Innovative approaches, such as output-based aid (OBA) and small-scale water providers, are needed to finance water services in the poorest countries. These are some of the recommendations of the Gurria Panel report [1] which focused on financing options for local government.The report found that investments in the water sector had not doubled over the past four years, despite the call launched by the Camdessus Panel [2] in 2003.One of reasons behind the current shortfall is the lack of attention to demand-side issues such as tariff structures, regulation, local capacity and access to finance options for local government and service providers.

The Gurria report does not assume that increased demand plus increased financing will equal poverty reduction. Approaches like OBA, the development of solidarity and decentralised funds, and credit systems for small-scale providers are needed. National and local governments should also develop action plans for increased investment in water at municipal and district levels.

Critics like the Food & Water Watch activist group were, however, not impressed by the Gurria report, stating that it “offers absolutely no new solutions for financing access to water for the poor”.

[1] Hofwegen, P. van (2006). Enhancing access to finance for local governments, financing water for agriculture. (Task Force on Financing Water for All. Report ; 1). Marseilles, France, World Water Council. PDF File [1 MB]

[2] World Water Council – Financing Water for All – Camdessus Panel

Related news: Innovative finance crucial to achieving MDG Target 10, Source Bulletin, Feb 2006

Web sites: World Water Council – Financing Water for All - ; IRC – Financing and Cost Recovery

Source: Water for All, Apr 2006 ; Currents, Apr 2006

Tags: financing, policies & legislation