MANILA, Philippines—The Asian Development Bank on Friday approved a $500 million loan for cleaning up Indonesia's Citarum River, calling it the world's dirtiest.

The Manila-based lender said the Citarum basin supports a population of 28 million people, delivers 20 percent of Indonesia's gross domestic product, and provides 80 percent of water supply to the capital, Jakarta.

But rapid urbanization over the last 20 years has seen a rise in untreated household sewage, solid waste and industrial effluents, posing threats to public health and imperiling the livelihood of poor fishing families, the bank said.

The loan package, available over the next 15 years, will support sanitation projects and construction of waste treatment plants in the river basin to provide safe water supply to poor families who use the polluted river for fishing, bathing and laundry.

"Rapid urbanization, climate change, environmental degradation, public health and food security are all important issues challenging water resources management in Asia and the Pacific region," said Christopher Morris, an ADB senior water resources engineer.

The loan also will allow the cultivation of an additional 61,700 acres (25,000 hectares) of rice paddy, benefiting 25,000 farming families, he said.

The river management program also aims to supply water to 200,000 more households in Jakarta. It will ultimately increase Jakarta's water supply by 2.5 percent yearly, and benefit millions by resolving critical water shortages in Bandung, Indonesia's fourth largest city, the bank said.