of Hydrometrics and Meteorology (SENAMHI); the Chira Special Project – Piura; the Tacna Special Project; the Olmos Special Project – Tinajones; the Pasto Grande Special Project; the SEDAPAL National Geographic Institute (IGN); the Geological, Mining and Metallurgical Institute (INGEMMET); the National Centre for Estimation, Prevention and Reduction of Disaster Risk (CENEPRED); and the National Commission of Aerospace Research and Development (CONIDA). Information is available and freely accessible at http://www.ana.gob.pe/portal/snirh.

← 42. Art. 15.4 of the Water Resources Law.

← 43. Approved by Supreme Decree No. 001-2010-AG (Art. 191).

← 44. These guidelines were approved by Resolution RJ No. 307-2015-ANA and amended by Resolution No. RJ 337-2016-ANA.

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