Environment in emerging and transition economies

Methodology and FEASIBLE Computer Model


Environmental Financing Strategies: Methodology and FEASIBLE Computer Model

Environmental financing strategies (EFS) provide a bridge between general environmental programmes and everyday decisions about how to use the next year budget for supporting individual infrastructure projects. EFS should typically be prepared together with implementation programmes as a way of testing whether they are financially viable and affordable to the treasury and households. Scenario analysis, conducted as part of the financing strategy, can be used to correct the implementation programmes, if they appear unrealistic.

Relevant authorities can subsequently use the financing strategy to identify specific projects or project types that would require government support. EFS is a powerful though not always sufficient tool to effectively support project proposals presented by relevant ministers at Budget Committees. In this role, the long-term strategy needs to be supplemented by a rolling two to four-year pipeline of priority investment projects for co-financing from the public budget. In some countries, such a pipeline management mechanism is called Public Investment Programme (PIP). PIP is a mechanism through which funding from the state budget is allocated to public sector investment projects in the short to medium term. A financing strategy offers a long-term, sustainable underpinning for successful PIPs. Both tools, applied together, are intended to streamline limited domestic and international resources and allocate them as efficiently as possible in order to maximise economic and social benefits and to support the Government's long-term environment and development strategies. At the end of this process, the planned government commitments are incorporated into annual budgets.

The EFS methodology was tested and applied in a number of countries. It includes a computer model (Decision Support Tool) to stimulate in quantitative terms the consequences of different policy choices. The financing strategies sensu stricto are put together through a series of iterative model runs with different assumptions describing environmental or service level targets and policies to mobilise additional finance. The model assesses the investment, maintenance and operational expenditure that would be required to achieve specific targets. These expenditure requirements are subsequently compared with current levels and sources of finance and the model calculates the resultant "financing gaps". The model has proven useful for dialogue between environment ministries, health ministries, ministries responsible for urban infrastructure and the ministries of finance and economy. The EFS methodology, developed by the EAP Task Force, with support from the Danish Ministry of Environment and Energy, was welcomed by the Ministers of Finance, Economy and Environment at the Ministerial Consultation on Water Management and Investments in Almaty, Kazakhstan in October 2000. Further, Environment Ministers at the Fifth “Environment for Europe” Ministerial Conference, held in Kiev, Ukraine, in May 2003, emphasised the need for preparing realistic environmental investment and financing strategies and plans at national and local levels as an essential prerequisite for making better use of public resources in financing investment-heavy public infrastructure.

Consulting Engineers and Planners (COWI) have built the software under the methodological guidance of the EAP Task Force Secretariat and applied it through demonstration projects in several EECCA, with support of local specialists. COWI hosts a special web page dedicated to this project:  Expert work has been monitored by advisory groups composed of senior officials and policy makers from the ministries of finance, economy, environment and other relevant government agencies. The role of these groups was also to discuss and approve all assumptions and targets used in modelling as well as the policy implications of the modelling results. This makes the strategies relevant to, and "owned" by the key stakeholders in the countries. The work on EFS has been supported by a number of donors, including the Danish Ministry of Environment and Energy (as the most significant contributor), the EU Tacis, Germany, Japan, Australia. Overall substantive guidance and methodological support has been provided by the EAP Task Force Secretariat.

To obtain Model Documentation and the software to prepare a financing strategy, all you need to do is to fill in the registration form and send it via e-mail to Alexander MARTUSEVICH from the OECD/EAP Task Force Secretariat In response, we will send you a CD with the FEASIBLE Version 2 software.

Files to download:

The latest version of the FEASIBLE model, version 2.1 with the new Module on Rural WSS is available for download from COWI AS server at the following link: To install this version in your PC, please follow the instructions:

  1. download the setup file to your local hard disk.
  2. execute the file:  FeasibleSetup.exe from your hard disk
  3. follow the instructions on the screen and  the FEASIBLE model will be installed in the directory "C:/Program Files/Feasible Model" (Standard installation)
  4. start FEASIBLE from the link on the desktop or by executing the Feasible.exe in the directory C:/Program Files/Feasible Model.

With inquiries concerning environmental financing strategies, please contact Alexander MARTUSEVICH at Your critical remarks about the model will help remove any possibly remaining bugs and improve its user-friendliness.

FEASIBLE is a software tool developed to support the preparation of environmental financing strategies for water, wastewater and municipal solid waste services. The name FEASIBLE stands for: Financing for Environmental, Affordable and Strategic Investments that Bring on Large-scale Expenditure. The first version of FEASIBLE, a spreadsheet based version for water and wastewater, was released in 2001. FEASIBLE Version 2 is a stand-alone application based on a database. The FEASIBLE model is freeware and can be obtained through the web pages of the OECD, DEPA/DANCEE and COWI. FEASIBLE can be used to facilitate the iterative process of balancing the required finance with the available finance. It provides a systematic, consistent and quantitative framework for analysing feasibility of financing environmental targets. Being a computerised model, FEASIBLE may be used to analyse “what if” a certain policy is changed and to document its financial impacts in a systematic and transparent manner. The chart attached provides a schematic overview of the iterative process of the FEASIBLE methodology.

FEASIBLE requires specific, technical city-by-city data on the present size and state of infrastructure. It also requires that policy makers reach consensus and specify their objectives in terms of specific, measurable and time-bound targets. FEASIBLE calculates investment, maintenance and operational expenditure that would be required to reach specific targets determined by local policy makers. The calculation of the expenditure need is based on a number of generic expenditure functions which are incorporated into FEASIBLE. These expenditure functions allow an easy estimation of the costs of alternative service and environmental targets with a limited data collection effort. They cover a number of technical measures within each sector. The expenditure requirements are subsequently compared with forecast levels and sources of finance. All sources of finance (public, private, domestic, foreign, etc.) and all financial products can be simulated. FEASIBLE compares the expenditure needs with the supply of finance on a year-by-year basis and computes cash-flow forecasts, i.e. financing deficits or surpluses, both annual and accumulated. But it is not only the magnitude of total cash-flow deficits/surpluses that is presented. The structure of the financing gaps is also shown, e.g. coverage of capital investment expenditure by various funding sources that can be used to finance fixed assets, cover operation and maintenance costs, etc. These results help policy makers understand where the main bottlenecks are as well as where, when and what additional policy interventions are needed to facilitate effective financing of infrastructure development programmes.

FEASIBLE Version 2 enables analysis of the following sectors:

  • Water supply and treatment; 
  • Wastewater collection and treatment; 
  • Municipal solid waste management.

A new module on rural water supply and sanitation (WSS) has been developed by COWI AS under the methodological guidance of the OECD/EAP Task Force. A comprehensive database on WSS technologies applicable in rural areas in EECCA and beyond with relevant cost functions was also developed in the framework of the project.

Files to download:


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