Non-governmental Organisations Major Group - Second World Water Forum

Background Paper for the plenary 'WATER AS A SOCIAL & ECONOMIC GOOD'

WATER VALUATION, INVESTMENT AND SUSTAINABLE DEVELOPMENT

Jim Lamb, Severn Trent PLC, United Kingdom.

1. Areas of Consensus

Water is essential for human existence

Access to water is a necessary if not sufficient condition for poverty alleviation and sustainable development

There are at least 1.2 billion individuals without adequate access to clean drinking water

There are at least 2 billion (one third of the world ) without adequate sanitation

Ninety percent of population growth is expected in developing countries where water supply and sanitation is already inadequate.

Massive amounts of new capital will be required if there is to be any hope of building-down the backlog and meeting basic needs of those unborn (between 2.5 and 3 billion people)

2. Despite urgent pleas ever since the RIO DEL PLATA conference capital investment in infrastructure in WATER SUPPLY AND SANITATION has failed to keep up with population growth - THE WORLD IS FURTHER BEHIND IN 2000, THAN IT WAS IN 1975!

Not only has capital investment failed to meet new infrastructure requirements, but older plant and equipment needs to be maintained and up-graded

There is a tendency to defer infrastructure maintenance, which can have negative effects on the efficiency of water services.

400,000 people a day need to be provided with sanitation services if this need is to be met by 2025.

3. This Workshop asks one basic question - WHERE WILL THE ESSENTIAL INVESTMENT FUNDS COME FROM?

The World Bank indicates that international government institutions can provide only 5% of "needs"

ODA funds are declining

Local and national governments appear unable or unwilling to increase capital grants for water

The private sector is one important new source of capital investment for water supply and sanitation.

4. What is needed to mobilize private sector investment?

The private sector will only invest if there is a positive rate of return and a degree of certainty that contractual arrangements will be honored

The public sector - government both local and national - will only accept private sector investment if they are confident that they will attain value for money - hence the urgent need for a competent and fair regulatory system that protects the public interest

The public will only support a system which appears to provide value for costs imposed

This Workshop is intended to discuss how to create confidence on the part of all stakeholders that creating Public - Private Partnerships is one key way to meet urgent needs for new and improved WATER SUPPLY AND SANITATION

5. A World Business Council for Sustainable Development perspective

There should be natural coalitions between the NGO community and business that "full cost pricing" sends both a CONSERVATION SIGNAL (because water is more valuable) and an INVESTMENT SIGNAL (because full cost pricing encourages sustainable business investment opportunities).

Provision must always be made to ensure access to water and sanitation services by the poor

There are a wide range of options varying from full pubic water service to full privatization at the other extreme - each community should arrange for the combination which best meets their specific needs.

Water should never be owned by the private sector - however the infrastructure and delivery system can be owned or operated by the private sector

Many of the urban poor would be better off paying for new water services since they already pay 20 to 40 times the cost of water off the "back of a truck"

Investors support a regulatory system which both protects the public interest and the environment and guarantees a fair rate of return to investors who deliver service as promised

Business sees this as a business opportunity and as a critical element in poverty alleviation and sustainable development - business's future markets, customers and workers will be in urban centers in the "South" - NO ONE WANTS TO INVEST IN AREAS WITH A HIGH INCIDENCE OF DISEASE AND POVERTY DUE TO LACK OF BASIC WATER SUPPLY AND SANITATION