Harnessing sustainable finance to fight climate change

Izmir, Turkey’s third largest city, is one of the liveliest cities in the Mediterranean region, surrounded by beaches and historic sites. The city’s port has been a major regional trade hub for thousands of years. But like many cities around the world, Izmir faces major sustainability challenges, such as water scarcity, regional forest fires and earthquakes. There is also a significant gender imbalance in Izmir’s workforce.

Rapid urbanization and population growth challenge Izmir’s ambitious plan to become one of the most livable cities in the world. The pleasant climate of the city and its many amenities attract foreign and local tourists, which benefits the local economy. However, the summer tourist wave is causing an increase in demand and use of water, putting pressure on the capacity of Izmir’s infrastructure to provide adequate water and wastewater management services. .

The quality and quantity of surface water across Turkey is deteriorating, and the situation is particularly dire in fast-growing cities like Izmir. Groundwater in Izmir and elsewhere is threatened by inadequate collection and treatment of wastewater. Groundwater is the source of about two-thirds of Izmir’s drinking water, so it is imperative that it be kept clean. Water from the Tahtalı Dam and local wells will not be enough to meet regional needs as the city grows. In addition, Turkey is already classified as water stressed and the situation is expected to worsen due to the impact of climate change.

Leverage commercial finance solutions

The city of Izmir is committed to investing in high-quality infrastructure to improve the reliability of water and sanitation services, while helping to combat climate change and build regional resilience.


Construction of the rainwater network in the district of Urla. Photo by: Hakan Mat

Sustainable development loans offer cities an innovative way to raise funds for such goals. With such a loan, the financing conditions are subject to the borrower’s achievement of certain sustainability objectives.

To help Izmir in its fight against climate change, IFC signed its first global loan linked to sustainable development in the area of ​​infrastructure with Izmir Water and Sewerage Administration (IZSU), the water service of the Izmir Metropolitan Municipality. IZSU is a founding member of IFC’s Utilities for Climate (U4C) initiative, and the investment will finance a drinking water treatment plant as well as hundreds of kilometers of sewers, water pipes and storm water. The IFC financing also represents the first long-term commercial financing by an international financial institution in the municipal space in Turkey, denominated in Turkish Lira and valued at up to $ 30 million.

With funding from IFC, IZSU will also build a new water treatment facility, enabling the company to provide more reliable water services to its customers. The funding will improve Izmir’s water supply network, benefiting approximately 463,000 citizens. The project will provide better quality drinking water to around 200,000 people. IFC funding will also be used for the rehabilitation of the water main, as older sections of the existing network currently experience frequent water cuts during repairs. These infrastructure upgrades will increase the availability of drinking water resources in the city.

“We continue to work ambitiously for a sparkling bay, a clean environment and safe drinking water,” said Mustafa Tunç Soyer, Mayor of Izmir.

Climate utilities

U4C facilitates access to finance, expertise and collaboration for subnational water service providers and private sector stakeholders in emerging markets. The program offers a demand-driven and customer-driven relationship model that leverages IFC’s substantial expertise in infrastructure finance to develop solutions for utilities to meet growing challenges and stimulate opportunities. investment in commercial water infrastructure.

The recent IFC funding of IZSU is the culmination of more than a decade of collaboration and trust between Izmir Metropolitan Municipality and IFC. The IZSU Sustainability Loan is expected to demonstrate how well-planned municipal infrastructure loans can facilitate the modernization of water services and enable cities to prepare for climate change.

Turkey is a water stressed country and the volatility of the climate is expected to place additional demand on regional water supply systems. Improving Izmir’s hydraulic infrastructure will help the country cope with the impact of climate change. The U4C initiative will increase investments to develop and modernize water infrastructure, especially in emerging markets. The initiative will also promote communication on water risk management in emerging markets, thereby improving the capacity of each local water authority to learn from other projects.


Construction of the wastewater and rainwater network in Kemalpasa district. Photo by: Hakan Mat

Izmir’s appeal to investors and tourists is based on clean beaches, well-managed growth, and access to essentials like clean water. The municipality is committed to expanding access to safe drinking water, while addressing other development goals such as gender equality.

As a sustainability-linked loan, IFC’s investment carries incentives that reward IZSU for making measurable gains towards the United Nations Sustainable Development Goals. The loan terms are designed to increase the number of women in the workforce, especially in traditionally male dominated jobs. When IZSU achieves its gender goals, it will benefit from a decrease in the loan interest rate.

In this case, IZSU will hire at least 300 women as heavy vehicle drivers, machine operators, maintenance personnel and other positions where women in Izmir are traditionally under-represented. By 2026, IZSU plans to have increased the percentage of women in these roles from the current 2% to 10%. By 2030, the IZSU will have increased the number of women in its payroll from 14% to 23%.

Achieving these goals will play an important role in gender equality in Turkey, which still struggles to achieve gender parity in the workplace. IFC will provide gender advisory services to help IZSU recruit employees, prevent gender-based violence and promote a corporate culture of respect, equality and inclusion.

Another beneficial aspect of Izmir’s collaboration with the World Bank Group is that IFC and the World Bank advise IZSU to apply cutting-edge behavioral knowledge to design and implement low-cost approaches that promote water conservation by end users and encourage payment of bills on time. to increase revenue collection. In addition, IFC and the World Bank are assisting Izmir in developing its smart city strategy and investment plan, so that Izmir can unleash the potential of digital technologies in water and other sectors for inclusive and sustainable development.

“In Izmir and much of Turkey, demand for water is increasing while supplies are decreasing,” said Arnaud Dupoizat, IFC Country Director for Turkey. “But by conserving water and investing in critical infrastructure, cities can ensure they have a steady supply of water that is crucial for their continued sustainable development.”

Working with clients like IZSU, IFC enables municipalities and utilities in emerging markets to access climate-friendly infrastructure loans. Through the U4C initiative, municipalities around the world will have access to advisory services, local currency loans and shared knowledge from years of collaboration. Economic growth must be designed with climate resilience in mind. IFC’s IZSU loan is a model for investing in infrastructure for the future.

Published in October 2021

Disclaimer

IFC – International Finance Corporation published this content on 28 October 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on October 28, 2021 04:12:03 PM UTC.

Source link

About Alexander Estrada

Check Also

CAIT urges ITC to revoke Amazon’s approval for future coupon deal, Retail News, ET Retail

The merchant body CAIT said on Wednesday it had urged India’s Competition Commission to revoke …

Leave a Reply

Your email address will not be published. Required fields are marked *