1. Water resources in Peru: The state of play

Peru is the eighth water-richest country in the world in terms of freshwater volume and the third in Latin America, after Brazil and Colombia. However, freshwater is unequally distributed across the country: 97% of available freshwater is in the Amazon Hydrographic Region, where the 31% of the population live (INEI, 2018[1]; ANA, 2013[2]). On the other hand, the majority of the population (65%) and economic activities are located in the Pacific Hydrographic Region, despite generating just 1.77% of Peru’s available freshwater. Water demand in the capital city of Lima, in the water-scarce Pacific Hydrographic Region, has experienced strong growth due to the significant increase (+51.8%) in its population over the past 25 years (INEI/UNFPA, 2020[3]). Its population consumed 163 litres per capita and per day in 2018, significantly above the 100 litres per capita and per day recommended by the World Health Organization (WHO). Despite the scarce amount of water resources, more than two-thirds of the agricultural gross domestic product (GDP) originates from the Pacific watershed (FAO, 2015[4]). Finally, the Titicaca Hydrographic Region provides 0.32% of total freshwater and hosts 4% of the population (INEI, 2018[1]; ANA, 2013[2]).

The three Hydrographic Regions also differ greatly in terms of volume of groundwater: from 542 998 hm³ in the Amazon Hydrographic Region (99%) to 4 844 hm³ in the Pacific Hydrographic Region (0.9%) and 615 hm³ in the Titicaca Hydrographic Region (0.1%) (ANA, 2013[2]). Overall, groundwater sources represent 25% of water available resources, of which the majority originates from surface water sources (75%) (INEI, 2015[5]). Groundwater is particularly important in the water-scarce Pacific Hydrographic Region, where water from aquifers is mainly used for agriculture and human use. Although some aquifers, notably in the Pacific Hydrographic Region, are closed or overexploited, the overall groundwater balance in the country is positive (an estimated +546 730 hm3) (ANA, 2013[2]).

Overall, water uses are as follows: in 2018, 29.3% corresponded to consumptive uses, mostly agriculture (74.8 %), and 70.7% to non-consumptive uses, mostly energy (97.7% of total non-consumptive demand), as 81% of electricity in Peru comes from hydraulic sources (ANA, 2019[6]) (Figure 1.1). Tensions related to water use are rising as demand increases, driven by a growing population and economy. In addition, climate change makes water scarcer and affects water security due to melting glaciers: 51% of glaciers in Peru has melted due to climate change in the last 50 years (World Bank, 2021[7]).

Peru is a fast-growing economy, which achieved the status of a middle-income country in 2008. With an annual average GDP growth rate of 6.1%, between 2002 and 2013, Peru doubled its real per capita income and was one of the fastest-growing countries in Latin America and the Caribbean (LAC), with 3.4% annual average GDP growth rate. Between 2014 and 2019, while the GDP growth slowed to an annual average rate of 3.1% reaching 4% in 2019, it was still above other LAC countries such as Colombia (3.0%), Chile (1.1%), or Brazil and Mexico (1.0%). Private investments and consumption, the services sector, as well as the mining and non-traditional agriculture sectors led the economic growth. Nevertheless, it is worth noticing that the service sector, which accounts for almost two-thirds of GDP, include informal activities in commerce, transport, or domestic services (World Bank, 2021[7]) .

The COVID-19 pandemic has deeply affected the Peruvian economy, which contracted by 12% in 2020 (MEF, 2020[8]). This 12% decrease in economic output between 2019 and 2020 made the Peruvian employment rate drop by -25% between the first and second quarter of 2020 (ILO, 2020[9]). The high rate of formal unemployment – around 70% (OECD, 2020[10]) – makes the majority of Peruvian workers particularly vulnerable to crises and the ensuing loss of income. Peru also experienced the strongest fall (-72%) in foreign direct investment (FDI) in the LAC region and a 10% depreciation in its exchange rate. The economic response to COVID-19 highlights the strong increase in non-financial public spending and the progressive recovery of external demand. For the period 2022-24, economic activity is expected to reach an average growth of 4.5% and this economic recovery will be sustained if there is a boost of the accumulation of capital that will come from increased investments (MEF, 2020[8]).

Agricultural production, which accounts for 74.8 % of consumptive water demand and one-third of the Peruvian working population, is of great economic and social importance in Peru (Box 1.1). Overall, agriculture, forestry and fishing contributed 7.0% to the country’s overall GDP in 2019 (World Bank, 2021[11]). The Peruvian economy is dependent on the exports of water-intensive commodities, which means that significant increases in prosperity and human well-being are contingent on improved access to drinking water and sanitation. However, the demand for water services has soared in many coastal regions, where the bulk of agricultural production is located, and it is now higher than long-term renewable resources. Hence, water scarcity has worsened over time. The potential for traditional responses to long-term water scarcity, such as new water storage and major diversion projects, may face a number of very significant constraints: the need to ensure upfront capital investment and to finance operational expenses, the emergence of social and territorial conflicts, meaningful environmental damages, etc. Yet the diversity of institutions and approaches in Peru is still biased towards supply augmentation solutions rather than water demand management. New ways forward are to be explored, including joint management of surface and groundwater, relevant efforts towards the diversification of water supply sources, water demand management (including water use efficiency measures), a more integrated approach to water bodies that factors in not only quantitative dimensions but also qualitative and hydro-morphological ones, the promotion of solutions to infrastructural development to complement conventional public works, and a redefinition of a number of financial and economic incentives.

Mining is also a major driver of Peru’s export-oriented economy. Peru is a global producer of copper ore and gold, which respectively amount to 26.9% and 15.9% of Peru’s total exports (OECD, 2017[13]). The main mining deposits in the country are located in the heights of the Andes, where the headwaters of the watersheds and areas of water recharge are located. In recent years legal mining has improved processes towards greater environmental protection (OECD, 2017[13]). On the other hand, illegal mining is responsible for negative environmental externalities, which include metal contamination, acid mine drainage, increased sediment levels in streams, soil erosion, nutrient loss and untreated wastewater effluents. It is estimated that in the last 20 years, more than 3 000 tons of mercury have been dumped into Amazonian rivers, contaminating water, aquatic organisms and human populations that consume water and fish (WWF, 2019[14]). Water contamination by anthropogenic activities, wastewater from the various uses, discharges, treatment or reuse of water, among others, is at the centre of a number of conflicts that have emerged as a result of pollution pressures and have involved Indigenous communities (Box 1.2).

In Peru, there are significant gaps in access to water and sanitation. Fourteen out of 24 departments,1 home to 91% of the population, have access to public water supply (Figure 1.3) (INEI, 2020[19]). It is estimated that 3 million Peruvians (9.2% of the population) lack access to water services and 8.2 million Peruvians (25.2%) lack access to sewerage services (INEI, 2020[19]). Between 2017 and 2018, only half of the total population that reported consuming water from the public network benefitted from this service 24 hours a day (INEI, 2020[19]). The COVID-19 crisis further emphasised the importance of water and sanitation for health, especially amongst the population living in informal settlements with difficult access to proper sanitation. In certain areas of the country, inadequate draining systems also created a double health risk due to the overflowing and flooding of untreated wastewater, inhibiting proper hygiene conditions to prevent the spread of the virus.

Access to water and sanitation shows a large urban-rural divide. Despite the existence of rural sanitation plans and specific rural sanitation programmes at the national, regional and local levels, 25.3% of the rural population and 4.7% of the urban population does not have access to public water supply networks. Moreover, 22.8% of the population lacked access to public sewerage networks in 2019, of which 9.6% in urban areas and 71.7% in rural areas. This situation has slightly improved since 2013 when close to a third (32.5%) of the population had no access to public sewerage (INEI, 2021[23]). However, according to the most recent data (2017[24]), Peru is far from achieving the SDG 6 on water and sanitation: 50% of the population use a safely managed drinking water service (SDG indicator 6.1.1) and 43% use a safely managed sanitation service (SDG indicator 6.2.1a). Disparities are larger in sanitation, where 89% of the urban population reside in homes with drainage service through a public network (84% inside the home), compared to just 17% of the rural population (UN, 2017[24]). Large urban settlements such as Arequipa, Callao, Lima and Tacna all report rates of improved access to sanitation well above the national average (74.9%), whereas the rural departments of Huancavelica, Huánuco, Loreto and Ucayali all show access to sanitation rates below 45%. As of July 2019, the Ministry of Housing, Construction and Sanitation (Ministerio de Vivienda Construcción y Saneamiento, MVCS) has invested and transferred PEN 3 749 million for the execution of 1 610 water and sanitation projects nationwide, from which more than 1 800 000 Peruvians in urban and rural areas are expected to benefit.

Urban and rural areas also face disparities regarding water quality, with 46.5% of the urban population having access to chlorinated water compared to only 2.2% for rural areas. In 41 hydrographic units (representing 26% of total hydrographic units), some parameters exceed Environmental Quality Standards (EQS) for water caused by the dumping of untreated wastewater, inadequate management of solid waste, environmental liabilities and informal and illegal mining (ANA, 2015[25]). Water quality degradation poses a number of challenges and leads to severe public health issues, although more epidemiological evidence and cost estimates would be needed to assess the full magnitude of the problem. In some areas, prevalently rural, there are high levels of chronic child anaemia. The World Food Programme (WFP) estimated2 in 2018 that around 50% of childhood anaemia cases were linked to a lack of access to water and sanitation, as well as hygiene (CADE, 2018[26]). In 2017, anaemia affected 43.6% of girls and boys under 36 months.

Bridging gaps in access to sanitation services has become a national priority in Peru. The National Environmental Policy, the National Environmental Action Plan and the National Agenda of Environmental Action have all set the target of treating 100% of urban wastewater effluents by 2021, in line with the National Sanitation Plan (Box 1.3). However, the target is far from being achieved: in 2019, 22 companies registered 0% treatment of their wastewater, 18 of which did not have a wastewater treatment plant (WWTP) (SUNASS, 2020[27]).

Peru is the third Latin American country in terms of dryland area, which covers 40% of its surface (MINAM, 2016[30]). In 2011, around 25.75% of the country suffered from desertification, while 3% was already desert. In terms of desertification, 80% of the affected area is concentrated in the Andes region. Of the 128.5 million hectares of national territory, 56.7% (72.9 million hectares) is affected by water erosion (INRENA, 2005[31]). The Coastal (23.8%) and Andes (72.5%) regions are the most affected by severe water erosion, which encourages desertification, aggravated by the scarcity of vegetation cover due to human activities (MINAGRI, 2017[32]). In addition, drainage and salinity issues, occurring along the coastal region, affect at least 25% of cultivated lands (World Bank, 2013[33]).

The country is also undergoing massive deforestation, especially in the Amazon rainforest. Peru is currently the 10th country in the world with the highest forest density, with more than half of the country (673 109 km2) covered by forests (WWF, 2015[34]). Only Brazil has a larger tropical Amazonian forest area. More than 330 000 people directly depend on national forests for their livelihoods and many more depend on numerous ecosystem goods and services provided by forests, such as carbon fixation and storage, water regulation and the protection of Peru’s biodiversity. However, between 2000 and 2014, Peru has lost an average of 118 081 hectares of forest every year (MINAM, 2016[35]). Deforestation is negatively affecting the capacity of the hydrological system to regulate itself.

The Andean Amazon is one of the areas of greatest biodiversity in the world and an essential part of the hydrological cycle in Peru. As such, the Amazon is often the location of the upper basin through which water flows to the Atlantic Ocean, as well as the location of many water diversion projects from the Atlantic to the Pacific watershed. Basins such as Madre de Dios and Inambari contain a wide diversity of Andean and Amazonian wetlands, which influence the hydrology of the Amazon basin (Barthem et al., 2016[36]). Some of the greatest threats affecting biodiversity in Peru are overfishing (with a large increase in the Amazon), the significant pollution of water in the Pacific watershed, invasive species, oil and mercury spills in the Amazonian rivers in the Atlantic watershed due quite often to illegal mining activities, climate change and the creation of hydroelectric plants (MINAM, 2019[37]). Inadequate water quality interferes with the provision of aquatic ecosystem services, including the economic use of water resources, such as crop irrigation, aquaculture, fishery, landscaping, recreational and navigation services and ecosystem services. Integrated water resources management and good environmental quality of water bodies are thus essential to the conservation of rainforest and biodiversity as well as to the health of the hydrological cycle.

Wider governance failures in Peru challenge policy effectiveness and implementation in the water sector. In recent years, Peru has been undergoing political and social turmoil, which jeopardises the policy continuity and leadership required for public policies, including water and sanitation, to deliver intended outcomes. The democratic transition that started in late 2001 coincided with an economic boom, fuelled by high international commodity prices, a strong mining sector and expanding private consumption. However, this remarkable macroeconomic performance did not deliver on political, social and environmental grounds. In recent years, Peru ran into political challenges that can largely be traced to the 2016 Odebrecht affair.3 Between 2018 and 2021, the Peruvian presidency changed four times. Despite recent instability, Peru has set water issues high on the political agenda. Since the presidency of Pedro Pablo Kuczynski (2016-18), ensuring universal and continuous access to water and sanitation4 to the whole Peruvian population and across urban and rural areas has been seen as a major priority. Nevertheless, shifting from impact remedial approaches (mostly ad hoc, unplanned and reactive) to long-term risk management requires effective, efficient and inclusive governance, which is intrinsically a reflection of a country’s culture, legal regime, legacy issues, political setup and territorial development patterns.

In the context of climate change, governance challenges come about with an unprecedented level of uncertainty. Between 2000 and 2020, floods in Peru affected an estimated 4.43 million people, of which 57 025 were made homeless, 1 666 were injured and 787 died (Guha-Sapir, 2021[38]). The flood that affected the most people (1.8 million) caused USD 3.1 billion in economic damages spread across 6 departments, including Lima, in 2017. The 2017 El Niño Costero was one of the country’s worst meteorological events of the 21st century (MINAM, 2016[39]). In the Amazon, excess rainfall mainly comes from La Niña events. An increase in flooding also brings about huaicos, highly destructive mudslides occurring in upper altitude areas and accounting for up to 4% of total emergency events between 2003 and 2014 (MINAM, 2016[39]). Huaicos displace large volumes of land, impacting human settlements and infrastructure, and causing strife and loss of life. The huaicos carry sediments and do not allow adequate water capture by the treatment plant. Between 2000 and 2020, landslides affected 1 140 people, of which 307 died. El Niño is also at the origin of drought events in the southernmost areas of Peru. According to a SENAMHI analysis (2019[40]) of 20 Peruvian departments, excluding the arid areas of coastal departments (as they receive less than 2% of Peruvian rainfall annually), 10 moderate to extreme drought events occurred in Peru between 1981 and 2018. Managing water in the face of uncertainty demands: the acknowledgement of conflicts between the flows of services and the conservation of water assets (stocks); the challenging trade-offs implied in the joint provision of private and public goods from aquatic ecosystems; the critical importance of water use for economic growth but the essential role of water conservation for sustained progress and sustainable development; the pervasive externalities derived from the interconnected nature of the hydrological cycle; the relevance of long-term water security and the increasing uncertainty about future supplies that make extreme precautionary options a sensible policy attitude, and the high fixed (capital) cost of water infrastructures and the still unsolved problem of how to design effective and efficient cost- and benefit-sharing schemes.


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← 1. Departments with the lowest coverage are Tumbes (78.9%), Huánuco and Ucayali (76%), Puno (69.7%) and Loreto (56.8%). The highest coverage areas (higher than 95%) can be found in the departments of Áncash, Apurímac, Arequipa, Ayacucho, Callao, Lima, Moquegua and Tacna.

← 2. World Food Programme in Peru, Peru’s 2018 Annual Executive Conference (CADE).

← 3. The Odebrecht Affair is an ongoing corruption case involving the Brazilian construction company Odebrecht and political figures, including heads of state, mainly in Latin America. In Peru, four former heads of state are accused of being involved in this corruption scandal.

← 4. Saneamiento” in most Latin American countries, including Peru, includes (drinking/potable) water supply and sanitation (collection of wastewater effluents), but also other services in the urban water cycle such as water reuse. Article 1 of Decreto Legislativo 1280 is even more relevant for the purposes of definition. Sanitation services are defined as follows: potable water, sewerage, wastewater treatment, effluent discharge or reclaimed water reuse, and final disposal of waste, both in urban and rural areas.

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