The document discusses the global challenges of water resource management. It notes that rapid population growth, increasing water demands, deteriorating water quality, and climate change are exacerbating a global water crisis. While there have been many international agreements regarding this crisis, little progress has been made in implementing solutions. Achieving targets for access to safe drinking water and sanitation by 2015 will require significant increases in funding from national governments, international donors, and private sector investment. Pricing water appropriately and utilizing public-private partnerships could help address the crisis by increasing investment while protecting access for poor communities.

1. The Global Challenge of Water Resource Management
Mohamed T. El-Ashry
Former CEO and Chairman, Global Environment Facility
The way we think about water goes to the heart of
the increasing worldwide concern about poverty,
human health, the environment and the pursuit of
sustainable development. Of all the natural resources needed for
survival and economic development, water is the most crucial. At the
beginning of the twenty-first century, we find ourselves facing formidable
challenges: rapid population growth; increasing demands for water to sat-
isfy people’s needs both in agriculture and in expanding urban centres;
deteriorating water quality and associated health and environmental
impacts; groundwater depletion; international conflict over shared water
resources; and the uncertainties of climate change.
The global water crisis is one of both quality and quantity and is closely
linked to the global environment crisis and the degradation of critical
ecosystems, highlighted in the Millennium Ecosystem Assessment Synthesis Report
published by the United Nations (2005). It is a crisis of fragmented
institutions, inadequate policies and legal systems, insufficient funding for
water supply and pollution control, and lack of political will.
In all of this, it is the poor in rural and peri-urban areas that suffer the
most. More than one billion people are without access to safe drinking
water and 2.4 billion people lack basic sanitation. Each year, some 1.7
million people (4,740 every day) die because of deficient water and sanita-
Introduction
11

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tion. If these current figures are shocking, the outlook is no better. By 2025, it is estimat-
ed that more than half of the people on our planet will be living with water scarcity.
These trends are not new, but they are getting worse because of inaction. In reality,
international attention to the global water crisis has been tremendous, with a number of
international meetings and agreements discussing and highlighting the issue: Stockholm
(1972), Mar del Plata (1977), Dublin and Rio de Janeiro (1992), the Commission on
Sustainable Development (1998 and 1999), the Millennium Development Goals
(MDGs, 2000), Johannesburg (2002). There have also been a number of water councils
and commissions created and global assessments carried out. In every case, it is the same
issues, the same debates, and the same recommendations. On paper, they seem like
remarkable achievements, yet little progress has been achieved in implementing these
recommendations or in improving the sorry state of world water. It is ironic that as the
knowledge of the root causes of the water crisis becomes clearer and more convincing,
the political will for action becomes weaker or non-existent.
If clean water and basic sanitation are fundamental human rights, as we hear in many
international forums, why is progress in achieving the MDGs so slow? The Millennium
Summit, held in September 2000, set a target of halving the proportion of people with-
out sustainable access to safe drinking water by 2015 and the World Summit on
Sustainable Development (WSSD), held in Johannesburg in 2002, agreed to an equiva-
lent target for sanitation in the same time frame. According to the World Bank, fewer
than one in five developing countries and fewer than one in 10 low-income countries
are on track to meet these goals.
One reason is inadequate finance. Although water is high on the agenda of all stake-
holders, the funding available in most national budgets and provided by international
donors is surprisingly low. There is a disconnect between commitments and actions,
between needs and what many governments and aid agencies are actually spending. The
Development Assistance Committee (DAC) of the Organisation for Economic Co-
operation and Development (OECD) reported that only 1.7 per cent of all sector-allo-
cable aid is earmarked for low-cost water and sanitation programmes. In contrast, most
of the funds available are for large-scale projects of US$100 million or more, such
as dams.
On the other hand, the Water Supply and Sanitation Collaborative Council and the
Global Water Partnership have estimated that meeting the MDGs on water coverage
alone could require between US$14 billion and US$30 billion a year on top of the

3. Introduction 13
roughly US$30 billion already being spent. The challenge is daunting. At current pop-
ulation growth rates in developing countries, achieving the MDGs will require some
300,000 clean water connections and 400,000 sanitation connections every day between
now and 2015.
So, where will the money come from? A combination of national government budg-
ets, international and bilateral funding, debt relief, private-sector investments and
community-level resources is required. Two important, interrelated but controversial
sources of funding are the private sector and water pricing.
Just as the lack of proper pricing of energy services results in wasted energy, the lack
of pricing for water services (and sometimes no pricing at all) is at the root of inefficien-
cy, overuse, excessive pollution and environmental degradation. Simply put, free water
is wasted water.
While water pricing has been advocated for a long time, particularly for irrigation,
it has seldom been implemented even though it is central to increased investment in the
sector. Most governments in developing countries cannot meet the investment demands
for water services now, let alone in the future. And the private sector will not invest
unless it can be assured of reasonable returns. Yet developing-country governments con-
tinue to resist water pricing and the phase-out of subsidies, hiding behind the argument
that the poor cannot afford to pay. The fact is that middle-class areas pay low prices for
networked services, while the poor pay much higher prices for poorer-quality water
from street vendors. In Lima, Peru, for example, the poor pay US$3 for one cubic foot
of poor-quality water while the affluent pay US$0.30 for relatively clean tap water.
In Bangladesh, squatters pay water rates that are 12 times higher than what the local
utility charges.
The answer to how water should be priced for the poor has existed for a long time,
but it continues to be ignored. The basic water needs of the poor, adequate to provide
for a healthy existence, should be priced low or even at no cost. Increased levels of con-
sumption are then priced at higher levels per unit. Such an incremental payment system
would provide an incentive for efficient use as well as revenue for additional investment
in water and sanitation.
In addition to relying on government budgets, it is necessary to attract private
investment for clean water, sanitation and irrigation services, but ideological and dog-
matic views by activists in anti-globalization non-governmental organizations (NGOs)

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object to such privatization. The solution is to privatize the services, not the actual
water. Large international water companies, therefore, would not own the water
resource but would work under contract with local authorities and be paid for the serv-
ices that they would provide. In return, governments must exercise their political will
and make it clear that they will not sell water to any private company and that the pub-
lic sector would retain ownership of water resources in perpetuity. Governments should
also encourage public-private partnerships for the provision of clean water and sanita-
tion, as advocated at the WSSD.
Among the sources of finance available for major water projects is the Global
Environment Facility (GEF). Among its members, GEF counts 175 developing and
developed countries. Principally through UNDP, the United Nations Environment
Programme (UNEP) and the World Bank, GEF helps to implement the objectives of
such international conventions as the Convention on Biological Diversity (1992), the
United Nations Framework Convention on Climate Change (1994) and the United
Nations Convention to Combat Desertification (1996) with a portfolio worth over
US$16 billion. A major concern of GEF has been to facilitate cooperation among
nations sharing transboundary water resources. Since 1991, GEF has provided about
US$600 million for 75 transboundary water projects with a total cost of more than
US$1.5 million. Countries sharing large river basins such as the Danube, Mekong, Nile,
Paraguay and Senegal, as well as Lakes Malawi, Titicaca and Victoria, have received GEF
funding to build capacity to work together in sharing water information, establishing
priorities for reforms and investments and assisting in the implementation of those
reforms and agreements.
In water management, the task sometimes seems overwhelming. How can services,
industry, trade, transport, agriculture, fisheries, science, environment, development,
waste management and diverse populations be coordinated? How can different interna-
tional agencies, levels of government, the private sector and NGOs be connected? How
can international pressure be applied when upstream nations see little direct benefit in
stopping pollution that affects downstream users, when coastal nations see little incen-
tive for protecting wetlands that sustain fisheries used by other nations, when countries
with transboundary groundwater aquifers feel no obligation to protect recharge zones
from degradation that affects the wells of their neighbours?
These are not insignificant questions since 40 per cent of the world’s population lives
in international river basins. It may take 10 to 20 years of concerted global effort to

5. Introduction 15
resolve these complex issues although constructive elements of cooperation are already
becoming evident in some of the GEF international water projects.
As stated earlier, the water crisis cannot be addressed in isolation from other crises
such as land degradation, deforestation and ecosystem loss. Taking an integrated
approach that considers the links between water, land and people and making the nec-
essary reforms and investments in these areas can go a long way towards sustainable
water management. Deforestation and degradation of watersheds mean that less fresh
water is available. Conserving fresh water ecosystems through better management
would help to maintain not only the quantity of water available but also its quality.
One way of achieving these benefits is through payment for environmental services.
Several pioneering and innovative efforts to recognize the value of ecosystems are emerg-
ing in a number of countries.
In the Costa Rica Ecomarkets Project, for example, land owners in the upper parts
of a watershed are paid for conservation efforts that generate multiple benefits, includ-
ing water capture, biodiversity, carbon sequestration and scenic beauty. These goods
and services are paid for by the users, including water companies, the tourist industry
and the public.
On the other hand, in six States in Brazil, an ecological value-added tax finances
payments to landowners to maintain natural forests. The mechanism generates US$22
million a year in the State of Parana alone. In less than a decade, each State has placed
more than 1 million hectares under protection.
While substantial financial resources are needed to put in place water and sanitation
solutions, finance alone will not solve the global water crisis. On its own, no technologi-
cal or investment solution will be effective or sustainable without the necessary policy,
institutional and legal reforms. Land tenure reforms, improved pricing policies, transparent
water rights and allocation systems, economic incentives, improved legal and regulatory
frameworks, the creation of basin management authorities, and public participation are all
necessary pieces of the reform puzzle. Empowering women’s groups, the poor, youth and
community-based groups to have an adequate voice in participatory decision-making is
essential. At the local level, community groups and user associations have a major role –
sometimes in providing and managing local sewage or irrigation works, sometimes in
monitoring the performance of public and private service providers, and sometimes in
managing land use in local watersheds.

6. 16 VOLUME 11: SAFE DRINKING WATER
Governments must also establish enabling frameworks that encourage private invest-
ment and public-private partnerships. Helping to reduce business risks can help to
increase the rate of return on investments in clean water and sanitation infrastructure,
making it more affordable.
One final remark concerns capacity-building. Knowledge-sharing, whether on a
specific technology or on a policy reform, and building developing countries’ institu-
tional capacity and their abilities to integrate the environment and natural resource con-
cerns into economic planning are essential to the realization of sustainable development
in general and the MDGs in particular. In many developing countries, there is a lack of
monitoring, observation and information management that hampers decision-making.
Institutional effectiveness is also impaired by resource constraints and weak manage-
ment, and science and technology are often ineffectively mobilized in support of policy
and decision-making.
On the science and technology side, the role of national academic institutions and
international organizations such as the Third World Network of Scientific
Organizations (TWNSO) and the Academy of Sciences for the Developing World
(TWAS) cannot be overemphasized. There is also a need to analyse and disseminate suc-
cess stories about water management in developing countries so that they can be repli-
cated and scaled up. Our three-day workshop is a good example of knowledge-sharing
in support of innovative approaches to safe drinking water. In addition, it sends a strong
message that we do not have to wait until all the policies are reformed and all the funds
are mobilized. TWNSO and TWAS, together with the UNDP Special Unit for SSC and
the World Meteorological Organization (WMO), are providing the necessary support
for the dissemination of indigenous research and development for addressing the water
crisis at the local level. Despite all the bad news about the state of the world’s water,
there is still cause for optimism. We have entered one of the most creative phases in
human history. The 21 proposals presented at the workshop held in Trieste, Italy, in
August 2004 that form the core of this publication are good examples of such creativity.