Water Financing and Governance

Abstract

"Traditionally, within the water sector, financing issues have not had a high profile and are mostly related to supply side investments. This is no longer sufficient as population growth, urbanisation, greater wellbeing and a higher quality of life puts the world’s fragile water resources under increasing stress. With the added threat from climate change the situation is set to deteriorate even more. Supply side issues and the financial architecture for providing essential domestic services was addressed by the Camdessus Report in 2003 and the issue of demand management was covered by the Gurria report in 2006. These two landmark papers have prompted a wealth of interest in water financing. However, this has mainly focused on service provision and there is very little that covers the issues of financing for the overarching water resource management and governance systems that are critical for all users and for environmental protection. Many commentators have stressed that financial needs will not be met without major reforms in water governance. By improving water governance the enabling environment for investment will improve as risks, commercial and political, will be better understood and addressed. Over the last fifteen years an integrated approach to water resources management (IWRM) has evolved as the means to manage water more holistically and sustainably, and overcome the fragmented decision making and purely supply side approach common to the past uses and abuses of water resources. There is a very close link between the integrated approach, good water governance and financing but, to date, there has been little discussion about this relationship. This paper aims to bring together these different strands so that a more coordinated, coherent approach to water financing is adopted. It focuses on the need to fund the water resources functions that are essential for security and sustainability and to examine the relationship between the different governance and organisational structures in the sector and their ability to secure funding for essential goods and services."