IDB Approves $10.5M Package to Improve Wastewater Infrastructure in Belize

The Inter-American Development Bank (IDB) has approved a $10 million investment loan and a $500,000 grant to support a critical new project aimed at improving coastal water quality and wastewater management in Caye Caulker, Belize. The initiative, which also includes an additional $2.25 million grant from the Global Environment Facility (GEF), is a significant step toward environmental protection, sustainable tourism, and public health improvement in one of Belize's most iconic coastal communities.

This funding is part of IDB CLIMA, a performance-based pilot program that rewards countries for achieving climate and nature-positive goals. The project's dual focus is on expanding wastewater services in South Caye Caulker and strengthening the institutional capacity of Belize Water Services Limited (BWSL), the country's public water utility.

Addressing Urgent Sanitation Needs in a Tourism-Driven Community

Caye Caulker, located just off Belize's coast, is known for its rich marine biodiversity, coral reefs, and a vibrant tourism sector. However, the island's growth has far outpaced the development of its wastewater infrastructure, creating challenges for both environmental sustainability and public health.

The new project aims to address these issues by:

• Constructing and commissioning a modern sewer system

• Establishing a wastewater treatment plant to serve the South Caye Caulker community

• Reducing pollution in coastal waters that threaten marine ecosystems and coral reefs

• Improving the resilience and environmental sustainability of sanitation systems

The initiative will directly benefit 3,226 residents, in addition to supporting the 1,238 daily tourists who visit the area and 145 commercial establishments operating in the region.

Institutional Strengthening of Belize Water Services Limited (BWSL)

Beyond infrastructure, the project also supports the institutional transformation of BWSL to help the utility company:

• Improve operational and financial performance

• Enhance data collection systems for informed decision-making

• Incorporate climate and nature-related risk assessments into project design

• Plan for future nature-positive water and sanitation investments

These enhancements aim to ensure that Belize's water infrastructure is not only expanded but also sustainable and resilient in the face of climate change and tourism pressures.

Climate-Focused Financing Structure

The financial package includes:

• A $10 million loan from the IDB with a 25-year repayment period, including a 5.5-year grace period, and an interest rate based on SOFR (Secured Overnight Financing Rate)

• A $500,000 non-reimbursable grant under IDB CLIMA

• A $2.25 million grant from the Global Environment Facility (GEF)

• A $750,000 local counterpart contribution by the Government of Belize

This structure reflects a growing emphasis by the IDB on climate-aligned, performance-based financing models that reward measurable environmental outcomes.

Raising Awareness and Community Engagement

Recognizing that infrastructure alone is not enough, the project will also invest in:

• Public awareness campaigns to promote responsible system use and community buy-in

• Educational initiatives for tourist businesses, aimed at improving waste management practices and reducing pollution risks

This component is particularly crucial for ensuring the long-term sustainability and effectiveness of the new sanitation system.

Supporting Belize's Climate and Sustainability Goals

The project aligns with Belize's national development and climate action strategies, including its Nationally Determined Contributions (NDCs) under the Paris Agreement. The initiative also supports global environmental goals related to marine conservation, clean water and sanitation (SDG 6), and sustainable cities and communities (SDG 11).

"This operation is a model of how infrastructure, climate finance, and community engagement can come together to protect nature, boost tourism sustainability, and improve quality of life," said a representative from IDB CLIMA.

About IDB CLIMA

IDB CLIMA is the Inter-American Development Bank's innovative financing instrument designed to incentivize countries to achieve climate mitigation, adaptation, and biodiversity goals. Under this mechanism, funding is linked to performance indicators, creating a results-based approach that enhances accountability and impact.

Caye Caulker's project is among the first in the Caribbean to benefit from IDB CLIMA funding, setting a precedent for nature-positive infrastructure development in the region.

A Cleaner, Safer Future for Caye Caulker

As Belize continues to navigate the challenges of economic development, climate vulnerability, and environmental protection, the Caye Caulker wastewater project represents a visionary step forward. By combining investment in hard infrastructure with institutional reform and public education, the initiative paves the way for a healthier, more resilient coastal ecosystem and community.

The project underscores the IDB's commitment to climate-resilient development in small island states and offers a replicable model for other tourism-dependent nations grappling with similar challenges.