Inter-American Development Bank President Enrique V. Iglesias and the director general of the Food and Agriculture Organization of the United Nations, Jacques Diouf, today inaugurated on conference on Financing Water and Sanitation Services: Options and Constraints.
The conference held Nov. 10-11 at IDB headquarters in Washington, D.C., was organized by the Infrastructure and Financial Markets and Environment divisions of the IDB’s Department of Sustainable Development.
“The absence of water and sanitation services is a brake on development, and their development and access will immeasurably improve the welfare of society,” Iglesias said.
“The results of this conference will configure the strategy that the Bank will develop to eliminate the institutional and financial obstacles to increasing water and sewerage services in the region.”
Public and private sector experts and representatives of civil debate for two days the problems of this costly and complex public utility. Sessions focus on issues such as institutional and financial obstacles; public and private alternatives in both rural and urban systems; social and political acceptance of reforms; and proposals for an action plan.
The United Nations Millennium goals propose that by 2015 the number of the world population without adequate water and sanitation services will be cut in half. This is a considerable challenge for Latin America, where, taking into account expected population increase, water services will need to be extended to nearly 120 million persons and sanitation services to nearly 140 million persons.
The IDB estimates that an investment of $40 billion in the next 12 years is needed to meet the goals. If the cost of water treatment were to be included, this investment would reach $60 billion.
Several speakers at the conference described water and sanitation in Latin America as of poor quality, low capacity, poor management, badly regulated or nonregulated, with considerable financial limitations. National resources allocated to this sector are typically minimal.
Investments by the population in water services is considerably below investments in other services. “In the Dominican Republic water represents 0.35 percent of the cost of homes,” said speaker Marcos Rodríguez. “Dominicans spend eight times more than that on electricity, five times that amount on the telephone and three times that amount on beer.”
Anne Krueger, first deputy managing director of the International Monetary Fund, stressed the need for consumers to be accustomed to paying for service. Guillermo Yepes criticized the practice of “cross subsidies.” Although the theory is that the rich will pay more than the poor, in practice these subsidies “have not accomplished any of their objectives of bringing service to the needy.”
“Investment in infrastructure for water and sanitation, both by the private and public sectors, and by international financial organizations, is on the decline,” said Margaret Catley-Carlson, president of Global Water Partnership. And although there is no one model for the sector, she added, “a reform of the sector and expanded sources of financing are needed.”
To break the vicious circle of a lack of investment, inadequate rates and falling external investment, experts propose, among other measures, a reform of the system that will put in place more viable rates that reflect costs and benefits. They also stress the need for cooperation between the public and private sectors, regulation that serves the needs of different groups in a climate of greater transparency and confidence and participation by affected communities.