As discussed in my previous post, there are a number of ways to finance water projects. However the topic of what options cash-strapped municipalities with low or non-existent credit ratings have for financing their water projects requires a more intensive look. This is a big concern for municipalities around the world because they need to somehow finance expensive water and sanitation projects, such as putting in new pipes to expand water and sanitation coverage and maintaining and updating aging infrastructure. Following the session on “Where Does the Money Come From? Moving Forward on Strategic Financial Planning for Water” at the 6th World Water Forum, I sought to find the answer to this question.
Water is a unique resource because it is both local and global. Water flows over international and state borders, between conflict areas and through cities and industrial areas. Upstream withdrawals and inputs greatly affect downstream users, who may or may not have legal recourse to challenge inappropriate water activity of upstream users. This phenomenon is particularly tricky in international bodies of water which is why international agencies have often attempted to create a body of international water law, to little effect. Water law and policy, both transboundary and national, was covered in several WWF6 panel sessions. International law is a body of law compiled from international agreements such as conventions and treaties, customary international law, general principles of law, and the teachings of the most highly qualified publicists. One of the biggest problems that arises with international law is its lack of enforcing power. In order to create successful laws, an entity needs to be enabled to enforce the laws and punish those who don’t follow them.
How can municipalities finance their water projects? The short answer: taxes, tariffs, transfers, bonds, loans, and grants. The long answer was divulged yesterday by a panel of finance experts who discussed strategic financial planning for water at the World Water Forum in Marseille, France. The crux of the issue was best outlined through a post-panel interview with Richard Torkelson – Managing Director, ButcherMark Financial Advisors LLC and Board Member for UNSGAB. I asked him “How can you effectively adapt a strategic financial plan in countries where the governments are working on cumbersome, if not outdated, laws and policies?” He responded that “the awareness of the need to change has almost gone off the curve.
We are now in the Sixth round of the World Water Forums. This was the first time, however, that the United States took a substantial part in the Forum: yesterday marked the first time that a panel was devoted purely to American water practices. The session was titled “Water in the American West: 150 Years of Adaptive Strategies.” The panel consisted of:
John Tubbs – Deputy Assistant Secretary for Water and Science (United States Department of the Interior)
Jo Ellen Darcy – Assistant Secretary (Army for Civil World)
Karen Fraser – Washington State Senator
Clayton Matt – Chief Executive Officer (Confederated Salish and Kootenai Tribes)
Brian McPeek – Chief Operating Officer (The Nature Conservancy)
Edward Drusina – Commissioner (International Boundary and Water Commission, United States and Mexico — United States Section
Jim Peterson – President (Montana State Senate)
This panel focused on the American West because of geographical differences that yield strikingly different water distribution in this area than other parts of the US. The “American West” is defined as that area west of the 100th meridian as noted on the map. The panelists focused on this area because they hope that other countries who are facing water shortages can learn from the lessons that Americans have learned in the last 150 years. John Tubbs started the discussion by stating, “The lack of moisture defines this story.” The Rocky Mountains stop rain clouds from passing over into the plains on the east of the Rockies. As a result, these areas are defined by desserts and canyons. Regardless of these dry conditions, there are now approximately 105 million people living in this area. The panelists discussed how Americans have historically entered into negotiations to use the rivers for irrigation, navigation, and hydropower. In the past, there was little discussion about Native American tribes’ water rights and even less about environmental issues.
There was one issue that arose repeatedly in many of the different sessions I attended and with many of the different professionals I interviewed. This issue is that water governance is often segmented to small working groups that may or may not communicate with all stakeholders and groups, so the big-picture is often lost. There are many examples in which this issue arose. How water is defined:
Different water laws arise because of the ways in which water is defined. In the American Clean Water Act, for example, different regulations for water pollution are imposed depending on the type of water: whether it is discharged from a point-source (like factories), from non-point sources (like run-off from farms), whether it is river water, sea water, etc. States and muncipalities also have different rules and views on water. For example, different rules arise depending on if the water is defined as surface water, rain water, ground water, aquifer water, and so on. Different rates are also charged based on the ‘type’ of water – storm-water run-off, wastewater, etc. Water governance segmentation:
According to the panelists in the “High Level Panel: Global Water Governance,” the United Nations has an agency, UN-Water, that promotes cooperation among the UN agencies responsible for global and regional water initiatives.
Southern Europe is not known for its endless rain nor its snowy winters. Instead, the land constantly experiences a long, dry summer, followed by intermittent rain during its winter season. This is the weather that creates the rolling fields of olive and fruit trees, green vegetables, and legumes which are hailed for their anti-oxidant properties and health benefits. These foods spurred the Mediterranean Diet, which as people who live in the Mediterranean will tell you, is a way of life. It has fostered the unique and popular history, culture, economy, environment, health and nutrition of the countries surrounding the Mediterranean.
One of the first sessions on the opening day of the sixth World Water Forum was an introductory panel discussion about the financial needs for water management entitled Mobilizing Finance for Water: Needs and Challenges. It was no surprise that finance was the first topic on the table. According to an OECD report, water is the “hungriest” sector in terms of investment needs. By 2020, 600 billion USD will be needed for water management. In comparison, electricity will only require 80 billion USD and roads will only need 160 billion USD.