Global Water Forum: financing for water infrastructure and sanitation services

Citation

(2013), "Global Water Forum: financing for water infrastructure and sanitation services", Management of Environmental Quality, Vol. 24 No. 6. https://doi.org/10.1108/meq.2013.08324faa.014

Global Water Forum: financing for water infrastructure and sanitation services

Global Water Forum: financing for water infrastructure and sanitation services

Article Type: Features From: Management of Environmental Quality: An International Journal, Volume 24, Issue 6.

The Global Water Forum (GWF) released a discussion paper, titled “Water finance: preparing for the next critical juncture,” which explores public and private financing for water infrastructure and sanitation services in developing countries. The authors, Diego Rodriguez and Amanda McMahon, recognize limitations in water financing but argue that a new generation of water infrastructure financing will emerge.

The authors formulate recommendations on how countries can best position themselves to benefit from this financing when it materializes. They argue investments in water infrastructure and sanitation services alone will not ensure infrastructure and services, and instead call for changing budget allocation, targets and execution.

Rodriguez and McMahon explain that 75 percent of public sector water financing is through what the Organisation for Economic Co-Operation and Development (OECD) calls the three “T’s,” namely tariffs, taxes and transfers. They argue the three T’s fail to incentivize long-term investments or efficiency improvements because they support the status quo. For instance, if tax revenues decrease, water budgets are also likely to decrease. Further, many developing countries allocate budgets annually, resulting in long-term uncertainty about water budget allocation and perverse incentives for long-term planning.