Water reclamation gets funding in $300m climate deal

The way is clear for the government to begin one of its signature climate action initiatives, a multi-million-dollar South Coast project to recycle wastewater into irrigation water, Prime Minister Mia Mottley revealed on Thursday night.

Her announcement came at the  St Philip Parish Speaks town hall meeting, just hours after Barbados had secured $300 million in guarantees from international development banks to fund climate adaptation projects in a groundbreaking debt-for-climate deal.

The South Coast Water Reclamation Project to upgrade sewage treatment to reclaim water for irrigation is a key project of the deal. This will allow aquifer recharge whilst preventing untreated wastewater discharge, protecting marine ecosystems and public health.

“We are now in the process of choosing the persons to do the projects based on who bid, who tendered; and we also have gotten through the last week and this week, all of the guarantees,” Mottley announced. “So, I would imagine that by September, October, we should be in a position then, to be able to move forward with getting all of the legal and financial closures so that the project can start.”

The Inter-American Development Bank (IDB) and European Investment Bank (EIB) have each approved $150 million guarantees in their first-ever joint operation in the Caribbean.

“One of the commitments we just had to agree to with the IDB and EIB is that there will be sufficient demand [for water] from St Philip farmers. Less than two hours ago, we were discussing this.

Mottley said: “We are buying back, US$375 million [$750 million] of our debt, and we are reissuing it with the help of the European Investment Bank and the Inter-American Development Bank, and the Green Climate Fund (GCF) at a lower interest rate than we are paying today.”

“The savings that we get,” she added, “will come, we hope, to be around $140 million that will allow us to build out the [sewage] treatment plant. And then on top of that, the GCF is also giving us a grant of US$40 million [$80 million]. So, the excess money that we will have from it, will also be used to help the [Barbados] Water Authority deal with what we call non-revenue water. In other words, burst pipes, and fixing them, as well as other wastewater solutions.”

The prime minister stressed that this would make a “huge, huge” difference to the government’s ability to meet the needs of farmers, to not have to deal with the outfall.

This collaborative effort among multilateral development banks to provide new tools to address climate change challenges could offer a potential model for other small island developing states grappling with similar vulnerabilities.
Mottley hailed the agreement as “a historic moment for Barbados” that “sets a powerful, scalable model for other vulnerable nations”.
“With these loan guarantees, we are not only securing our nation’s water and food resources but also fortifying our resilience against the ever-looming threat of the climate crisis”, the prime minister said. “This initiative exemplifies how innovative climate financing can drive meaningful change, ensuring a sustainable future for our people and our planet.”
The guarantees will support a debt conversion plan first revealed late last year, creating fiscal space for investments in resilience that would otherwise be impossible given current financial constraints. The funds will advance plans outlined in Barbados’ updated climate commitments under the Paris Agreement and its comprehensive Roofs to Reefs Programme.
“The EIB has consolidated its role as the Climate Bank, supporting investments that reinforce the resilience of most affected countries,” EIB President Nadia Calviño said. “I am really proud that the EIB Group participates in the first-ever debt-for-climate conversion and, through our partnership with the European Commission, the IDB and the Government of Barbados, set an important milestone in innovative financing for climate action.”
The operation supports the implementation of the European Union’s Global Gateway investment strategy.

Jutta Urpilainen, EU commissioner, commented: “This operation exemplifies how the Global Gateway Investment Agenda for Latin America and the Caribbean is delivering innovative solutions to enhance partner countries’ resilience and direct benefits to the citizens. These crucial resources help Barbados address climate vulnerabilities and invest in resilient infrastructures.”

IDB president Ilan Goldfajn praised Barbados’ leadership: “Barbados is on the forefront of financial innovation and partnerships. We reached this important major achievement because of the country’s strategic vision and commitment to a climate-resilient future.”

He added: “Our partnership with the EIB, and Barbados, shows how international development organisations are working together as a system with governments to devise innovative financial solutions to mobilise more resources for more impactful climate-resilient investments.”

As part of the guarantee programme, the government has developed policies to strengthen its capacity for preparing and implementing climate investments, protecting groundwater resources, and boosting agricultural production. The government has also committed to measures improving tax and debt management, and strategies enhancing financial resilience to natural disasters.

The deal comes as the Caribbean faces heightened climate vulnerability. Hurricane Beryl on July 1 became the earliest Category 5 storm on record, with forecasters predicting an unusually active and intense Atlantic hurricane season driven by exceptionally warm ocean temperatures.

emmanueljoseph@barbadostoday.bb / BGIS