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The document discusses building sustainability through public-private partnerships for environmental investments. It outlines that the public sector lacks funding and technical skills, private sector faces short-term profit pressures, and NGOs lack funding and capacity. Successful partnerships require the public sector to set standards, private sector to provide expertise, and NGOs to represent communities. Key challenges include political, regulatory, commercial and financial risks. Overcoming these requires capacity building, innovative financing, and delineating clear roles and responsibilities for partners.
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aross_pemsea.ppt
- 1. BUILDING SUSTAINABILITY:BUILDING SUSTAINABILITY: PARTNERSHIPSAND FINANCEPARTNERSHIPS AND FINANCE byby S. Adrian RossS. Adrian Ross Senior Programme OfficerSenior Programme Officer PEMSEAPEMSEA
- 2. $80 – $180billion for investment in environmental facilities and services 70% of which is needed for: • Wastewater treatment • Pollution abatement • Nutrient reduction • Water reuse/recycling The NeedThe Need
- 3. Public sector has: •legal authority • law-making power • monitoring and regulatory function • mandate …but lacks • funding • technical resources • business skills. The SituationThe Situation Private sector has: • experience • expertise • technology • business skills • access to financing …but faces • a conflict between making long-term investments and reporting on short-term financial cycles.
- 4. The SituationThe Situation NGOshave: • an understanding of local needs • ability to work with and influence people, including poor communities • credibility • organizational and communication skills …but lack • sufficient and predictable funding • staff and technical capacity • experience in partnership arrangements.
- 5. Building SustainabilityBuilding Sustainability Setwithin a policy, regulatory and investment environment that is conducive to business participation An alternative delivery mechanism…not the only one Principles of multi-sectorPrinciples of multi-sector partnershipspartnerships
- 6. Building SustainabilityBuilding Sustainability Bringingtogether government, private sector and civil society to better tackle the challenges of providing water and sanitation services, as well as other services to communities Recognizing two separate but related issues, namely: Partnership development and sustainability Project development and sustainability. Principles of multi-sectorPrinciples of multi-sector partnershipspartnerships
- 7. Constraints to PrivateSector ParticipationConstraints to Private Sector Participation Political risk Regulatory risk Commercial risk • Financial risks • Design fault • Construction and operational risks Revenue risk • Tariff system • Demand forecast/willingness to pay Failure to identify or lack of sound projects Bias against projects in small- and medium-sized urban and rural areas
- 8. Public-Private PartnershipsPublic-Private Partnerships LocalGovernmentLocal Government UnitsUnits
- 9. ICM Framework andProcess Planning and Implementation Cycle Planning and Implementation Cycle
- 10. The implementation ofICM programs provide local governments with: a management framework institutional arrangements and mechanisms long-term vision and strategies action programs addressing priority concerns local community participatory process climate for investment. Political RiskPolitical Risk
- 11. Public-Private PartnershipsPublic-Private Partnerships LocalGovernmentLocal Government UnitsUnits Local communities,Local communities, NGOs and POsNGOs and POs
- 12. Manila Bay CoastalStrategy October 2001 Danang - 2001 PEOPLE’S COMMI TTEE OF DANANG CI TY Coastal Strategy ofCoastal Strategy of DanangDanang CityCity
- 13. Community awareness/participation • Informationdissemination • Consultation/communication • Issues, causes and effects • Shared vision, roles and responsibilities Political Risk: Community supportPolitical Risk: Community support
- 14. Scoping the Needs/Capacities •Socioeconomic considerations (services to poor communities) • Community mobilization – as a partner in the project • Expectations/benefits to be derived • Willingness and ability to pay • Monitoring and evaluation Revenue Risk: AffordabilityRevenue Risk: Affordability
- 15. Revenue Risk: TariffStructureRevenue Risk: Tariff Structure Information and education campaign ‘Full-cost’ pricing public’s attitude regarding ‘public services’ Implications on the poor and disadvantaged sectors of the population Efficiency of existing bureaucracies with regard to collection of fees and taxes Increasing block structure Lifeline price for the poor Strengthen local governance
- 16. Public-Private PartnershipsPublic-Private Partnerships LocalGovernmentLocal Government UnitsUnits National GovernmentNational Government and in-countryand in-country contractors, suppliers,contractors, suppliers, financial institutions,financial institutions, banks and investorsbanks and investors Local communities,Local communities, NGOs and POsNGOs and POs
- 17. Delineation of responsibility: •authority of local governments in the investment area • mandate local governments to form partnerships, raise funds and impose tariffs for environmental facilities and services • stipulate standards against which performance can be measured. Regulatory RiskRegulatory Risk
- 18. Capacity building tofully implement delineated responsibilities by strengthening: • technical/scientific skills • regulatory and economic instruments • monitoring and evaluation • enforcement Regulatory RiskRegulatory Risk
- 19. Commercial RiskCommercial Risk Financialrisk • Exchange rate fluctuations • High interest rates • High inflation rates Construction and operational risk Start-up delays Construction and operating cost overruns & delays Actions • Access to domestic funds • Innovative financial structures • Financial commitment • Performance standards • Licensing/permit approvals
- 20. Public-Private PartnershipsPublic-Private Partnerships LocalGovernmentLocal Government UnitsUnits International operatingInternational operating companies, investorscompanies, investors financial institutions,financial institutions, development agenciesdevelopment agencies and donorsand donors Local communities,Local communities, NGOs and POsNGOs and POs National GovernmentNational Government and in-countryand in-country contractors, suppliers,contractors, suppliers, financial institutions,financial institutions, banks and investorsbanks and investors
- 21. Capacity building isa major bridge for overcoming barriers to private sector participation in environmental investments. Strengthening: • capabilities in local governance (ICM) • project development and management • technical/scientific skills and support • regulatory and economic instruments • financial management • monitoring and evaluation • enforcement Commercial RiskCommercial Risk
- 22. Financial Risk • accessibilityto multiple sources of financing • project portfolio that is affordable, self-sustaining and attractive to private sector ActionsActions • Creation of innovative financial mechanism to meet the needs and capacities of local governments and their partners. Commercial RiskCommercial Risk
- 23. Public-Private PartnershipsPublic-Private Partnerships LocalGovernmentLocal Government UnitsUnits Public-PrivatePublic-Private PartnershipPartnership (PPP)(PPP) International operatingInternational operating companies, investorscompanies, investors financial institutions,financial institutions, development agenciesdevelopment agencies and donorsand donors Local communities,Local communities, NGOs and POsNGOs and POs National GovernmentNational Government and in-countryand in-country contractors, suppliers,contractors, suppliers, financial institutions,financial institutions, banks and investorsbanks and investors
- 24. PEMSEA’s Guide toEnvironmental Investments
- 25. Is this agood time for environmental investments? 5 ICM sites and 2 hotspots: • more than 40 investment opportunities identified • priority environmental concerns screened • 15 projects proceeding through pre-feasibility studies, lead by local stakeholders • more than $600 million in capital investments • local governments and local stakeholders providing concrete commitments
- 26. Is this agood time for environmental investments? Contingent valuation surveys: • overall willingness to pay for environmental services • correlates with household income • <1% of monthly household income • ability to pay is a factor, as is education and age of respondent • unwillingness to pay <1% of respondents
- 27. What about theprivate sector? Challenges: • Trust, transparency and confidence in the process and the other ‘partners’ • Goals, expectations, verification of viability • Roles and responsibilities • Governance structure of partnership • Communication
- 28. What are thecritical features? Critical features: • leadership • concrete commitments of local government and local stakeholders • private sector awareness and confidence • innovative financial mechanism accessible by local governments and their partners