High population growth, rising water demand, and uncontrolled pollution in many unplanned settlements within the Federal District and its Integrated Development Region adversely impact the quantity and quality of water resources.

"Left unchecked, these impacts could potentially impose a high cost on the expansion of basic services, erode the quality of life and health of the most vulnerable population, and ultimately undermine the sustainable development of the region," said Paula Pini, World Bank Project Task Manager.

The project approved today is expected to help reduce regional inequalities, especially the issues associated with the sustainable use of scarce regional natural resources, such as water. It will also help address main policy and institutional issues of waste management, particularly water pollution, and high priority investments to address acute social issues. Specific benefits of the project are:

• Improved water quality in the principal sources for the Federal District, reducing water treatment costs and avoiding contamination and long-term compromise of these sources;
• Improved water quality of the Paranoá lake for recreation and leisure; and
• Improved living conditions in targeted poor neighborhood by providing integrated urban environmental services.

"This very unique project focuses on some of the most critical challenges facing large urban centers in Brazil today," said Luiz Gabriel Azevedo, World Bank Sector Leader for Environmentally and Socially Sustainable Development in Brazil. "It seeks to tackle issues of environmental management, urban development, water resources, sanitation, and poverty reduction in a modern urban area such as Brasilia, in an integrated fashion."

The project also offers the opportunity to incorporate a broader assistance package including possible GEF support and carbon financing.

This fixed-spread IBRD loan in US dollars is repayable in 17 years, including a five-year grace period.