Da Nang, Vietnam: Financing drinkable water for economic growth (plus what to do with all those plastic bottles)

August 26, 2016

By Chrissy Mancini Nichols

One of the first thing I noticed while in Da Nang, Vietnam was the number of plastic water bottles.  I was in Da Nang as part of a U.S. State Dept. fellowship to work with local officials on plans to finance and build infrastructure.  A constant reminder that I was in an emerging country was that I could not drink water out of the tap. My hotel provided several bottles of water each day, restaurants served botted water and at meetings participants each had a little water bottle of their own.

So much plastic.  

So much plastic — the bottled water I drank on a typical day in Vietnam.

While the country of Vietnam has 2360 rivers longer than 6 miles, both a lack of infrastructure and the effects of weather related issues — typhoons, flooding and droughts — result in a lack of access to a supply of clean, drinkable water. Also placing a burden on the water supply — farming.  As One of the largest produces of rice in the world, farming irrigation places the largest burden on the water supply — estimated at 84 percent of total demand for the country's water.

But with water being a critical element of economic and social development, it got me thinking — How a country moves out of third world or emerging status when it lacks clean, drinkable water? 

How does it grow industry?

How does it keep people healthy? 

Consider 80 percent of diseases in Vietnam are caused by polluted water.

And what about the enormous amount of waste generated from all of those plastic bottles. 

Da Nang moving forward on building new water infrastructure

Da Nang is a growing city with a  population that is expected to double between 2010 - 2020

With more than a million people, Da Nang is one of the largest cities in Vietnam.  The city has experienced rapid population growth in the past decade and the number of people living in the city is forecasted to roughly double by 2020.  With rapid growth comes rapid economic development, leaving river water contaminated with runoff and untreated waste water from industry and farming.

Current water resources serviced by the Da Nang Water Supply Company (DAWACO)  cannot meet demand—it has only one intake and is often complicated by drought and flood—At one point last year, due to flooding and sea water getting in the fresh water system, the water resources in Da Nang dropped to 50 percent of their capacity and residents were urged to save a few weeks supply of water.  

Water coming out of the tap must be boiled or filtered to be drinkable.

It's hot out so water is necessary at each meeting.  Due to a lack of clean drinking water from the tap, it's often bottled.

A main goal of the City of Da Nang’s environmental city plan is to improve water quality. The city is moving forward on that mandate with a public private partnership to build a new water treatment plant.

The Da Nang Water Supply Project will expand and improve the clean water production capacity and the distribution network coverage within the city. This will be accomplished through (i) expanding access to safe and sustainable water supply services; (ii) increasing public awareness of the importance of using safe water and reduced risk to public health; and (iii) improving management capacity of the water systems and sustain service through adequate tariffs and cost recovery, and strengthened sector regulation.

Reviewing plans at the site of the new water treatment plant in Da Nang, Vietnam

To achieve these goals, two projects will increase water production capacity:

• Construction of a new 16 km water main from a new dam to be constructed on the Cu De River to a new water treatment plant
• Construction of the new Hoa Lien water treatment plant  with three separate intakes

I had a chance to visit the site where the new water treatment plant will be built.  The project will be financed through a public private partnership (P3).  With massive infrastructure needs and not enough upfront capital to fund them, a P3 makes sense for the water treatment plant because the city can take advantage of private investor loan capacity and repay the financing through revenues from water fees.   The total cost of the proposed projects is estimated at USD $81.4 million ($84.4 million including financing charges during implementation.)  It will be financed from the following sources:

A newly built rock wall designed to protect from flooding.

• Sub-loan financed from Asian Development Bank ($78 million)
• Asian Development Bank grant for the proposed energy efficiency program ($2 million)
• Government of Viet Nam ($4.7 million)
• Da Nang Water Supply Company funding ($1.4 million)

The City of Da Nang is partnering with The Japan International Co-operation Agency (JICA), which leverage Japanese capital capacity to build infrastructure in developing countries.  JICA has already provided USD $2 million in assistance to Da Nang to complete the pre-feasibility studies for the Hoa Lien Water supply plant.

A few more things I learned while visiting the site — It took about 30 minutes to reach by car from the city center, as we got close, the roads were mostly dirt.  But a massive overpass from a new north/south highway built by the Central Government was under construction near the area. 

Cows hang out on the future site of the new water treatment plant to serve Da Nang, Vietnam

The project will require relocating a small village.  I didn’t get a chance to speak with any of the local residents (I did moo to a few cows) but with such need for clean water and a site next to the river, the project’s benefits likely outweigh the social and economic costs from this relocation.

The new highway that will connect north and south Vietnam.

Even after the project is complete, Da Nang still has a combined sewer/water pipe system. Replacing all of the underground water and sewer infrastructure would be such a massive undertaking and while the city wants an overhaul, there is no cost estimate or timeline to do so.