A Framework for Financing Water Resources Management

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A lack of finance for water resources management is a primary concern for most OECD countries. This is exacerbated in the current fiscal environment of tight budgets and strong fiscal consolidation, as public funding provides the lion’s share of financial resources for water management.

The report provides a framework for policy discussions around financing water resources management that are taking place at local, basin, national, or transboundary levels. The report goes beyond the traditional focus on financing water supply and sanitation to examine the full range of water management tasks that governments have to fulfill; when appropriate, a distinction is made on distinctive water issues.

The report identifies four principles (Polluter Pays, Beneficiary Pays, Equity, Policy Coherence), which have to be combined. In addition, it identifies five empirical issues, which have to be addressed on a case-by-case basis. Finally, it sketches a staged approach that governments might wish to consider, to assess the financial status of their water policies and to design robust financial strategies for water management. Case studies provide illustrations of selected instruments and how they can be used to finance water resources management.    


Executive Summary

There is a clear and pressing need for governments around the world to strengthen the financial dimension of water resources management. Back in 1978, the OECD Recommendation of the Council on Water Management Policies and Instruments specified the main objectives of water management: to protect water resources against pollution and excessive use; to preserve the water environment and ecology; to safeguard and improve the hydrological cycle in general; and to provide adequate water supply, in quality and quantity, for domestic, industrial and agricultural purposes, account being taken of long-term demands. Recent analysis of water governance arrangements in OECD countries flagged lack of finance as a major and recurrent gap in water policies.


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