Water finance, investment and pricing
FINANCING INVESTMENT IN WATER SECURITY AND SUSTAINBLE GROWTH AT SCALE
Harnessing water to drive sustainable growth requires investments in water infrastructure, information and institutions. The Task Force on Water Security and Sustainable Growth has argued that the most beneficial investments in water security are sequenced along strategic pathways. Securing Water, Sustaining Growth documents some of the pathways taken by cities, aquifers, and basins to water security.
The Water, Growth and Finance - Policy Highlights argues that the issue is not only about raising more finance. It is about four inter-related pillars:
- Maximise the value of existing water security investments.
- Select investment pathways that reduce water risks at least cost over time.
- Ensure synergies and complementarities with investments in other sectors.
- Scale-up financing through risk-return allocation schemes.
How come the strong economic case for investment in water security does not materialise in financial flows at scale? The Roundtable on Financing Water (2nd meeting) (12-13 April 2017), a joint initiative with the World Water Council and the Netherlands, was set up to investigate this issue and derive practical answers. It brings together financiers from very diverse background, including development finance, institutional investors and commercial banks. It also brings institutions in charge of infrastructure planning. Preliminary outcomes will be delivered at the World Water Forum in Brasilia in 2018.
pricing water and water services as a policy tool
Putting a price on water can signal its scarcity or the cost of pollution. As such, prices can promote water efficiency. The policy dialogues in Brazil and Korea provide concrete illustrations and practical discussions on the reform of pricing instruments for water management (abstraction charges, pollution charges).
Charging for water services can also generate revenues to finance these services. Lessons can be learned from good international practice. The social consequences of pricing deserve particular attention. The Expert Commission on water set up in 2016 in Ireland – in which the OECD participated - provides ample illustrations of the debates that accompany the reform of water charges in an OECD country.
- Access the publication Water Resource Allocation
- See also relevant sections of the OECD Council Recommendation on Water
- Access the publication Pricing Water Resources and Water and Sanitation Services