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Friday, March 24, 2023

Report underlines need for urgent increase in water financing

World leaders and business met recently in Davos just as the World Economic Forum’s Global Risks Report revealed environmental factors as the most devastating risks to business and society and the most likely. Another major risk identified in the report are water crises, which are listed among the five most damaging risks, confirming a trend that started eight years ago.

Water rationing

Among top risks, the report also lists the failure to respond and adapt to climate change and points at a global infrastructure gap of $18 trillion that affects both emerging and advanced countries. World leaders all agree on the consensus, but few seem to be backing their concerns with appropriate action.

Water is the predominant means through which the impacts of climate change and demographic pressure are being felt and investments in water infrastructure are both critical and urgent for countries to adapt to these changes, yet efforts in closing the funding gap are currently failing.

In their recently released report titled “Water Infrastructure for Climate Adaptation”, the World Water Council and Global Water Partnership address these issues directly. Through a set of 12 recommendations, the report explores specially-designed investments to help increase the climate resilience of water systems.

The report argues that enough income exists, and the global financial system has plenty of capital seeking investment opportunities. The challenges lay in how to scale up funding and develop “water proofed” mechanisms to finance infrastructure.

The Council has dedicated many years to understanding why financing water is so difficult and why it fails to attract investors. A set of financing reports released last year propose innovative and bold solutions that could help to close the financing gap both for water and sanitation systems.

Two complementary reports offer analysis on both investors and projects for infrastructure in order to propose a better alignment between the two that would unlock and increase funding for projects.

Another paper makes the case for blended finance, a tool that uses development finance to attract and engage the private finance sector in scaling up its investments in water – especially corporations, which account for more than 50% of investors. Finally, the Council explores how to improve the financing of urban sanitation. The report suggests using new and bold approaches to reduce costs, stimulate increased revenues and attract new money into the sector.

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