More than a thousand experts are meeting this week in Stockholm to discuss the problems facing water financing, a sector vital to development, writes the World Bank press review Thursday..
Johan Kuylenstierna, an expert from the International Water Institute in Stockholm, explains:
– When we talk about the water sector, we say that it is difficult to make money there, particularly in developing countries. But the economic gains for a country where investments are made in the water sector are considerable.
– For one dollar (6 DKR) invested in water distribution, hygiene or resource management, you can have a return on investment that can go from 3 dollar to 34 dollar, taking into consideration the number of people who do not contract water-borne diseases, and women who can work instead of fetching water.
Today, 2,4 billion people live without access to water cleansing systems, and 1,1 billion without access to clean water.
A few weeks ahead of the United Nations review of the Millennium Development Goals (MDGs) progress over the past five years, the experts in Stockholm estimate that if the MDG water goals are fulfilled, 470.000 lives will be saved, representing an additional 320 million days worked in a year, as well as an additional 270 million school days.
The World Health Organization estimates that developing countries that have improved their water provision and recycling systems have an average growth of 3,7 percent, compared to 0,1 percent for developing countries that do not have this infrastructure.
– Many people agree that water is important, says Håhan Tropp, a water expert working on a water governance project with the UN Development Program (UNDP), adding: – However, few understand how central water is to development. I regret that finance ministers do not attend the water conferences.
Meanwhile experts at the Stockholm water conference are stating that 2,6 billion people worldwide do not have access to lavatories. The lack of sanitation facilities is having a dramatic impact on the propagation of diseases: about 6.000 children die each day of diarrhea because of lack of hygiene.
One of the MDGs is to provide an additional 1,75 billion people with sanitation facilities by 2015, which represents 95.000 installations a day. The biggest challenge is to provide sanitation facilities in India which counts 600 million people, particularly in rural areas, China with 400 million people, and Sub-Saharan Africa with 350 million.
The experts at the conference are saying that developing countries should not follow the western sewer system, which is not sustainable. They say that a sanitary system based on the separation of urine and feces that can then be turned into fertilizers would be an ecological solution for developing countries, instead of western style sewers that are most expensive, pollute more and consume more water.
Meanwhile, Jamal Saghir, the World Banks Energy and water Director, says in an interview with La Tribune (France) that the reason why it is difficult to attract investments in the water sector is that water is the least profitable infrastructure sector of all.
In developing countries, returns on investments are 20 to 25 percent in telecommunication, 13 to 15 percent in electricity, but only five percent on water projects. The public sector finances 90 percent of all water projects. The level of investment is at 15 billion US dollar a year. – If we want to reach the MDGs, this sum has to be doubled, Saghir says.
Saghir further notes that hydroelectricity represents 20 percent of the global electricity production. In OECD countries, 70 percent of the hydroelectric potential is exploited, compared to 20 percent in developing countries, or even percent in Africa.
– But a dam does not only provide electricity, Saghir explains. – It also saves water that can be used in case of drought. When the World Bank finances a dam project, it is under the condition that they yield a positive return, taking into consideration the social and environmental aspects. We are currently working on the Nam Theun 2 in Laos, a 1,2 billion dollar project that will allow Laos to export electricity to Thailand.
Further, in a commentary published in the Financial Times, Fredrik Segerfeldt, author of a water study published by the Cato Institute, writes that water shortage helps to perpetuate poverty, disease and early death.
However, there is no shortage of water. We use a mere eight percent of the water available for human consumption. Instead, bad policies are the main problem. Ninety-seven percent of all water distribution in poor countries is managed by the public sector, which is largely responsible for more than a billion people being without water.
Some governments of impoverished nations have turned to business for help, usually with good results. In poor countries with private investments in the water sector, more people have access to water than in those without such investments.
The privatization of water distribution has stirred up strong feelings and met with resistance. True, many privatizations have been troublesome. Proper supervision has been missing. Regulatory bodies charged with enforcing contracts have been non-existent, incompetent or too weak. Contracts have been badly designed and bidding processes sloppy.
But these mistakes do not make strong arguments against privatizations as such, but against bad privatizations, Segerfeldt argues.
Kilde: www. worldbank.org
