2: Quest for the Holy Grail: accelerating investment in water
- 22nd August 2023, 9:00 am – 10:30 am (Hybrid)
- Convenors: ADB, APWF, OECD, WaterEquity
The session presented an overview of the current water security financing needs in Asia and the Pacific and discussed the ways to address challenges in attracting private sector investment, how to use public sector financing more effectively and efficiently to support water security, as well as other innovative financing tools through the speakers’ introduction of good practices and cases from the region on overcoming these identified challenges to attract and sustain investment in water.
At the beginning of the session, H.E. Dr. Ir. M. Basuki Hadimuljono, Minister of Public Works and Housing, Republic of Indonesia, kindly delivered the Opening Remarks for this session.
In the presentation, Ms. Delia Sanchez Trancon, OECD, stressed the need for effective use of current financing alongside fundraising efforts, emphasizing the lack of conducive conditions for attracting investment. She outlined four dimensions for identifying such conditions: investment in countries, the water sector, projects, and other economic sectors. The OECD is developing a tool to assess a country’s investment attractiveness, recently used in seven Asian countries with plans for Eastern Europe. Using the example of sanitation investment in Armenia, Ms. Trancon illustrated the tool’s findings, revealing the absence of necessary conditions like a sectoral plan and waste standards. Discussions with relevant ministries and donor organizations resulted in identified barriers, potential funding sources, and government support. The OECD aims to make the tool open-source for collaboration, fostering impactful government interventions in investment barriers.
Ms. Sophie Trémolet, Europe Freshwater Director, The Nature Conservancy, emphasized the critical importance of investing in the integrity of freshwater systems rather than relying solely on a geographical approach for water security. She highlighted the deterioration of many freshwater ecosystems, with 40% of watersheds degraded and numerous rivers obstructed by dams. Ms.Trémolet also noted a significant loss of wetlands, leading to an 83% decline in freshwater biodiversity since the 1970s. To address these challenges, she advocated for “Nature-Based Solutions,” which include actions like forest conservation, afforestation, improved agricultural practices, and the restoration of river systems and wetlands. Despite the recognized value of these solutions, current investment levels remain relatively low compared to green infrastructure. Trémolet argued that integrating Nature-Based Solutions and green infrastructure is crucial for achieving water security.
Dr. Mónica A. Altamirano, Director, Climate Impact, WaterEquity, an asset management company tackling the global water and sanitation crisis, discussed their investment approach in financial institutions, businesses, and climate-resilient infrastructure. Despite multiple agreements and established funds, only 15% are managed by public institutions, highlighting the need for public-private partnerships. Emphasizing the decade-long focus on balancing adaptation and mitigation in investments, Altamirano identified a major challenge: governments struggling to fully utilize public procurement strategies, hindering effective private sector involvement. She detailed Water Equity’s funds, showcasing the emergence of new corporations with each fund, providing not just funding but valuable expertise in water-related risks. The company invests in local businesses, anticipating their future role in project advancement, though challenges include uncertain returns and the reliance of emerging businesses on grants. Water Equity addresses this by providing grants to support these businesses.
Ms. Meera Mehta, Executive Director at Center for Water and Sanitation, CRDF, CEPT University, highlighted the need for safe management of sanitation facilities and questioned potential delays in achieving Sustainable Development Goal 6.2 beyond investment and project shortages. She discussed the Indian government’s “Clean India Mission: Swachh Bharat,” providing public sector funding for household toilets but emphasizing the need for additional resources. Leveraging collaborations with women’s self-help groups and the private sector in Maharashtra, India, she underscored the importance of local government involvement for widespread sanitation access. Mehta introduced the Hybrid Annuity Model (HAM), where private developers cover a portion of costs, and the government provides funding, with reimbursement over 10 to 15 years. Despite potential delays in payments, this model facilitated the construction of 32 sewage treatment plants. An example of funding collaboration between the Nagpur Municipal Corporation and a thermal power plant was presented, with potential for similar approaches in the state. The conclusion emphasized the role of local governments and utilities in exploring commercial funds through markets and municipal bonds, along with the importance of IoT-based monitoring and addressing payment delays.
Mr. Satoshi Ishii Director, Strategy and Partnerships Team, Water and Urban Development Sector Office, Sectors Group of the ADB, discussed the Asian Development Bank’s (ADB) engagement in sovereign and non-sovereign loans, introducing Strategy 2030, which focuses on seven priority areas, including water. ADB aims to expand private sector engagement, mobilize substantial funding, and enhance knowledge to achieve Strategy 2030. He highlighted four key areas for acceleration, emphasizing ADB’s role as a climate and solutions bank and advocating workplace reform for better integration of public and private sector divisions. He illustrated this through a project in Vietnam involving BIWASE, a water utility corporation. ADB and JICA jointly provided a $16 million loan to bridge gaps between the public and private sectors, enhancing BIWASE’s creditworthiness and facilitating collaboration with the government. This model, involving joint teams and collaboration between sectors, is aimed to be replicated in Vietnam, Southeast Asia, and the broader Asia-Pacific region.
(Reported by Yumiko Asayama, Chief Manager)