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BECC, NADB Stretch
To Help Border Communities
by Andrea Abel | October 4, 2002
As the Border Environment Cooperation Commission (BECC) continues to certify additional environmental infrastructure projects in the U.S.-Mexico boundary area, the North American Development Bank (NADB) is increasing its ability to provide appropriate funding through a variety of new financing programs. Building on the sister institutions’ mandate expansion from Fall 2000 and ongoing negotiations between the two countries, including the March 2002 Monterrey Commitments signed by Mexican President Vicente Fox and U.S. President George W. Bush, the BECC and the NADB now have an array of new programs and policies.
The new programs and policies are expected to address, in part, two nagging issues that have plagued the border institutions: 1) creating projects to assist with the border’s most pressing environmental infrastructure needs, including cross-boundary water sharing, while remaining true to the mission by which they were formed; and 2) providing a broader array of financing mechanisms beyond the NADB’s market-rate, standard lending program and the Border Environment Infrastructure Fund (BEIF) grant program, which is limited to water and wastewater.
Months of heated negotiations and escalating rhetoric over Mexico’s debt of Rio Grande water to the United States, affecting Mexicans and Texans alike, culminated in the signing of Minute 308 in late June by the commissioners of the International Boundary and Water Commission (IBWC). Minute 308 sets the stage for Mexico to begin to repay water during the last year of the current five-year payment cycle, to seek investment from both countries for water conservation projects throughout the Rio Grande Basin, to consider a binational sustainable management plan for the basin, and to establish an international advisory council made up of "government and nongovernment organizations in their respective countries."
Delivering sufficient water to the Rio Grande and its tributaries, the majority of which is used for agricultural irrigation in Northern Mexico and South Texas, has been predicated on the ability to save water through extensive agricultural water conservation initiatives. Substantial improvements will require commensurate investment by both countries.
In conjunction with the signing of IBWC Minute 308, the NADB board of directors met in San Antonio, Texas on Aug. 20, passing four resolutions:
Resolution 2002-2 and Document 2002-3 pertaining to a Statement of Principles for NADB Water Conservation Programs;
Resolution 2002-3 and Document 2002-4 regarding the establishment of a Water Conservation Investment Fund (WCIF);
Resolution 2002-4 relating to the creation of a Project Development Program (PDP); and
Resolution 2002-5 and Document 2002-5 addressing technical assistance for water conservation projects.
The Water Conservation Investment Fund sets aside $80 million from the NADB’s retained earnings, which is to be divided equally between the United States and Mexico for agricultural water conservation project grants. NADB spokesperson Juan Antonio Flores announced that the Guidelines for Projects in the United States were opened for a 45-day comment period, ending Oct. 9. Projects must be within 100 kilometers of the U.S.-Mexico border or if beyond 100 kilometers address a demonstrated transboundary health or environmental problem. If beyond the 100-kilometer border area, a project must affect a binational river, such as the Rio Grande or the Colorado River. In addition, U.S. projects are limited to up to 50% of project cost from the WCIF.
Given the urgent need for water, the window of opportunity to begin conservation projects between crop production cycles and previously held Mexican Congressional hearings, the Mexican delegation of the NADB board of directors chose to put the Guidelines for Projects in Mexico into force without a public comment period, added Flores. Mexican projects must directly or indirectly "result in increasing the delivery of water into the Rio Grande." Funds can be used for up to 100% of the project cost.
Other board action includes directing the bank’s management to rename the bank’s existing Solid Waste Project Development Program (SWPD) to the Project Development Program and to make the PDP available to assist "all sectors in which the bank operates, including water conservation." In a move to support increased project development in water conservation, the NADB board of directors also directed that an additional $5 million in retained earnings be earmarked for technical assistance for water conservation projects in Mexico under the PDP.
The board’s actions were well-received by the Texas Center for Policy Studies (TCPS), a nongovernmental organization with a long history of involvement in border environmental issues. TCPS Border Project Director Cyrus Reed welcomed the resolutions as "something we support because it meets the expanded mandate. Of course, we want to make sure that projects go through normal BECC procedures and that the public is involved. The goal is to make sure that water stays in the basin to ensure conservation of environmental flows and for farmers in Texas and in the Rio Conchos."
As the NADB establishes new financial mechanisms to address water conservation projects, the BECC is rising to the challenge of expeditiously providing technical assistance and certifying these projects and others considered under mandate expansion while upholding the BECC’s commitment to public participation and its sustainability criteria.
According to BECC General Counsel Donald Hobbs, three Step 1 applications pertaining to water conservation projects have been received by the BECC to date, including one in Chihuahua and two in the Lower Rio Grande Valley of Texas. Step 1 is a preliminary stage in the project proposal submission process to be completed prior to the comprehensive project proposal. "The Chihuahua water conservation project encompasses three irrigation districts," said Hobbs, adding that coordination and communication between the BECC and the NADB for water conservation and other projects being considered under mandate expansion has been going "very well."
Thus far, projects submitted for certification by the BECC under mandate expansion are being considered using the existing certification criteria, said Hobbs, but with fine-tuning to gear the technical review, environmental assessment, and public participation to the type of project.
A number of Step 1 applications for mandate expansion projects have been received by the BECC, in addition to the water conservation projects, including an Air Quality Project on the West Side of Ciudad Juárez, a Power Recovery Project through Municipal Solid Waste Air Emissions in Laredo, Texas, and a Tire Recycling Plant also in Laredo.
A Step 1 application submitted by Anahuac, Nuevo León in January 2001 for a solid waste incinerator has been withdrawn by the applicant. The applicant’s withdrawal of the project was not due to any determination or input from the BECC, according to a BECC official.
In other news, the NADB approved the first loans made under the bank’s Low Interest Rate Lending Facility (LIRF). Made available for solid waste in San Luis Río Colorado, Sonora was $1.75 million in LIRF financing in addition to a $500,000 grant from the Solid Waste Environmental Program (SWEP). The LIRF is providing $5.3 million to combine with a $16.73 million BEIF grant for Comprehensive Sanitation (wastewater collection and treatment) in Ciudad Acuna, Coahuila. In addition, $4.75 million of LIRF monies and $6.1 million in BEIF grants was approved for water and wastewater in Fabens, Texas.
On Sept. 24, the BECC board adopted resolutions to expedite critical water conservation projects, and the NADB put out a call Sept. 27 for public comments on a Business Process Review.
While the new programs appear to be off to a good start, Mexico is still having a hard time meeting the water debt repayment schedule. Meanwhile, the fate of the NADB’s standard lending program and the BECC’s capacity to efficiently move projects through the certification process are conditioned by the size of their budget appropriations from the U.S. and Mexican congresses.
Andrea Abel is a member of the National Advisory Committee to the North American Commission for Environmental Cooperation and a frequent contributor to the Americas Program.
Sources for more information:
Contact the NADB at http://www.nadb.org/ or (210) 231-8000 about submitting public comments.
"Board Resolutions and Related Documents on NADB Water Conservation Programs" | North American Development Bank, August 20, 2002
"Notice of Public Comment Period for Terms of Reference for Business Process Review" | NADBank News, October 1, 2002
"The North American Development Bank Will Provide More than $57.8 Million in Grant Assistance for Six New Projects in U.S.-Mexico Border Communities" | NADBank News , September 27, 2002
"5th Annual Environmental Business Opportunities Seminar, October 11, 2002, San Antonio, TX" http://www.nadb.org/
"Sharing the Waters" | Americas Program, May 17, 2002
"What’s Holding Up the Bank?" | Americas Program, February 1, 2002 http://www.americaspolicy.org/articles/2002/0202beccnadb.html
"Pace of Reforms to NAFTA Border Institutions Slows" | Americas Program, November 7, 2001
Published by the Americas
Program at the Interhemispheric Resource Center (IRC). ©2002. All
Andrea Abel, "BECC, NADB Stretch to Help Border Communities," Americas Program (Silver City, NM: Interhemispheric Resource Center, October 4, 2002).