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INTERNATIONAL INVESTMENTS IN THE WATER SECTOR: LAST DECADE ANALYSIS AND WAY FORWARD TOWARDS MDGs

Congress: 2008
Author(s): Alejandro Jiménez, A. Pérez-Foguet
Civil Engineer (1999, Universidad Politecnica de Madrid), Msc Hidraulycs (2001,Universidad Politécnica de Madrid), PhD Candidate (Universidad Politécnica de Catalunya), I have 9 years of experience in development projects. Since 2004, I am the water and i

Keyword(s): financing, aid, donors, MDG,
Article:
AbstractEffective allocation of investments is vital if the Millennium Development Goal’s (MDG) target for Water and Sanitation is to be achieved. The present paper exposes the main findings of a study about the Official Development Assistance (ODA)- bilateral & multilateral- and the international private sector participation in the water sector during the last decade, undertaken with the main objective of assessing the international contribution to the sector in developing countries. For that purpose, it makes a comparative analysis of public and private international investment in the given period; it analyzes the coherence, both geographical and sectorial, of aid allocation, as well as the terms and conditions of ODA delivered. Finally, it assesses private participation success in the sector and evaluates cross cutting issues in ODA water programmes. Analysis was possible through the development of a database using the public available data sets from Development Assistance Committee (DAC) and the World Bank, completed with population and water and sanitation access figures from Human Development Report. It covers the last ten years of available completed data, 1995-2004. Results from international private participation in water and sanitation projects show a little contribution to MDGs: 98% of investment was dedicated either to medium or high income countries and mostly oriented to mixed projects over 100 MUSD each; meanwhile, Africa attracted only 0.95% of the investment in the period. At the same time, private participation has been rather conflictive and shows a decrease tendency, with 28% of the investment engaged during the decade cancelled or under distress. Moreover, little complementarities were found between international public and private investment, from the point of view of the unserved. Results of ODA analysis show how far donors lag behind their own commitments both in terms of quantity and quality. In terms of quantity, during the 2000-2004 period donors and multilateral institutions only committed 50 MUSD/year more as in the 1995-1999 period, despite MDG´s declaration. Data show big geographical inequalities, comparing the share of aid received by regions related to the number of unserved people living there, evidencing donors lack of coordination to allocate funds among countries. Individual donor analysis did not show better results. Some of the most important donors of the sector (Japan, European Commission, Germany and France) score a very low performance against aid terms and conditions criteria, and some donors’ aid allocation principles are not coherent, if MDG’s are to be achieved. Regardless extremely low coverage in sanitation, not a single DAC donor is really committed to improve it. As a result of the analysis made, we can affirm that there is room for improvements in water sector aid. Current donor’s effort is focused on improving general aid efficiency, through alignment and coordination at national level in the recipient countries. But MDGs fulfilment needs a wider approach: a global coordination mechanism to ensure more efficient sector resources allocation between countries is needed, and donors must fulfil their own recommendations on terms and conditions of aid. The tiny amount of ODA resources dedicated to sanitation represents a huge contradiction with actual needs.
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