Partnerships, peer group collaboration and private technical and managerial support are relevant across the board in conjunction with all financial options. Institutional support of these types will improve access to finance if it bolsters the solvency and commercial viability of water undertakings.
IWRM requires much more than applying isolated tools, keep in mind the concepts seen in chapter 1 of this manual: it's about management and capacity building. Are we ready to implement the principles? Who else needs to be?
Charges for use of water & water services
Water abstraction charges
Water supply tariffs
Sewerage and effluent charges
Water pollution charges and taxes
License fees and charges for specific services
Running away form the costs of pollution.
Financing flood risk management (1)
Charges on water users
Example: “French Agences de Bassin” fund their water resource management activities (including flood control) through surcharges on customers’ water bills, sometimes referred to as a “polluters’ tax”
Surcharge on property owners
Example: “Netherlands Water Boards”, responsible for surface water management including flood control, recover costs through charges on property owners
Financing flood risk management (2)
Negotiated contributions from beneficiaries Large landowners, property developers, sporting complexes, factories, power stations.
Charges and fees for use of facilities and attractions
Assets created by flood risk management have recreational and touristic benefits which can be the basis of entry charges and fees to the general public.
Financing flood risk management (3)
Cost sharing from multipurpose schemes Costs can be shared because FRM is often one of the purposes of hydropower projects, river flow management, preservation of wetlands, etc.
Cost sharing in transboundary projects FRM frequently entails transboundary projects, where costs can be shared with neighbours
Insurance Many governments encourage their citizens to take out private insurance policies to cover flood risk
The national budget for recurrent cost funding
Covering recurrent overhead water services costs
Providing the variable costs of operating water services
Underwriting any financial deficits incurred by local water undertakings, this removes any incentive on undertaking to improve its finance
Providing subsidies to cover stated and specific purposes (free water for deserving & sanitation)
Targeted or smart subsidies avoid disadvantages of general subsidies, if predictable and transparent
National government grants, soft loans & guarantees
Advantages of government funding of projects are:
Fund raising is related to national financial capacity, and can avoid local over-borrowing & debt problems
The national Treasury can get better terms in financial markets than local authorities
It can set national priorities and steer funds towards urgent/priority cases, ensuring equity between richer and poorer parts of the country
The foreign exchange risk of foreign loans is borne by central government
Financial intermediaries & development banks
Financial agencies occupying a position between central governments and local service providers, e.g. national development banks, infrastructure development corporations, water sector banks, municipal development corporations, environmental funds, etc.
External grants (Official Development Aid)
Grants or concessional loans are available from a wide variety of international agencies. It is sensible for developing countries to maximise their uptake of ODA grant money, before contemplating commercial finance for this sector.
Concessional loan is one that is available on better terms than those provided by private financial markets – lower interest, longer maturities, and/or grace periods before interest or repayments are due.