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Financing

Demystifying the role of financing SDG6

Joel Kolker's picture

Perhaps one of the most exciting developments coming out of the SIWI World Water Week in Stockholm at the end of August was the large number of sessions and debates around the financing issue.  In essence, the discussion on how we will collectively raise enough funds to close the financing gap was prominent in many discussions. 

It is worth noting that some progress has been made. The issue is now prominent in all the major policy discussions with stakeholders. There is an acknowledgement that domestic finance, rather than international resources, are key to addressing the issue. 

Global Water Security and Sanitation Partnership: Scaling up financing outreach at World Water Week

Joel Kolker's picture

The latest news about the finance world usually involves stories of blockchain technology, acquisitions and mergers, and stock market fluctuations. But the world of finance is also central to the Sustainable Development Goals and particularly the objective of universal access in the water and sanitation sector. Financing, whether public or private, is essential to the development, maintenance and improvement of water supply and sanitation (WSS) systems.

That’s why scaling-up finance for water is crucial if we are to reach the Sustainable Development Goals (SDGs) in the water sector. The SDGs call upon the world to achieve universal WSS access that is safe, affordable, and available to all by 2030. In addition, the SDGs include targets for increasing efficiency of water use across all sectors, protecting and restoring water-related ecosystems, and improving water quality. And water is a fundamental prerequisite to the achievement of all 17 of the goals – water flows through and connects all the other SDGs.  

However, many people still live in areas where WSS systems are inadequate or even unavailable. Although drinking water is essential to life, across the world today 2.1 billion people lack reliable access to safely managed drinking water services and 4.5 billion lack safely managed sanitation services. In Sub-Saharan Africa alone, 42 percent of people lack improved water sources within a 30-minute roundtrip.

The World Bank Group’s Global Water Security and Sanitation Partnership (GWSP) understands that additional finance for water infrastructure is absolutely critical to achieve the SDGs. The WSS sector alone requires six times more financing than governments, the private sector, and donors are currently funding.

Leveraging commercial finance for water: will it hurt the poor?

Sophie Trémolet's picture
Water investments are lumpy and costly: financing is essential to spread the costs of these investments out over time. For water, development finance institutions still provide the bulk of such financing. It can no longer be the only one, however. The costs of extending universal access to safe water and sanitation has been estimated at US$ 114bn per year, which is a substantial increase compared to what was invested to reach the Millenium Development Goals. In contrast, in 2014 total official development finance for water, including grants and loans with varying degrees of concessionality, reached a mere US$18 bn per year, three times more than in 2003 but still woefully insufficient to meet all investment needs.

To meet the Sustainable Development Goals, governments will need to better target their investments and leverage more financing from private sources, including from households that can afford it (via more realistic and fair tariff policies and incentives to invest in things like toilets) and from commercial finance providers, including microfinance institutions, commercial banks, bond investors or venture capitalists.

A this year’s Stockholm World Water Week, the World Bank is releasing  a report which provides guidance to governments and private financiers on “Easing the Transition to Commercial Finance for Sustainable Water and Sanitation”. This report brings together strands of analysis and key messages that were developed for the High Level Panel on Water and for the Sanitation and Water for All Partnership in the run-up to the 2017 High Level Ministerial Meetings hosted by the World Bank.
Download Easing the Transition to Commercial Finance
for Sustainable Water and Sanitation

Learn more about the session Private Finance and
Equitable Delivery of WASH services
 at World Water Week.  

Toward water and sanitation for all: Featuring Matt Damon, co-founder of Water.org

Brittany Scalise's picture
Matt Damon urges ministers to move aggressively toward water and sanitation for all.
Watch his full remarks: http://live.worldbank.org/water-and-sanitation



Last week, on April 20th, Matt Damon, co-founder of Water.org, addressed ministers of finance, water, and sanitation from across the world at the Sanitation and Water for All (SWA) Finance Ministers’ High Level Meeting at the 2017 World Bank-IMF Spring Meetings. The meeting focused on finding ways to fill the enormous financing gap via innovative financial solutions. Mr. Damon urged ministers to consider the full breadth of financing options to achieve the goal of providing safe, affordable, and sustainable water and sanitation for all.

Tackling the vital challenge of financing the world’s water infrastructure needs

Guangzhe CHEN's picture
President of Hungary János Áder (left), President of Mauritius Ameenah Gurib-Fakim (middle) and Guangzhe CHEN, Senior Director for World Bank Water Global Practice (left) hosting a press conference at the Budapest Water Summit 2016.

We cannot talk about water and Sustainable Development Goal (SDG) 6 without also looking at everything that depends on it: from climate, food and electricity to families, farms and ecosystems. It is thus quite simple, if we don’t get it right on water, then we will not succeed in achieving the other SDGs either.

Water and climate change are also intertwined, with some regions at risk of losing up to 6 percent of GDP by 2050 if the growing challenge of water scarcity is not properly addressed.


So what is standing in between humanity and the SDGs related to water? 

One of the biggest hurdles is the lack of sufficient sources of finance. Financing the SDG sub-targets for water supply and sanitation alone will cost triple historic financing levels - an estimated $114 billion per year between now and 2030. The shortfall for financing irrigation and water resource management sub-targets will likely be as large, if not larger.

Identifying the Potential for Results-Based Financing

Water Communications's picture

Although Results-Based Financing (RBF), an approach that allocates public funds based on the achievement of specified results, has had some practical successes in the health and education sectors, its use in the sanitation sector has been limited. Identifying the Potential for Results-Based Financing for Sanitation by Sophie Trémolet looks at the potential for application.