1. Water resources in Peru: The state of play
Water and sanitation are key priorities in Peru for sustainable development and social well-being. However, within the context of climate change and political instability, governance challenges come about with an unprecedented level of uncertainty. The chapter provides key facts and data on water security in Peru, as well as an analysis of how megatrends increasingly challenge water supply for the economy, society and the environment.
Peru is the eighth water-richest country in the world in terms of freshwater volume and the third in Latin America, after Brazil and Colombia. However, freshwater is unequally distributed across the country: 97% of available freshwater is in the Amazon Hydrographic Region, where the 31% of the population live (INEI, 2018[1]; ANA, 2013[2]). On the other hand, the majority of the population (65%) and economic activities are located in the Pacific Hydrographic Region, despite generating just 1.77% of Peru’s available freshwater. Water demand in the capital city of Lima, in the water-scarce Pacific Hydrographic Region, has experienced strong growth due to the significant increase (+51.8%) in its population over the past 25 years (INEI/UNFPA, 2020[3]). Its population consumed 163 litres per capita and per day in 2018, significantly above the 100 litres per capita and per day recommended by the World Health Organization (WHO). Despite the scarce amount of water resources, more than two-thirds of the agricultural gross domestic product (GDP) originates from the Pacific watershed (FAO, 2015[4]). Finally, the Titicaca Hydrographic Region provides 0.32% of total freshwater and hosts 4% of the population (INEI, 2018[1]; ANA, 2013[2]).
The three Hydrographic Regions also differ greatly in terms of volume of groundwater: from 542 998 hm³ in the Amazon Hydrographic Region (99%) to 4 844 hm³ in the Pacific Hydrographic Region (0.9%) and 615 hm³ in the Titicaca Hydrographic Region (0.1%) (ANA, 2013[2]). Overall, groundwater sources represent 25% of water available resources, of which the majority originates from surface water sources (75%) (INEI, 2015[5]). Groundwater is particularly important in the water-scarce Pacific Hydrographic Region, where water from aquifers is mainly used for agriculture and human use. Although some aquifers, notably in the Pacific Hydrographic Region, are closed or overexploited, the overall groundwater balance in the country is positive (an estimated +546 730 hm3) (ANA, 2013[2]).
Overall, water uses are as follows: in 2018, 29.3% corresponded to consumptive uses, mostly agriculture (74.8 %), and 70.7% to non-consumptive uses, mostly energy (97.7% of total non-consumptive demand), as 81% of electricity in Peru comes from hydraulic sources (ANA, 2019[6]) (Figure 1.1). Tensions related to water use are rising as demand increases, driven by a growing population and economy. In addition, climate change makes water scarcer and affects water security due to melting glaciers: 51% of glaciers in Peru has melted due to climate change in the last 50 years (World Bank, 2021[7]).
Source: ANA (2019[6]) , ANA REGISTRO 2019.
Peru is a fast-growing economy, which achieved the status of a middle-income country in 2008. With an annual average GDP growth rate of 6.1%, between 2002 and 2013, Peru doubled its real per capita income and was one of the fastest-growing countries in Latin America and the Caribbean (LAC), with 3.4% annual average GDP growth rate. Between 2014 and 2019, while the GDP growth slowed to an annual average rate of 3.1% reaching 4% in 2019, it was still above other LAC countries such as Colombia (3.0%), Chile (1.1%), or Brazil and Mexico (1.0%). Private investments and consumption, the services sector, as well as the mining and non-traditional agriculture sectors led the economic growth. Nevertheless, it is worth noticing that the service sector, which accounts for almost two-thirds of GDP, include informal activities in commerce, transport, or domestic services (World Bank, 2021[7]) .
The COVID-19 pandemic has deeply affected the Peruvian economy, which contracted by 12% in 2020 (MEF, 2020[8]). This 12% decrease in economic output between 2019 and 2020 made the Peruvian employment rate drop by -25% between the first and second quarter of 2020 (ILO, 2020[9]). The high rate of formal unemployment – around 70% (OECD, 2020[10]) – makes the majority of Peruvian workers particularly vulnerable to crises and the ensuing loss of income. Peru also experienced the strongest fall (-72%) in foreign direct investment (FDI) in the LAC region and a 10% depreciation in its exchange rate. The economic response to COVID-19 highlights the strong increase in non-financial public spending and the progressive recovery of external demand. For the period 2022-24, economic activity is expected to reach an average growth of 4.5% and this economic recovery will be sustained if there is a boost of the accumulation of capital that will come from increased investments (MEF, 2020[8]).
Agricultural production, which accounts for 74.8 % of consumptive water demand and one-third of the Peruvian working population, is of great economic and social importance in Peru (Box 1.1). Overall, agriculture, forestry and fishing contributed 7.0% to the country’s overall GDP in 2019 (World Bank, 2021[11]). The Peruvian economy is dependent on the exports of water-intensive commodities, which means that significant increases in prosperity and human well-being are contingent on improved access to drinking water and sanitation. However, the demand for water services has soared in many coastal regions, where the bulk of agricultural production is located, and it is now higher than long-term renewable resources. Hence, water scarcity has worsened over time. The potential for traditional responses to long-term water scarcity, such as new water storage and major diversion projects, may face a number of very significant constraints: the need to ensure upfront capital investment and to finance operational expenses, the emergence of social and territorial conflicts, meaningful environmental damages, etc. Yet the diversity of institutions and approaches in Peru is still biased towards supply augmentation solutions rather than water demand management. New ways forward are to be explored, including joint management of surface and groundwater, relevant efforts towards the diversification of water supply sources, water demand management (including water use efficiency measures), a more integrated approach to water bodies that factors in not only quantitative dimensions but also qualitative and hydro-morphological ones, the promotion of solutions to infrastructural development to complement conventional public works, and a redefinition of a number of financial and economic incentives.
The great variety of climates and ecological zones allows the production of a wide range of crops. In general, in Peru, three different kinds of agricultural production systems coexist (FAO, 2015[4]):
Subsistence agriculture: Characteristic of the poorest social sectors in rural areas, especially in the Andes Mountains region. The predominant crops are corn, beans, cereals, rustic grasslands, vegetables and other bread crops.
Agriculture for local markets: Rice, potatoes, hard yellow corn, cotton, sugar cane, beans, wheat, fruits, vegetables, etc. This type of agriculture is prevalent in the irrigated valleys of the coast, where sugar cane is produced by companies on a larger scale.
Export-oriented agriculture: With high levels of dynamism in terms of incorporating new technology also to improve water efficiency and agro-commercial management, Peru is rated among the countries with the highest export rate of asparagus (revenues of USD 384 million in 2018), mango (USD 257 million), avocado (USD 724 million) and coffee (USD 680 million), etc. (Figure 1.2). These business activities are mostly carried out on the coast.
The National Land Classification System (Sistema Nacional de Clasificación de las Tierras), according to its Greater Use Capacity (Capacidad de Uso Mayor) includes regulations for soil management and conservation. Along the same line, the National Agrarian Policy, in its first axis “Sustainable management of water and soils”, contains Policy Axis 1 “Water management”, whose objective is to improve the management of water for agricultural use, for which establishes eight strategic guidelines. In general, these guidelines encourage the participation of user organisations, promote water use rights, the identification of water sources, the establishment of an integrated information system on sources, payment for water use and water recharge.
Source: Author’s own elaboration based on MINAGRI (2019[12]), Boletín Estadístico de Comercio Exterior Agrario, https://www.midagri.gob.pe/portal/boletin-estadistico-de-comercio-exterior-agrario ; Reglamento de Clasificación de Tierras por su Capacidad de Uso Mayor, Decreto Supremo No. 017-2009-AG; Política Nacional Agraria, Decreto Supremo No. 002-2016-MINAGRI.
Mining is also a major driver of Peru’s export-oriented economy. Peru is a global producer of copper ore and gold, which respectively amount to 26.9% and 15.9% of Peru’s total exports (OECD, 2017[13]). The main mining deposits in the country are located in the heights of the Andes, where the headwaters of the watersheds and areas of water recharge are located. In recent years legal mining has improved processes towards greater environmental protection (OECD, 2017[13]). On the other hand, illegal mining is responsible for negative environmental externalities, which include metal contamination, acid mine drainage, increased sediment levels in streams, soil erosion, nutrient loss and untreated wastewater effluents. It is estimated that in the last 20 years, more than 3 000 tons of mercury have been dumped into Amazonian rivers, contaminating water, aquatic organisms and human populations that consume water and fish (WWF, 2019[14]). Water contamination by anthropogenic activities, wastewater from the various uses, discharges, treatment or reuse of water, among others, is at the centre of a number of conflicts that have emerged as a result of pollution pressures and have involved Indigenous communities (Box 1.2).
Many social conflicts in Peru stem from water-related issues. As of December 2019, the Secretariat for Social Management and Dialogue (SGSD) identified 143 cases of social conflict at the national level, of which 8.4% (12 cases) were related to water. Although there is leeway for improvement in the methodology used by the Ombudsman to upgrade and update the analysis of complex social conflicts, the Ombudsman’s Office registered between January 2011 and December 2014 a total of 153 social conflicts linked to water resources, representing 28.36% of the total number of conflicts over that period (539 cases).
Resolution No. 285-2014-ANA established two types of classification of water conflicts: one in relation to the “theme” of the social conflict linked to the use of water (e.g. dispute over the volume or flow of the water resource; management of the quality of the resource; hydraulic infrastructure and assets associated with water resources); and in relation to the “stage” in which the conflict is prevented and treated. The National Water Authority (ANA) intervenes prior to the emergence of the water conflict and/or in the event of a crisis, or at the time of the open manifestation of the conflict. The intervention at different stages seeks to reduce the intensity of the factors that exacerbate the water conflict and find solutions through mechanisms, guidelines and established spaces for its approach (dialogue, agreement and negotiation).
In 2015, 8% of water conflicts registered with the ombudsman in Peru involved Indigenous communities and 5% involved Indigenous organisations (Ombudsman’s Office, 2015[15]). Conflicts are related to: the implementation of irrigation projects; the use of lagoons; the construction of dams; projects that would affect groundwater conduits; or stem from demands of Indigenous organisations for not having been consulted. Law No. 29785, recognised in the International Labour Organization (ILO) Convention 169, develops content, principles and procedures for the right to prior consultation with Indigenous or native peoples regarding legislative or administrative measures that directly affect them. Along the same line, the Regulation of Law No. 30754, the Framework Law on Climate Change (Supreme Decree No. 013-2019-MINAM), incorporates the creation of the Indigenous Peoples’ Platform to face climate change, as a space for Indigenous peoples to share their proposals for adaptation and mitigation measures to climate change.
Peru is the third-largest home to Indigenous peoples, after Bolivia and Guatemala, with over 2 000 Indigenous communities belonging to 44 different Indigenous peoples (INEI, 2017[16]) and over 20% of the total population claiming Indigenous heritage (World Bank, 2015[17]). Many of these communities live in the mountainous regions of the Andes and the Amazon Rainforest. 78% of Indigenous people have access to piped water and 68% have access to sewerage (INEI, 2009[18]), significantly below the national average of 89% and 73% respectively (INEI, 2020[19]). The contamination of water resources poses a serious threat to their economic subsistence, as well as their cultural identity, which is ultimately linked to the conservation of the territory they inhabit and that they use both for practical reasons (to obtain resources) as well as symbolic reasons (ritual significance).
The OECD has recognised that the 38 million Indigenous peoples living across 12 OECD countries contribute to stronger regional and national economies and have unique assets and knowledge that address global challenges such as climate change. OECD (2019[20]) suggests to improve Indigenous statistics and data governance; create an enabling environment for Indigenous entrepreneurship and small business development at the local and regional levels; improve the Indigenous land tenure system to facilitate opportunities for economic development; adapt policies and governance to implement a place-based approach to economic development that improves policy coherence and empowers Indigenous communities.
Source: OECD (2019[20]), Linking Indigenous Communities with Regional Development, https://doi.org/10.1787/3203c082-en; OECD (2017[13]), “Mining regions and their cities”, http://www.oecd.org/cfe/regional-policy/Mining%20discussion%20paper%20FINAL_CM.pdf; ANA (2015[21]), Conflictos sociales y recursos hídricos, Autoridad, https://repositorio.ana.gob.pe/handle/20.500.12543/2807; PCM (2020[22]), Willaqniki N° 12 - 2019: Monthly Report December 2019; Ombudsman’s Office (2015[15]), “Social conflicts and water resources”, Defensoría del Pueblo; INEI (2017[16]), III Censo De Comunidades Nativas 2017: Resultados Definitivos, Tomo 1: Lima, https://www.inei.gob.pe/media/MenuRecursivo/publicaciones_digitales/Est/Lib1598/TOMO_01.pdf; INEI (2020[19]), Perú: Formas de Acceso al Agua y Saneamiento Básico, https://www.inei.gob.pe/media/MenuRecursivo/boletines/boletin_agua_y_saneamiento.pdf.
In Peru, there are significant gaps in access to water and sanitation. Fourteen out of 24 departments,1 home to 91% of the population, have access to public water supply (Figure 1.3) (INEI, 2020[19]). It is estimated that 3 million Peruvians (9.2% of the population) lack access to water services and 8.2 million Peruvians (25.2%) lack access to sewerage services (INEI, 2020[19]). Between 2017 and 2018, only half of the total population that reported consuming water from the public network benefitted from this service 24 hours a day (INEI, 2020[19]). The COVID-19 crisis further emphasised the importance of water and sanitation for health, especially amongst the population living in informal settlements with difficult access to proper sanitation. In certain areas of the country, inadequate draining systems also created a double health risk due to the overflowing and flooding of untreated wastewater, inhibiting proper hygiene conditions to prevent the spread of the virus.
Access to water and sanitation shows a large urban-rural divide. Despite the existence of rural sanitation plans and specific rural sanitation programmes at the national, regional and local levels, 25.3% of the rural population and 4.7% of the urban population does not have access to public water supply networks. Moreover, 22.8% of the population lacked access to public sewerage networks in 2019, of which 9.6% in urban areas and 71.7% in rural areas. This situation has slightly improved since 2013 when close to a third (32.5%) of the population had no access to public sewerage (INEI, 2021[23]). However, according to the most recent data (2017[24]), Peru is far from achieving the SDG 6 on water and sanitation: 50% of the population use a safely managed drinking water service (SDG indicator 6.1.1) and 43% use a safely managed sanitation service (SDG indicator 6.2.1a). Disparities are larger in sanitation, where 89% of the urban population reside in homes with drainage service through a public network (84% inside the home), compared to just 17% of the rural population (UN, 2017[24]). Large urban settlements such as Arequipa, Callao, Lima and Tacna all report rates of improved access to sanitation well above the national average (74.9%), whereas the rural departments of Huancavelica, Huánuco, Loreto and Ucayali all show access to sanitation rates below 45%. As of July 2019, the Ministry of Housing, Construction and Sanitation (Ministerio de Vivienda Construcción y Saneamiento, MVCS) has invested and transferred PEN 3 749 million for the execution of 1 610 water and sanitation projects nationwide, from which more than 1 800 000 Peruvians in urban and rural areas are expected to benefit.
Source: 2019 data in INEI (2020[19]), Perú: Formas de Acceso al Agua y Saneamiento Básico, https://www.inei.gob.pe/media/MenuRecursivo/boletines/boletin_agua_y_saneamiento.pdf.
Urban and rural areas also face disparities regarding water quality, with 46.5% of the urban population having access to chlorinated water compared to only 2.2% for rural areas. In 41 hydrographic units (representing 26% of total hydrographic units), some parameters exceed Environmental Quality Standards (EQS) for water caused by the dumping of untreated wastewater, inadequate management of solid waste, environmental liabilities and informal and illegal mining (ANA, 2015[25]). Water quality degradation poses a number of challenges and leads to severe public health issues, although more epidemiological evidence and cost estimates would be needed to assess the full magnitude of the problem. In some areas, prevalently rural, there are high levels of chronic child anaemia. The World Food Programme (WFP) estimated2 in 2018 that around 50% of childhood anaemia cases were linked to a lack of access to water and sanitation, as well as hygiene (CADE, 2018[26]). In 2017, anaemia affected 43.6% of girls and boys under 36 months.
Bridging gaps in access to sanitation services has become a national priority in Peru. The National Environmental Policy, the National Environmental Action Plan and the National Agenda of Environmental Action have all set the target of treating 100% of urban wastewater effluents by 2021, in line with the National Sanitation Plan (Box 1.3). However, the target is far from being achieved: in 2019, 22 companies registered 0% treatment of their wastewater, 18 of which did not have a wastewater treatment plant (WWTP) (SUNASS, 2020[27]).
The National Urban Sanitation Programme (PNSU) or Agua para Todos (Water for All), 2007
The Agua para Todos programme was created by the MVCS by Supreme Decree No. 006-2007-VIVIENDA on 23 February 2007. In 2012, the name of the programme was modified to the National Urban Sanitation Programme (PNSU). The PNSU aims to expand coverage, improve water quality and promote the sustainable use of sanitation services in urban areas, in order to improve the quality of life of people living in urban settlements. The PNSU executes programmes, investment projects and activities whose objectives revolve around the closing of gaps in sanitation services in urban areas, which leads to greater expenditure and decentralised investment through regional and local governments and service providers. It established operational criteria for eligibility and priority in the allocation of sector resources within the framework of national policies and the National Sanitation Plan.
The National Rural Sanitation Programme (PNSR), 2012
The PNSR was created in 2012 by Supreme Decree No. 002-2012-VIVIENDA to honour the commitment of the Government of Peru to provide the rural population with water services and comprehensive, quality and sustainable sanitation. Its foremost engagement is to provide opportunities for the improvement of the health of targeted rural families through the provision of quality, sustainable and comprehensive water and sanitation services such as Basic Sanitation Units (toilet, shower, sink, etc.), quality water, communication and health education, as well as capacity building in administration, operation and maintenance. Other objectives include the joint co-ordination with local and regional governments and other public and private entities of actions to support water and sanitation projects for the rural population in Peru.
In order to meet these goals, the plan focuses on courses of action that include the construction and improvement of water and sanitation infrastructure, the implementation of non-conventional technological solutions for access to drinking water, and capacity building for local and regional public authorities and citizens in different areas (e.g. management and maintenance of sanitation services and investment in sanitation).
Source: MVCS (2019[28]), Programa Nacional de Saneamiento Rural, http://pnsr.vivienda.gob.pe/portal/ (accessed on 12 March 2021); MVCS (2012[29]), Manual de operaciones del programa de saneamiento.
Peru is the third Latin American country in terms of dryland area, which covers 40% of its surface (MINAM, 2016[30]). In 2011, around 25.75% of the country suffered from desertification, while 3% was already desert. In terms of desertification, 80% of the affected area is concentrated in the Andes region. Of the 128.5 million hectares of national territory, 56.7% (72.9 million hectares) is affected by water erosion (INRENA, 2005[31]). The Coastal (23.8%) and Andes (72.5%) regions are the most affected by severe water erosion, which encourages desertification, aggravated by the scarcity of vegetation cover due to human activities (MINAGRI, 2017[32]). In addition, drainage and salinity issues, occurring along the coastal region, affect at least 25% of cultivated lands (World Bank, 2013[33]).
The country is also undergoing massive deforestation, especially in the Amazon rainforest. Peru is currently the 10th country in the world with the highest forest density, with more than half of the country (673 109 km2) covered by forests (WWF, 2015[34]). Only Brazil has a larger tropical Amazonian forest area. More than 330 000 people directly depend on national forests for their livelihoods and many more depend on numerous ecosystem goods and services provided by forests, such as carbon fixation and storage, water regulation and the protection of Peru’s biodiversity. However, between 2000 and 2014, Peru has lost an average of 118 081 hectares of forest every year (MINAM, 2016[35]). Deforestation is negatively affecting the capacity of the hydrological system to regulate itself.
The Andean Amazon is one of the areas of greatest biodiversity in the world and an essential part of the hydrological cycle in Peru. As such, the Amazon is often the location of the upper basin through which water flows to the Atlantic Ocean, as well as the location of many water diversion projects from the Atlantic to the Pacific watershed. Basins such as Madre de Dios and Inambari contain a wide diversity of Andean and Amazonian wetlands, which influence the hydrology of the Amazon basin (Barthem et al., 2016[36]). Some of the greatest threats affecting biodiversity in Peru are overfishing (with a large increase in the Amazon), the significant pollution of water in the Pacific watershed, invasive species, oil and mercury spills in the Amazonian rivers in the Atlantic watershed due quite often to illegal mining activities, climate change and the creation of hydroelectric plants (MINAM, 2019[37]). Inadequate water quality interferes with the provision of aquatic ecosystem services, including the economic use of water resources, such as crop irrigation, aquaculture, fishery, landscaping, recreational and navigation services and ecosystem services. Integrated water resources management and good environmental quality of water bodies are thus essential to the conservation of rainforest and biodiversity as well as to the health of the hydrological cycle.
Wider governance failures in Peru challenge policy effectiveness and implementation in the water sector. In recent years, Peru has been undergoing political and social turmoil, which jeopardises the policy continuity and leadership required for public policies, including water and sanitation, to deliver intended outcomes. The democratic transition that started in late 2001 coincided with an economic boom, fuelled by high international commodity prices, a strong mining sector and expanding private consumption. However, this remarkable macroeconomic performance did not deliver on political, social and environmental grounds. In recent years, Peru ran into political challenges that can largely be traced to the 2016 Odebrecht affair.3 Between 2018 and 2021, the Peruvian presidency changed four times. Despite recent instability, Peru has set water issues high on the political agenda. Since the presidency of Pedro Pablo Kuczynski (2016-18), ensuring universal and continuous access to water and sanitation4 to the whole Peruvian population and across urban and rural areas has been seen as a major priority. Nevertheless, shifting from impact remedial approaches (mostly ad hoc, unplanned and reactive) to long-term risk management requires effective, efficient and inclusive governance, which is intrinsically a reflection of a country’s culture, legal regime, legacy issues, political setup and territorial development patterns.
In the context of climate change, governance challenges come about with an unprecedented level of uncertainty. Between 2000 and 2020, floods in Peru affected an estimated 4.43 million people, of which 57 025 were made homeless, 1 666 were injured and 787 died (Guha-Sapir, 2021[38]). The flood that affected the most people (1.8 million) caused USD 3.1 billion in economic damages spread across 6 departments, including Lima, in 2017. The 2017 El Niño Costero was one of the country’s worst meteorological events of the 21st century (MINAM, 2016[39]). In the Amazon, excess rainfall mainly comes from La Niña events. An increase in flooding also brings about huaicos, highly destructive mudslides occurring in upper altitude areas and accounting for up to 4% of total emergency events between 2003 and 2014 (MINAM, 2016[39]). Huaicos displace large volumes of land, impacting human settlements and infrastructure, and causing strife and loss of life. The huaicos carry sediments and do not allow adequate water capture by the treatment plant. Between 2000 and 2020, landslides affected 1 140 people, of which 307 died. El Niño is also at the origin of drought events in the southernmost areas of Peru. According to a SENAMHI analysis (2019[40]) of 20 Peruvian departments, excluding the arid areas of coastal departments (as they receive less than 2% of Peruvian rainfall annually), 10 moderate to extreme drought events occurred in Peru between 1981 and 2018. Managing water in the face of uncertainty demands: the acknowledgement of conflicts between the flows of services and the conservation of water assets (stocks); the challenging trade-offs implied in the joint provision of private and public goods from aquatic ecosystems; the critical importance of water use for economic growth but the essential role of water conservation for sustained progress and sustainable development; the pervasive externalities derived from the interconnected nature of the hydrological cycle; the relevance of long-term water security and the increasing uncertainty about future supplies that make extreme precautionary options a sensible policy attitude, and the high fixed (capital) cost of water infrastructures and the still unsolved problem of how to design effective and efficient cost- and benefit-sharing schemes.
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Notes
← 1. Departments with the lowest coverage are Tumbes (78.9%), Huánuco and Ucayali (76%), Puno (69.7%) and Loreto (56.8%). The highest coverage areas (higher than 95%) can be found in the departments of Áncash, Apurímac, Arequipa, Ayacucho, Callao, Lima, Moquegua and Tacna.
← 2. World Food Programme in Peru, Peru’s 2018 Annual Executive Conference (CADE).
← 3. The Odebrecht Affair is an ongoing corruption case involving the Brazilian construction company Odebrecht and political figures, including heads of state, mainly in Latin America. In Peru, four former heads of state are accused of being involved in this corruption scandal.
← 4. “Saneamiento” in most Latin American countries, including Peru, includes (drinking/potable) water supply and sanitation (collection of wastewater effluents), but also other services in the urban water cycle such as water reuse. Article 1 of Decreto Legislativo 1280 is even more relevant for the purposes of definition. Sanitation services are defined as follows: potable water, sewerage, wastewater treatment, effluent discharge or reclaimed water reuse, and final disposal of waste, both in urban and rural areas.