keynote - pezon - trends in financing sustainability
TRANSCRIPT
Financing sustainable water services trends and challenges
Dr Christelle Pezon, IRC
International Symposium on Rural Water Services Kampala, Uganda – April 13-15, 2010
Content
Sources and trends
Financing what ?
Challenges
Sources: the 3Ts
International Development Aid – Transfer
Final users – Tariffs
In country subsidies – Tax
TRANSFER
TAX
TARIFF
Sources and flows
INTERNATIONAL multilateral agencies
bilateral agencies
private foundations
oversees water authorities
migrants living abroad
NATIONAL State and/or sector budget
LOCAL final users
National
Intermediate
Water Authority
Water Service provider
Users
Development Agencies, INGO & Foundation
o $7.4 billion in the WASH sector (12th position)
o 63% in water ($4.7 billion) vs needs ~ $70 billion
Migrants fundingo 4 times the international aid
Oversees Water Authoritieso ~15 millions euros (2009)
National budgetso From 0 to 85% of the sector budget (0.48% of GDP in average)
Userso From 0 to 100% of the service received
Trends in drinking-water and sanitation aid commitments by recipient income category, 1998 - 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
0
1000
2000
3000
4000
5000
6000
7000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Aid
com
mitm
ent
(US$
mill
ions
, con
stan
t 20
07 $
US)
Upper middle income countries (UMICs)Lower middle income countries (LMIC)Other low income countries (OLIC)Least developed countries (LDCs)
0
1000
2000
3000
4000
5000
6000
7000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Aid
com
mitm
ent
(US$
mill
ions
, con
stan
t 20
07 $
US)
Upper middle income countries (UMICs)Lower middle income countries (LMIC)Other low income countries (OLIC)Least developed countries (LDCs)
1. Trends in drinking-water and sanitation aid commitments by recipient income category, 1998 - 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
Aid to low-income countries (least and other low) has increased from 32% to 46% of total WASH ODA in 10 y.
Africa received 33% of ODA over 2002-2007 (OECD)
Trends in aid (Development Agencies) for water and sanitation, education, and health,1995-2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
$11.5 b
Trends in aid (Development Agencies) for water and sanitation, education, and health,1995-2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
$11.5 b
Trends in funding mechanisms: the relative decrease of general budget support 1981-2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
Trends in funding mechanisms: the relative decrease of general budget support 1981-2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
Trends in funding mechanisms: the predominance of project and programme supports
Source: EUWI Africa Working Group, 2008
Trends in funding mechanisms: the predominance of project and programme supports
Source: EUWI Africa Working Group, 2008
Only 29% of European aid to the sector in Africa is provided through sector budget support
According to the GLASS report, 12% of the grants and 2% of the loans are channelled through sector budget support
Financing what?CapEx Opex CapManEx ExpDS ExpIS Cost of
Capital
New service X X X X X
Existing service X X X X X
Upgraded service X X X X X
Breakdown of development aid among project objectives, 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
Breakdown of development aid among project objectives, 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
87% of aid of 8 development agencies are disbursed for new services or for upgrading existing services
Source: adapted from UN-Water GLASS Report (WHO, in press)
2. Breakdown of aid commitments to water and sanitation among purpose types, 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
2. Breakdown of aid commitments to water and sanitation among purpose types, 2008
2. Trends in aid for basic sanitation and water 2003-2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
2. Trends in aid for basic sanitation and water 2003-2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
Aid for basic water and sanitation has declined from 27% to 16% of total aid since 2003
Breakdown of estimated needs to meet the MDG 7 target, 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
Breakdown of estimated needs to meet the MDG 7 target, 2008
Source: adapted from UN-Water GLASS Report (WHO, in press)
88% of the estimated need for WATER consist of recurrent capital and maintenance for existing services (vs 12% for new water coverage)
Financing what?CapEx Opex CapManEx ExpDS ExpIS Cost of
Capital
New service X X X X X
Existing service X X X X X
Upgraded service X X X X X
Transfer Tax Tariff
Challenges for rural services
Thirsting for subsidieso Over 2002-2007, subsidies represented 62% of ODA to LDCs
o The financial crisis is reducing the level of subsidies
Thirsting for efficiency (doing more with less)o Scale to operate and support services (economies of scale)
o Professional management
o Improve in-country funds transfer to lower levels
o Combine financing mechanisms
Thirsting for sustainabilityo Keep the services running, extend and upgrade them
o Consistent share of costs between stakeholders
Challenges for rural services
New sources? development of decentralised cooperation and water operator partnerships
in-country tax, cross-subsidies from urban users (AVT) or from other sectors
tariffs? No historical record of rural water supply development based on tariffs exceeding operating costs
Financing flows and regulatory mechanisms: possible framework...
Schematic example of a framework for a budget sector support
Transfer Tariff Tax
State
Water Authority
Water Service Provider
OpEx
?
CapExCapManEx
ExpDS
ExpIDS
To conclude
The world goes urban, so does the ODA
Our knowledge on sources, flows and costs must improve
More attention should be paid to maintenance and rehabilitation
Rural users cannot be charged full cost
Public finance options need to be better explored