Financing options for the 2030 Water Agenda

TITLE: Financing options for the 2030 Water Agenda

AUTHORS: Kolker J, Kingdom B & Tremolet S

YEAR: 2016

ABSTRACT: The Sustainable Development Goals (SDGs) have new and very significant financing needs. Regarding water supply and sanitation, this has been estimated at US$1.7 trillion, with additional billions of dollars required for irrigation and water resource management more generally. The water sector is not well equipped to face these challenges. A new sector financing paradigm is required, based on four broad themes: 

  • Improving sector governance and efficiency (i.e. improving creditworthiness)
  • Crowd in or blend private finance (i.e. leveraging capital)
  • Allocating sector resources more efficiently to deliver the maximum benefit for every dollar invested (i.e. targeting capital)
  • Improving sector capital planning to reduce unit capital costs (i.e. minimising capital requirements)

In order to realise this new financing paradigm, all stakeholders will have to play an active role. This means that governments will have to facilitate the mobilisation of public finance by: a) developing policies and incentives that improve efficiency and governance of service providers to make them more creditworthy, b) improving the financial enabling environment and c) incentivising leveraging of public funds with commercial finances.