What does it take to finance sustainable water supply and sanitation? The World Bank Group takes this question very seriously indeed. That’s why during the recent Global Water Summit, the World Bank Group partnered with the organizer, Global Water Intelligence, to present the key concepts of Blended Finance to participants from all over the world.
But what is blended finance and why is the World Bank talking about it?
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Small towns* typically have not been well served by national or regional water utilities. Decentralization has become increasingly widely adopted, but even if local governments at the small town level have the power to operate a water utility, they often lack the capital and skills to do so. In response, some local governments and public institutions concentrate improvements on upgrading public utilities’ operations or strengthening community based management. In other cases, they choose to bring in the private sector knowledge of how to get clean water and sanitation services to more people more efficiently, affordably or sustainably.
There are many ways in which the public sector can leverage its own resources through partnering with the private sector. For the domestic private sector to fully realize its potential at scale in the small town sub-sector, we found they need capable and enabled public institutions to structure the market and regulate private operators.
Lessons learned from case study countries (Colombia, Bangladesh, Philippines, Uganda, Cambodia, Niger and Senegal) in a new global study published by the Water Global Practice’s in order to build a conducive business climate for market players in small towns Water Supply and Sanitation (WSS) service delivery:
When we go to the supermarket, our decision-making is considerably aided by having the price, ingredients and source of goods clearly labeled. This allows us to rapidly compare the characteristics, perceived benefits, and price of different products to make what is usually an informed and instantaneous purchase decision.
When it comes to making investment choices for public programs, we do not traditionally have the same luxury of information. The full benefits and costs of those interventions, including the long-term costs to maintain and operate a service, are rarely understood or taken into account in the decision. As a result, public decisions are usually made based on the most visible costs (capital investment required from the public budget), historical choices and the political process.
- United States
- United Kingdom
- South Africa
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
- Communities and Human Settlements