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In this note, the PSIRU team reviews some of the financing models and assesses their relevance to the current debate in the water sector.

TitleWater finance : a discussion note
Publication TypeMiscellaneous
Year of Publication2004
AuthorsHall, D
Pagination12 p.
Date Published2004-01-01
PublisherPublic Services International Research Unit (PSIRU), University of Greenwich
Place PublishedLondon, UK
Keywordsfinancing, investment, poverty, private sector, sdipol, subsidies, taxes, ueik
Abstract

In this note, the PSIRU team reviews some of the financing models and assesses their relevance to the current debate in the water sector. Much more work must be done to develop 'alternative' financing models (assuming that the central model is the one advanced by the Bank and the corporations). This work will include solid critical research to determine the limits and possibilities of various models. But a big piece of the work is advocacy - unions, community groups, public utility managers and politicians must be much more aggressive in demanding that financing of new infrastructure do not equate with privatisation and commercialisation of public services. Financing water to meet the needs of people does not necessarily require international capital. Poor communities may be capable of mobilising the necessary resources to construct domestic extensions even if the government, municipal and water authorities are failing to function. Public water services can be made affordable for the poor through a combination of taxation, charges, efficient collection methods, and cross-subsidy. Investment finance can be raised through loans or bonds issued within the country itself, if basic requirements for capital markets exist. Governments, and even local governments, are themselves capable of accessing international capital if necessary, without the need for private companies. Development banks should have a role to play, but that depends on whether it is possible to prevent the damaging effects of policy conditionalities.

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