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Financial And Institutional Diagnostic Tool For Assesing Investment In Water For Agriculture And Energy

Congress: 2015
Author(s): Maher Salman (Rome, Italy), Alba Martinez, Claudia Casarotto, Leonora Lorena

Keyword(s): Sub-theme 10: Management of water resources,
Introduction and objectives
It is expected that the world population will grow from the current 6.9 billion to about 9 billion in 2050, with increased incomes and higher nutrition standards and energy needs. Climate change would only intensify the need for increased food and energy production.

It is, thus, clear that accelerated investment in water for agriculture and hydropower production is needed to keep pace with increasing demands. However, this investment has to be done in an integrated manner. A diagnostic tool was developed to provide a framework for an Evidence-based Analysis which will lead to the formulation of Country Strategic Investment Frameworks - an inevitable step prior to the designing of Country Investment Programmes - and will lead to improved policies and their greater inclusion in National Development Plans.

Methodology approach
The Diagnostic Tool for Investment in Agriculture and Energy was developed to provide a comprehensive analysis of the water use patterns for food and energy production at country level; systematically define appropriate policy and institutional frameworks embracing investment, assess current investment levels and identify investment needs their priority setting for the sustainable development of water resources.

In line with these objectives, the tool is composed of three instruments that provide comprehensive qualitative and quantitative diagnosis/ evidence based analysis. These are: (1) Context Tool; (2) Institutional and Policy Tool; and (3) Financial Tool.

Analysis, results, conclusions and recommendation
The three different instruments work in synergy to represent all dimensions relevant to the use and management of water resources for agriculture development and hydropower generation.

1. The Context Tool characterizes the economic, social, human and environmental context where irrigation and hydropower projects express their potential. Climate change and variability issues are also characterized within this framework.

2. The Institutional and Policy Tool facilitates mapping institutions, actors, laws, policies, and public spending for water management. The tool produces indicators that highlight investment priorities and commitments to water management and proposes actions needed, policy and regulatory changes, and responsible actors.

3. The Financial Tool supports reliable and project-based estimates of current and planned investment in water for irrigation and hydropower. The Tool allows assessing the allocation of public, donor and private sector funds within different timeframes. The Tool helps the prioritization of national projects/ programmes and supports the investment decision-making process with the rigorous analysis of the sources of financing, the distribution of investments, and the derivation of financial indicators.

The application of the Diagnostic Tool converges with the formulation of a National Investment Framework. The framework outlines investment priorities to address food and energy security. It combines sectoral typologies, development objectives and time horizons in a way that facilitates strategic planning and the establishment of cost envelopes.

The Tool has been largely applied in African countries including and its result-based analysis has evidently been plugged into the countries strategic investment planning. However, and while acknowledgment of the importance of the financial assessment for successful investment is commonplace, the diagnosis of the institutional and policy setting with its enabling and constraining factors for sector-level policies and related external support has to embrace financial assessment, and so does the country context. The tool attempts to do so in an integral manner.
1. SEI 2011. Understanding the Nexus. Background paper for the Bonn2011 Nexus Conference.

2. FAO 2011. The state of the world's land and water resources for food and agriculture (SOLAW).

3. EIA 2011. International Energy Outlook 2011.

4. FAO 2008. WATER FOR AGRICULTURE AND ENERGY IN AFRICA. Introduction to Conference Thematic Sessions.


6. FAO 2012. Diagnostic Tool for Investment in the nexus energy-water-food. CONCEPT PAPER (Unpublished).

2011 IWRA - International Water Resources Association - - Admin