Meeting the Challenge of Financing Water and Sanitation

Tools and Approaches

image of Meeting the Challenge of Financing Water and Sanitation
The investments needed to deliver sustainable water and sanitation services, including the funds that are needed to operate and maintain the infrastructure, expand their coverage and upgrade service delivery to meet current social and environmental expectations, are huge. Yet, most systems are underfunded with dire consequences for water and sanitation users, especially the poorest. Providing sustainable drinking water supply and sanitation services requires sound financial basis and strategic financial planning to ensure that existing and future financial resources are commensurate with investment needs as well as the costs of operating and maintaining services. Some of the key messages of the report are:

- WSS generate substantial benefits for the economy

- Investment needs to generate these benefits are large in both OECD and developing countries

- Tariffs are a preferred funding source, but public budgets and ODA will have a role to play, too

- Markets-based repayable finance is needed to cover high up-front capital investment costs

- Strategic financial planning and other OECD tools can help Governments move forward

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The benefits of investing in water and sanitation services are very substantial. An adequate and dependable source of water is needed to sustain human life, economic development, and the integrity of ecosystems. Investment in drinking water and sanitation services can yield substantial benefits, with benefit-cost ratios that are consistently above one. According to the JMP, around 884 million people lack access to improved water sources and 2.6 billion are without access to basic sanitation. Approximately 10% of the global burden of disease could be prevented with improvements to water, sanitation and hygiene and better water resource management worldwide. The burden of water-related diseases falls disproportionately on developing countries and particularly on children under five, with 30% of deaths of such children attributable to inadequate access to water and sanitation. Wastewater from domestic and industrial uses often reaches the environment untreated or insufficiently treated, resulting in major impacts on surface waters and associated ecosystems as well as economic activity that uses these resources.

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