Panel Urges Strategic Investments In Water

Annual water-related investments worth USD400-500 billion have a proven track record of providing consistent and steady yields, even in turbulent times. But today, the public coffers of Europe, America, China and Japan and of emerging economies have run dry or into debt. As social, economic and environmental pressures mount, it will be tough to increase or even maintain spending on water and sanitation. Yet as local authorities and public utility managers begin to raise capital, they have an advantage.

"If there is an item in the agenda that could qualify for inclusion in today's fiscal stimulus packages, clearly that is water," said Angel Gurria, Secretary General of the OECD, speaking of the benefits of investing in water infrastructure and thereby stimulating the economy. "Water represents the best example of 'double dividend' spending that packages offer the opportunity to invest in."

Since the greatest yields are public, the biggest investors in water have been, and will remain, centralised federal governments. Every USD1 spent on the water and sanitation sector yields USD8 in income, health, productivity and infrastructure-related jobs.

But in a world of financial uncertainty, the very dynamics that make water a smart public investment tend to make it a safe haven that attracts private sector funds. Water's unexciting lack of volatility has now encouraged private funds to flow into the sector.

However, while water is a good financial investment for affluent economies, developing countries remain in a different category. Without enough public tax revenues or access to private equity, they will continue to lack the size and scale of resources to provide and maintain safe water and sanitation for all citizens.

The Forum heard a robust debate on private vs. public management, and some participants advocated "solidarity financing" that can expand access through cross subsidies to the poor. This is where overseas development aid could become a catalyst.

"The international community will have to give even more to the poor, who can't support the investments needed for water," said Loic Fauchon, President of the World Water Council, which organised the 5th World Water Forum. "The most fragile African regions are those who need the most support. Let's make sure that we do not impose too strict financing conditions with the risk of leaving the poorest on the roadside."