Mon | Sep 20, 2021

Earth Today |New money for vital natural resource?

Published:Thursday | April 1, 2021 | 12:20 AM
A snap of the new perspectives paper.
A snap of the new perspectives paper.

WITH AN identified water storage gap in the Caribbean has come the recommendation for the sourcing of alternative financing for the precious resource in the region.

This is a point of view reflected in the perspectives paper developed by Global Water Partnership – Caribbean, which is titled ‘Status, need and role of freshwater storage in the Caribbean’ and authored by Anika Cole and Dr Adrian Cashman.

According to the researchers, the predominant financing model for the region is now one whereby “operation and maintenance costs are covered by revenue from tariffs but capital works are funded through loans guaranteed by governments and by government transfers”.

“Tariffs are predominantly low across the region, which results in limited finances to maintain, rehabilitate and upgrade the ageing water infrastructure. Losses from these systems are high with average levels of non-revenue water across the region being in excess of 50%. This, coupled with challenges to collect tariffs, particularly in unmetered zones where estimated billing is the norm, has along with other factors resulted in utilities being severely underfunded,” explained Cole and Cashman.

Larger water infrastructure upgrades are generally funded through development agencies and international financial institutions such as the World Bank, Caribbean Development Bank, Inter-American Development Bank, and in the case of climate-related projects, the Green Climate Fund.

The trouble, Cole and Cashman indicate, is that these funding sources are becoming more competitive to tap into with increased development “not just regionally but globally”.

“However, these agencies are at lengths to point out that finance is available but that there must be clear and well-prepared applications that they can consider,” they said.

The solution, Cole and Cashman advance, may rest, at least in part, with ‘niche financing’.

“There is opportunity in exploring more niche financing streams, especially through public-private partnership. Several large private sector firms, including breweries, manufacturers, have gone the route of being self-sustainable with their own infrastructure. There is growing interest around how to leverage private sector participation through shared resources and programmes to meet both public and private water demand,” the researchers said.

Diverting funds is another option.

“Another lens to look at this is that in the evaluation of where to divert funding, the measure of return is almost exclusively financial with the economic cost of the risk of not investing overlooked in the process. In other words, the co-benefits need to be better articulated and factored into the financial and economic analyses to demonstrate the wider returns on investment. This suggests that water utilities need to work more closely with the ministries responsible for finance and economic development to advance their cause,” they added.

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