The Misicuni project will increase the supply of water for domestic use and irrigation to the Cochabamba Valley while generating electricity for Bolivia’s National Interconnected System. The Cochabamba region has been increasingly suffering from a scarcity of water both for human consumption and for agriculture, and Bolivia needs to expand its electricity generation capacity to meet the growing demand.

A total of $101M in IDB loans will be used to build the hydroelectric component of the project, including electric power transmission and related works, which will contribute up to 80MW of power to the national grid. Construction of the dam on the Misicuni River, which began in June 2009, is expected to cost $85M and is being financed by the Government of Italy, the Prefecture of Cochabamba, Bolivia’s National Treasury, and the Andean Development Corporation.

An additional $5M in IDB financing will be used to finance the Misicuni Watershed Environmental Management Project. This project will supplement and strengthen measures to mitigate the indirect impacts of the Misicuni Project on the environment and population in the main dam’s watershed.

Specifically, these funds will be used to reduce susceptibility to erosion, enhance water management, and protect priority habitats in the areas of the watershed most exposed to such risks. They will also be used to promote soil and water conservation measures and sustainable, income-generating alternatives to subsistence farming within the communities resettled due to construction of the dam.

The IDB financed project will also help the affected communities to develop agricultural activities that will compensate for productive losses associated with the construction of the main dam.