International practices innovative water & climate ... overview... · International practices...
Transcript of International practices innovative water & climate ... overview... · International practices...
International practices innovative
water & climate adaptation finance
Ecorys research for the Netherlands Water Partnership and
Bangladesh Delta Plan
Rotterdam, 30 June 2016
Inventory of international cases
special reports for NWP and Bangladesh DeltaPlan 2100
• Around 40 interesting water funding & financing
cases were collected from more than 30 countries
• Different subsectors: flood protection, water
availability and drinking water & sanitation
• Per case information regarding:
–Title, introduction, stakeholders involved, financing
mechanisms, conditions for application and
successfactors
Typology of funding & financing mechanisms
I) Water funding needs
Recurrent annual costs(OPEX, O&M)
Investments (CAPEX)
III) Financing mechanismsC) Financial instruments
Revolving fundsMatch fundingViability gap fundingBlending (grants-loans..)Pooling funds
II) Funding arrangements(aimed at cost recovery)A) Market based pricing mechanisms
B) Institutional arrangements
Pricing mechanismsPayment & billing innovationsBenefit pricingPolluters pay & licensingInsurance mechanisms
Taxation & levy modelsDedicated fundsScope extensionScaling Private sector involvement (&PPP)Community models
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INDEX
Flood protection & water
availability and navigation
Dedicated Funds
for investment &
related O&M
Example Delta Fund
Water safety
levy systems
Financial instruments:
Blending grants & loans, viability gap funding,
revolving funds
Private
engagement &
PPP - Availability payments and scope
extension to non water (roads, land
development)
- Private irrigation schemes
Water supply & sanitation
Improving Cost Recovery
- Service improvement
- Optimal tariff setting
- Smart metering and innovative
payment and billing systems
- Innovative leak detection to reduce
non revenue water
PPP and privatization
Viability Gap Funding
Small scale solutions
Community or private operation of
small drinking water solutions
Ongoing practices in Bangladesh
• PPPs industrial wastewater treatment in economic zones
• Private funding of tube wells in small scale irrigation projects
• Muhuri irrigation project
• PROOFS project (PROfitable Opportunities for Food Security)
• Inclusive finance in drinking water: DWASA Low-income Customer
Support Unit
International cases of innovative
water funding & finance
1. Flood Protection
1% additional sales tax - USA
• City of Tallahassee USA
• 1% additional sales tax is imposed to
ensure funding for storm drain
infrastructure projects (period 20yrs)
• The tax is managed a special purpose
intergovernmental agency, Blueprint
2000
• From earliest beginning local
stakeholders involved!
• Blueprint 2000 has received on
average $28.4 million per year
Delta Fund- the Netherlands
• The Delta Fund to ensure long-run
sufficient funds for flood protection and
freshwater supply
• Delta Fund: own budget which is an
independent part of the national budget
• Delta Fund is fed by contributions from
the Ministry of Infrastructure and
Environment and other national
budgets.
• Water Boards provide an annual
contribution to the Delta Fund.
PPP Lagos-Atlantic - Nigeria
• New city will rise from Atlantic Ocean in
Lagos Nigeria (ongoing) with a powerful
structure along coastline (Great Wall)
• Develop and financed entirely by private
sector (on PPP basis, with certificate of
occupancy for 78 years)
• Combination of flood protection together
with residential, commercial
developments
• The commercial developments (land
sales) will be used to cross subsidize the
flood protection
Philippines – Expressway Dike
• Laguna Lakeshore Expressway (to start
with implementation in early 2016)
• Combination of highway development,
land reclamation with flood protection
• PPP arrangement; strong say private
sector in development
• The revenues from reclaimed land and
toll income will be used to cross
subsidize the flood protection (FULLY
RECOVERY)
4. International cases of innovative water
funding & finance
2. Water availability & navigation
Muhiri Irrigation Project - Bangladesh
• Part of wider strategy to modernize large
scale agriculture in Bangladesh
• Integrated approach: – Repair 460km of canals, 23km coastal
embankments, Develop 17,000 ha modern and
highly efficient piped water distribution system
– Prepaid card meters water allocations on a
volumetric basis (full transparent payment)
– Electrification of pumping system (incl. Solar)
– Private sector involvement 5 year implementation
MOM contract, then a PPP for 15 year operations
IMOM contract (lease)
• 100% O&M cost recovery by 2019
Water pricing irrigation – Israel
• Three-tired tariff for the agricultural
sector
• Incentive for water use efficiency
• Maximum allocations (caps) issued to
farmers by the Water Authority.
• First 50% of the quota is supplied at a
given price!
• Increasing tariff structure based on the
percentage of allocation consumed
EL Guerdane irrigation PPP – Morocco
• Covering financing, design,
construction and management
(DBFMO) of irrigation infrastructure
(10 000 ha)
• Financing provided by the state (48%),
operator (44%) and farmers (8%)
• Clearly defined standards,
requirements and performance of
implementation by operator
• Farmers pay a single amount to be
connected to the irrigation system +
additionally a fixed price per cubic
meter of water used
Water licences and markets
(Australia Murray-Darling Basin)
• Water licencing system (introduced in
1970s) to decrease the overexploitation
of water resources
• Water market evolved that allowed (first
steps) in water trading (1980s;1990s)
• Water trading rules and market platform
(1994 and 2004)
• Requirements: sound metering
capabilities and allocation of water
quantity caps and regional caps
International cases of innovative water
funding & finance
Drinking water & sanitation
Small scale rural water operator: Haiti
• Local entrepreneurial water
operators selected by the community
• TA project trained operators,
promoted cost recovery, metering,
and the use of household
connections and water basins
• Grants/Loans in investments
financed by World Bank, IDB,
Spanish Fund, NGOs
• Operating costs are in most cases
covered given current tariff structure
Low-income Customer Support Unit (LICSU):
DWASA Bangladesh
• Inclusive finance: introducing
payment and billing innovations
• Customer associations/CBOs to
function as one legal customer
• Allows slum residents to obtain a
piped drinking water connection
without required land title and house
registration
• DWASA reduced the proportion of
non-revenue water to 22% compared
to 40% in 2008
FIPAG Financial performance improvement-
Mozambique
• Run by Vitens Evidens International (VEI)
and FIPAG
• Aims to improve non-revenue water,
water quality and services, billing and
collection efficiency and increase water
supply coverage up to 70%
• Project is financed by the Dutch Ministry
of Foreign Affairs (63%) and VEI (37%)
• Preliminary measures and results: – increased billing rates by 25%-point by monitoring
payments and closing of water connections,
– water loss reduced by 60%
– old water meters were replaced.
Manila Water PPP – the Philippines
• 1997: Manila Water Company (MWC) under a Concession Agreement (25 years)
• Viability gap funding grant by WB GPOBA
(2 mln $)
• Cost of providing access to clean water to over 20,000 poor households amounted at US$10.7
million, paid by MWC, GPOBA and the users
• The connection fee indexed on annual basis (in line with consumer price)
Harnaschpolder WWTP PPP – the Netherlands
• Wastewater treatment plant with capacity of 1.3 million pollution equivalents (p.e.)
• Consortium of Delfluent Services treats the wastewater from more than 1 million
inhabitants (30 years contract)
• PPP DBFO availability payments scheme
• Project resulted in a cost saving for the Delfland Water Board of 70 million Euros due
to the contract price & efficiency advantages of PPP
Maji Ni Maisha blending financial instrument – Kenya
• Maji Ni Maisha facilitates access to
finance for community-based water
providers by blending output-based
grants and commercial finance.
• The community provides equity (20%)
• Local bank, K-Rep, finances the
remaining 80 % (loan)
• Output based grants (released once a
subproject achieves the agreed number
of new connections and average monthly
revenues)
Lessons learned international practices
Market based and institutional arrangements
• Good governance, political commitment and leadership (champion),
• Registration systems and water metering essential elements;
• Sound monitoring of progress is key
• Active multi-stakeholder communication& engagement and real
participation
• Service level improvement & realistic path for increasing user charges
Financing instruments
• Sufficient level of private sector and financing expertise required
• Government or donor grants or guarantee mechanisms essential
components in order to attract private finance
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Funding climate adaptation and water &
sanitation
Key recommendations
1. Public investment
management challenges
require coordinating
mechanisms with financial
cloud
Set up a dedicated Delta
Fund for adaptation
2. Improve general tax
revenue collection and
introduce specific water mgt
charges & levies
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Funding climate adaptation and water & sanitation
Key recommendations
4. Scope extension
in flood protection
can generate
additional
revenues
Identify and
explore flood
protection projects
where additional
revenues streams
could be added
5. Community
adaptation and
small scale private
water supply is
promising
Develop incentive
schemes /
innovation fund for
initiatives
3. Improving cost
recovery of water
utilities is needed
Improve tariff
systems,
collection, billing,
leakages systems
with TA projects