Financing access to water and sanitation in the Mediterranean - Is innovative funding a solution or an illusion?

Published : Thursday 10 September 2015 - Caroline ORJEBIN-YOUSFAOUI , Chef de projet IPEMED

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Water is an endangered collective resource in the Mediterranean. Southern and Eastern Mediterranean countries (SEMCs) are characterised by a structural water stress situation. North Africa only gathers 0.1% of the world’s renewable natural water resources and the Middle East 1.1%, for a total population of 280 million inhabitants, or about 4% of the world’s population. Besides water must face growing anthropogenic pressures and climate change impacts in the region: The regional climate change index of the Mediterranean is, along with that of North-East Europe, the highest in the world, according to Intergovernmental Panel on Climate Change (IPCC). An increase of 2 to 4°C in temperature as well as a decrease of 4 to 30% in pluviometry are expected in the area. The demographic and urban growth of SEMCs should also increase the pressure on water resources. According to United Nations estimations, the SEMCs’ population could reach more than 360 million in 2030 while it currently amounts to 280 million. The degree of urbanization is clearly increasing. 2/3 of Mediterranean people live in cities and more than 3/4 of them should by 2030. 

In the Mediterranean, the water issues regard: 
- Better access to drinking water and its quality; 
- (Domestic and industrial) sewage water collection and treatment; 
- Reducing diffuse pollution; 
- Adapting water resources management to climate change impacts. 

Taking up these challenges would have significant positive effects on the education level, especially for girls, public health and hygiene, since 1 to 5% of deceases in the region are due to insufficient or inadequate services in the water, hygiene and sanitation fields. The improvement of water and sanitation services in the region would also have a significant economic impact. According to the UN GLAAS report, a better access to water and sanitation could on the contrary increase SEMCs’ GDP by 2 to 7% (WHO, 2010). Therefore, investments in drinking water distribution would bring in 4 to 12 times more than they cost. 

A paradigm shift based on a more efficient governance and a strategic vision of water allocation for its different uses is necessary. This structural transformation, that must be carried on simultaneously as a better understanding of local populations needs, requires a “radical shift in the financial architecture” to quote Michel Camdessus.

Extra financing is an essential condition to implement a Mediterranean water strategy. According to the WHO’s estimations, about 17 billion USD would be necessary each year to meet SEMCs’ needs regarding access to water and sanitation. For indebted States which economies cannot afford all the population’ needs through the water pricing structure and direct taxation, the Official Development Assistance (ODA) is the main financing source in this sector. However, it remains insufficient to meet these needs. Mostly directed to the financing of big water and sanitation systems, the ODA financing often overlook governance support and access to basic services. In order to cover one part of the financing deficit and allow a better allocation of financial resources, a strategy must be developed around two actions: The implementation of an efficient policy of “sustainable costs recovery” and the definition of innovating “perennial, predictable and additional” financing (P. Douste Blazy). 

About 60 billion euros could be mobilised by the innovating financing mechanisms presented in the Ipemed report. Beyond generating extra financial resources, the interest of these “international solidarity contributions” (P. Douste Blazy) lie in their capacity to modify the behaviour of some economic actors by a “polluters pay” principle and pricing or tax incentives for users who reduce their impact on the environment. 

Such an approach requires a strong political commitment from Mediterranean States, regional institutions (Union for the Mediterranean) and international institutions (UN) operating in the region. 

The management of Innovating Financing Mechanisms (IFM) identified in this report require the implementation of an interdisciplinary governance in favour of access to water and sanitation in the Mediterranean, gathering the signatory States, the fund managing authorities and the civil society in a Mediterranean Water Agency. This agency needs to be structured with around complementary bodies: a neutral and independent information system on water resources and pollution causes in the Mediterranean, a decision-making general assembly gathering the stakeholders in a Trans-Mediterranean water committee and an Executive body, attached to an international agency, that would have a leverage effect by allotting innovating financing to the region’s local authorities, operators and NGOs. 

This report was initially published in French in June, 2014. 

- Acknowledgements 
- Synthesis 
- Abstract 

- 1- The issues of access to water and sanitation in the Mediterranean Limited freshwater resources 
An increasing water consumption
A major social and health issue
Controversial uses of water
National strategies that favoured increased supply instead of dealing with demand 

- 2- Financing access to water and sanitation
Benefits of investing in the sector of access to water and sanitation
Complementary resources to develop: innovative funding 
Innovative Financing Mechanisms used to raise new public resources 
Financial tools with a leverage effect

CONCLUSION: The necessity of a better water governance in the Mediterranean 

Appendix 1. Synthesis of proposed innovative funding
Appendix 2. Examples of innovative funding developed in Europe and in the world

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