Public finance for water infrastructure development and its practical challenges for small towns

The small and fluctuating population, the economic characteristics and administrative capacity of small towns not only pose infrastructural challenges for providing services, but also limit the possibilities for generating local revenues for financing water infrastructure development and maintenance. This limited ability to generate local resources for water infrastructure is exacerbated by the way in which scarce public funds are allocated. A first concern is linked to an urban bias that characterises allocation of funds by central governments. A second concerns the prioritisation of other sectors by allocation decisions of local governments. These local governments often prioritise other sectors such as education, health and agriculture for the use of scarce local public resources. What this discussion highlights is that existing models used for financing water infrastructure development do not seem very applicable to the realities of small towns. Additional research and models are necessary to allow for solutions that are better tailored to these realities.