Photo: Fernando Matoso 2015

The Business Case for Sharing the Global Water Bill

By Mariana Matoso and Nathaniel Mason, ODI

The Business Case for Sharing the Global Water Bill

By 2030, the world will look back on the past 15 years with a sense of achievement, or lament a missed opportunity. The ambitious and transformational development agenda[1] due to be approved at the UN Summit in September[2] is setting the bar high, and there are similarly high expectations for the Financing for Development meeting in Addis[3].

We know that the Sustainable Development Goals (SDGs) come with a very hefty price tag. In developing countries alone, investment needs could range from $3.3 trillion to $4.5 trillion per year[4]. But with many traditional donors still feeling the ripples of the global financial crisis we can expect a funding gap of $2.5 trillion per year.[5] Tightened belts among Northern governments mean a replay of the 2005 Gleneagles Commitment to increase aid and cancel multilateral debt is unlikely[6]. The big unanswered question then is who will foot the bill, especially within one of the key ‘development drivers’, water and sanitation[7].

By 2030, there will be 8.3 billion of us cohabiting in the world – all drinking, defecating and using water for other uses 365 days a year. This means that to deliver SDG 6 and ensure universal access to water and sanitation, we will have to account for an additional 2.3 billion people in need of water and 3 billion in need of basic sanitation.[8]

But while we are looking to spend $27 billion per year for the next 15 years,[9] only five countries, in a recent survey of 38 African countries, for example, were found to have enough finance[10] to meet drinking water and sanitation targets. More worryingly, with global commitment stalled at $11 billion[11], we are still $394 billion off the target.

What options are on the table?

There is no need to reinvent the wheel. One option is to bring the private sector back to the table –while learning from the past mistakes of ideologically-led privatisation.

This is not about privatising the foundations of the human right to water and sanitation.[12] It is about bringing the private sector (domestic and international) into the conversation, as a peer, where profit-driven ethos and viable business models can be harnessed to deliver equitable and sustainable water and sanitation access, including to those at the base of the pyramid (BoP).[13]

But can business really help finance SDG 6?

Research due in August, led by ODI and commissioned by UNICEF and the UN Foundation, has begun exploring how the conversation between business and development circles can be advanced for water, sanitation and hygiene. Contributions on financing SDG 6 should not be limited to donations and grants, and could include:

Developing lower-cost service delivery models and technologies – increasing efficiencies and sustainability (the cost of replacing failing water and sanitation systems is a major part of the price tag);

Providing progressively more commercial forms of finance to scale technologies and services – from impact investing to straight commercial loans (matched by public sector support to help water utilities and other service providers gain credit worthiness);

Finding ways to make philanthropic investment scalable – in ways that really tap private sector strengths. Corporate social responsibility funding, and employees’ own expertise, could be directed to support small WASH enterprises with basic business skills. Increasing small businesses’ capacity to sell and maintain affordable handpumps and toilets would make a bigger splash than shiny new facilities which represent a drop in the ocean of need.

Despite holding significant potential, we need substantially more evidence around initiatives of this nature to prove their business value, scalability and reach. Unless businesses are convinced themselves that BoP markets can offer real returns, the argument is doomed. But why shouldn’t they? After all, the global water sector market for the 4 billion BoP consumers is worth $20 billion[14] alone.

Dormant opportunities are not limited to those associated with water, sanitation and hygiene markets directly. There is a case for businesses of all kinds to invest in a more productive and sustainable workforce through water, sanitation and hygiene outreach. Initiatives such as HERHealth,[15] where partnerships between the private sector and local NGOs are used to promote women’s general and reproductive health through workplace training programs, are taking the lead.

To make new partnerships work, we need to understand the motivations and strengths of each player. Public money can underwrite early risks in developing new technologies and models, but the balance should be carefully judged to avoid displacing viable private investment. The public sector will also need to remain the guarantor of an equitable approach whilst helping the private sector to access and understand poor customers and underlying affordability issues. The private sector will also need to be frank and transparent in its dealings in a politically and socially delicate market.

With the right balance, we could be a lot closer to paying our ‘global water bill’.

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