Looking at the water sector in developing countries like Tanzania,
one may cite resource scarcity as a major problem. Of course it is, to a
great extent, what with many rivers and lakes drying and some having
reduced flows even during the rainy season. And these are the major
sources of water supply for domestic, industry, agriculture and
ecosystem uses, among others.
Short periods of rainfall preceded by long dry seasons have made
rivers and other waterbodies lose their ability to store and supply
enough water to meet the needs of the various users as was the case in
the past several years. Many parts of the world, particularly developing
countries, experience acute shortage of water as underground water
resources are also being depleted.
But while water scarcity prompted by diminishing resources has
stalled efforts to uphold the human right to water and realise water
security, there are other problemmes that have impacted the realisation
of these goals.
“In order to attain the UN Right to Access Safe Water, developing
countries need money. Funding is needed to improve infrastructure such
as supply and distribution networks, creation of institutions that
enforce rules and regulations and proper management of the water
sector,” says Prof Benedito Braga, President of the World Water Council.
He adds that governments cannot by themselves raise the funds
required to make these improvements as a result of which there is need
to cooperate with the private sector so that companies can invest.
“But government cannot shift its ultimate responsibility to promote
access to water for the poor, to the private sector. Even without
thinking of making profits, public utilities need funds to provide
services. This calls for governments to attract sufficient funds through
Public-Private-Partnership so as to enable public utilities to offer
services sustainably.”
The partnership with the private sector should also aim to train
locals in operation and management of infrastructure while the
government should ensure that water tariffs are set in a manner that
does not exclude the poor from accessing clean and safe water. Where
tariffs are not low enough for the poor to afford, governments should
provide subsidies so that the poor can foot their water bills. This is
being done in Chile where the poor receive subsidy to pay for water,
electricity and gas.
While governments acknowledge that water infrastructure is central
to delivering water security in the face of a changing climate, at the
global scale they are simply not investing enough to bridge the gap
between demand and supply. Financing water infrastructure must take into
account the upstream and downstream social, economic and environmental
impacts. It must be multi-purpose, addressing current and future needs.
Embracing the multi-purpose infrastructure approach will demand new
financing solutions, as well as new ways of engaging all users in a
genuine shared responsibility for the world’s precious water resources.
“There are costs involved in financing water infrastructure but
the positive impacts of water resources infrastructure and management
overweigh the costs,” says Prof Braga.
In order to increase the number of poor people who have access to
clean and safe water in developing countries, it is vital to finance
more development projects in the sector focusing mainly on delivery and
quality. While the cooperation between governments and the private
sector could provide the much needed funding for the development of
infrastructure, governments should strive to find other sources.
“Trans-boundary cooperation is important because countries sharing
waterbodies can implement joint projects that focus on infrastructure
for supply and distribution. Together they can also deal with the issue
of water quality and as such reduce the burden of financing the water
sector,” said Global Environmental Facility CEO Naoko Ishi during the
Seventh World Water Forum that was held recently in Korea.
However she warned that while the goal is to raise the number of
people in developing countries who can have access to clean and safe
water, water projects should not undermine the global natural system by
destroying ecosystems.
“Many African countries are facing acute shortage of water due to
rising urbanisation and fast-growing populations both of which put a big
strain on resources. However, countries must balance between
development projects meant to improve water infrastructure and
conservation of ecosystems which play an important part in sustaining
freshwater flows,” said the GEF CEO.
WWF International President Yolanda Kakabadze also stresses the
importance of the private sector in financing the improvement of water
infrastructure. She says that every business is water-dependent in one
way or another.
“Given that it is one of the world’s most precious resources,
water quality and quantity will increasingly influence a business’s
ability to grow, thrive and operate. In advancing corporate water
stewardship , companies must play an important role not only in
financing water infrastructure that would ensure efficient use of water
but also restore and protect healthy, resilient freshwater ecosystems,”
she says.
Funding for water infrastructure is not a once-off activity, but a
continuous process that involves repair and maintenance of existing
facilities and construction of new ones. There is therefore a need to
have a sustainable financial model that would provide funding for water
supply and sanitation services. This could be implemented through the
reduction of service costs through improved management by among others,
reduction in leakage and development of appropriate technology.
Another measure is the optimisation of resource allocation with
subsidies concentrated on the funding of access to services for the
poorest and most vulnerable populations.
In 2014, the World Water Council (WWC) with The Organisation for
Economic Cooperation and Development (OECD) created a High-level Panel
on Infrastructure Financing for a Water Secure World to set out clear
objectives and encourage dialogue on the role of multi-purpose water
infrastructure to ensure water security.
At the 7th World Water Forum that was held recently in the Republic
of Korea the WWC and (OECD) called on policy makers and business
leaders to address financing water infrastructure to provide water
security for the demands of the global population and global economy.
Through the High-level Panel on Infrastructure Financing for a Water
Secure World, the two organisations highlighted the increasing need for
public and private partnerships to drive the construction of major water
infrastructure schemes.
However, it has become evident that there are many risks involved
in water projects, a situation that has created a barrier to potential
investors in the sector. This has resulted in water infrastructure
projects being marginalised compared to other branches of infrastructure
investment.
“With the increasing use of water for all kinds of activities –
agriculture, industry, energy – water infrastructure needs to be
multi-purpose. But multi-purpose water infrastructure presents specific
financing problems. The sums involved are typically large and some
components are not financially profitable. Many different stakeholders
are also affected and conflicts over priorities often arise between
them,” says WWC President.
However, evidence shows that existing financial sources are
available alongside newer sources of funds. Pension funds, insurance
companies, water funds, and climate funds may be pooled to finance the
full range of products, services and functions needed for global water
security.This investment is necessary today, since water supply and
sanitation alone are expected to require USD 6.7 trillion by 2050.
“Despite the fact that financing for the water sector can easily be
justified by the pressing need to adapt to global changes including
climate, population growth and urbanisation, investment in water
infrastructure is underdeveloped. Globally we are simply not doing
enough”, says the WWC President.
“We must grasp the big picture connected to water and bring
together investors, bankers, economic players and public officials to
tackle the infrastructure deficit in new and creative ways,” he adds.
The OECD sees governments as having a lead role to play in
attracting new sources of funding water infrastructure and coordinating
the use of such funds so that they are used appropriately.
“Governments need to think harder about coordinating the timing of
different water investments, maximising their efficiency and being
ready to exploit new sources of financing,” says Angel Gurria, OECD
Secretary General.
Yet in order to achieve water security for human needs, water
security for economic development and water security for environmental
sustainability, action is required from governments and financial
regulators, water regulators and international financing institutions.
Banks, commercial financing and investment institutions, industry
and individual water users, water utilities, international and regional
agencies all have a role to play in financing water infrastructure for
water security.
The current water insecurity already dents global economic growth
to the tune of USD 500 billion a year, with inadequate water supply and
sanitation alone estimated to cost an annual USD 260 billion. Thus,
getting infrastructure financing right is absolutely essential for
achieving a water secure world.
According to Gurria enhanced understanding of water security has
been matched by a proliferation of new opportunities to finance water
infrastructure. Increasing numbers of developing and middle-income
countries are now able to access commercial finance for water
infrastructure.
“On top of this, sources of funding have become increasingly
diverse. Long-term investors – who at the last count held over USD 87
trillion in assets in the OECD area alone – are looking for the right
investment opportunities. We have also seen the creation of new
financing vehicles, and institutional arrangements that could be
channeled into financing a water secure world,” he notes, adding that it
is important to maintain existing infrastructure before seeking funds
from other sources.
“First, we can do better with what we have. We can better operate
and maintain existing assets to minimise investment needs. We can also
avoid generating further needs, by smart water management and increasing
coherence across policy areas. We should also acknowledge the enormous
diversity of water infrastructure, from small scale projects initiated
by local entrepreneurs, to large infrastructure that can serve multiple
purposes,” he says.
However, governance is important in attracting funding for water
infrastructure. There is need to build trust between investors and the
water community. This means coordinating across levels of government and
the different sectors, strengthening the capacity of water management
institutions and enhancing the integrity and transparency of water
management.SOURCE: THE GUARDIAN
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