Sandra Bruehlmann
Sandra Bruehlmann • 9 June 2022
in community SDG 6 IWRM Community
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The world is not on track to meet SDG 6.5.1 on the degree of integrated water resources management (IWRM), and the financing dimension is the one dimension lagging furthest behind. On a broader scale, the situation is similar – achieving SDG 6 in its entirety and thus contributing to a more water-secure world is only possible if investments in water are considerably scaled up. Investing in water yields multiple benefits: it strengthens resilience of communities and green and grey infrastructure to climate change, enhances equitable and inclusive water security and supports sustainable development. Yet the world is far from investing in water at an appropriate scale. A recent study (Strong et al., 2020) estimates that the global costs of achieving SDG 6 are more than 1 trillion USD per year (which is the equivalent of around 1.21% of global GDP). Many studies have shown that the cost of NOT investing in water could be several orders of magnitude higher.  

But what are we talking about exactly when we refer to water-related investments? The OECD (2018) has provided a (non-exhaustive) summary of sub-sectors of water-related investments: 

  • Water resources management: Conservation and rehabilitation of inland surface waters (rivers, lakes etc.), ground water and coastal waters; prevention of water contamination.  

  • Bulk water supply: The production of water to be distributed to various end-users, including drinking water supply. Bulk water supply may be produced from the abstraction of surface or groundwater or through non-conventional sources, such as desalination or wastewater reuse. 

  • Storage and conveyance: The infrastructure required to store and transport bulk water supply to various end-users. This includes reservoirs, pipelines, channels and other forms of water supply distribution.  

  • Water supply services: The production and distribution of high quality water at standards required for consumption as drinking.  

  • Sanitation, wastewater collection and treatment: Sanitation services consist of the provision of facilities and services for the safe disposal of human urine and faeces. Wastewater collection and treatment refers to the safe collection and treatment of sewage and wastewater. The treatment can be executed on several different levels: preliminary, primary, secondary and tertiary. May include waste to energy activities.  

  • Irrigation: The production and distribution of water intended for agricultural use.  

  • Flood protection (riverine, coastal): Interventions intended to manage the risk of flooding caused by coastal and river flooding. Flood is defined as the overflowing of the normal confines of a stream or other body of water, or the accumulation of water over areas that are not normally submerged.  

  • Urban drainage: Interventions to manage runoff from storm water.  

  • Multipurpose infrastructure: encompasses all constructed water systems, including dams, dykes, reservoirs, hydropower and associated irrigation canals and water supply networks, which may be used for more than one purpose for economic, social and environmental activities. 

 

Country responses to the SDG indicator 6.5.1 survey indicate that challenges related to financing include a lack of funds or low investments for IWRM, but also the need for improved management of existing funds and the strengthening of an enabling environment for revenue raising (UNEP, 2021). Many of these issues are true for investing in water security more broadly. The OECD (2022) has summarised a few water-related characteristics that hinder more financing flowing into water: 

  • Water-related investments generate a mix of public and private benefits, which cannot always be easily monetised; 

  • Water resources and the associated benefits are consistently under-valued; 

  • There is a lack of well-prepared bankable projects that could be matched with financing; 

  • The enabling environment for attracting investments is weak; 

  • There is a mismatch between the needs and the characteristics of the supply and demand side of finance; 

  • Many water-related investments are relatively small-scale given the local scope of managing water resources, which leads to high transaction costs and perceived risks; 

  • There is a lack of data and analytical tools to assess complex water-related investments and performance 

Historically, public finance was central in financing water investments and will continue to do so in the future. Yet we are all aware of the constraints of public funding to meet the tremendous investment gap, especially as we look to recover from the COVID-19 pandemic. Thus, academics and practitioners all around the world have been working on identifying and scaling up successful approaches to leverage additional financial resources from other sources. In this first discussion round of our learning journey, we encourage you to exchange with your peers in this community on your practical experiences and insights on the challenges related to financing water security. From your experience, what are the main challenges you have encountered that hinder investments in water security? And what good lessons have you learned of what should and should not be done to overcome these obstacles? 

Please share your insights, resources and also questions in the discussion thread. This Learning Journey will be effective if we all contribute to it, so we look forward to hearing from you!  

Further reading 

If you are interested in more in-depth background material and resources, please find below an initial (non-exhaustive) list of resources. Please feel free to share more resources in the discussion.