Citywide Inclusive Sanitation Part 2: Long-Term Financing of Water Supply and Sanitation Projects

Summary

The video script addresses the urgent need for innovative sanitation solutions in urban areas, emphasizing the challenges of managing water and sanitation amidst growing populations. It introduces 'City-Wide Inclusive Sanitation' (C-WISE), an approach that involves all stakeholders and considers unconventional technical solutions. The script discusses the financial complexities of sanitation projects, the importance of local knowledge and partnerships, and various financing mechanisms like blended finance and outcome-based instruments. It also highlights the role of public-private partnerships and the potential of innovative solutions like the Jokaso system for wastewater treatment. The script concludes by underscoring the importance of a comprehensive, collaborative approach to achieve sustainable sanitation by 2030.

Takeaways

• 🌍 By 2030, nearly half of the global population still lacks access to safely managed sanitation, despite global efforts to ensure availability and sustainable management of water and sanitation for all.
• 🏙️ 'City-wide inclusive sanitation' or C-WISE is an approach that considers technical solutions beyond conventional sanitation systems and works closely with all stakeholders to create an enabling environment for the entire service chain.
• 💡 Sanitation projects are complex due to geographical distribution, fragmented governance, and overlapping mandates among various government agencies, which hampers effective planning, coordination, and management.
• 🏡 Addressing household ability or willingness to pay for sanitation services is crucial, as poor unit economics and the need for subsidization are realities of the sector.
• 🌐 High operating expenses, local partnerships, and expertise increase counterparty risks when international financing is mobilized for sanitation, making investments vulnerable to exchange rates and macro risks.
• 🏛️ The potential for education and capacity development programs is highlighted as a way to bring projects to the forefront and develop or support public counterparties.
• 💼 The importance of local knowledge in the sanitation sector is emphasized, allowing for innovation at the local level with the flexibility required from investments.
• 💵 Blended finance is introduced as a strategic use of development finance to mobilize commercial capital towards projects contributing to sustainable development, making projects more attractive to private investors by absorbing much of the risk.
• 🌱 Impact investing, which uses investment capital to actively contribute to improvements in people's lives and the environment, could help fill the gap in financing for sanitation projects.
• 🔄 Public-Private Partnerships (PPPs) can efficiently manage and assign risks between the public and private sectors, introducing innovative and high-quality services from the private sector.

Q & A

What is the global challenge regarding water and sanitation management in cities?

The global challenge is managing water and sanitation in expanding cities with higher population densities, where nearly half of the global population still lacks access to safely managed sanitation.

What is the goal set by global efforts for water and sanitation by 2030?

The goal is to ensure the availability and sustainable management of water and sanitation for all by 2030.

What is the City-Wide Inclusive Sanitation (C-WISE) approach and how does it differ from conventional sanitation systems?

C-WISE is an approach that considers technical solutions beyond conventional sanitation systems and works closely with all stakeholders to create an enabling environment for the entire service chain.

Why is the sanitation sector tied to people, place, and politics, making it a financial puzzle?

Sanitation is tied to these factors because it involves geographically distributed projects with fragmented governance, overlapping and ambiguous mandates, which hampers effective planning, coordination, and management.

What are the financial realities of the sanitation sector that pose challenges?

The financial realities include high operating expenses, the need for local partnerships and expertise, and the need for subsidization due to poor unit economics.

How does the investment in sanitation projects face risks such as exchange rates and macro risks?

Investments in sanitation are exposed to unfavorable moves in exchange rates and are vulnerable to macro risks like political or civil unrest and changes in monetary policies.

What role can education and capacity development programs play in the sanitation sector?

Education and capacity development programs can help bubble up project opportunities and create regional coordination, bringing projects to the forefront and fostering local knowledge and innovation.

What is blended finance and how does it help in mobilizing resources for sanitation projects?

Blended finance is the strategic use of development finance to mobilize commercial capital towards projects contributing to sustainable development. It makes projects more attractive to private investors by having concessional funding absorb much of the risk.

How does the Development Impact Bond (DIB) work in the context of the sanitation sector?

A DIB is a results-based financing instrument involving an impact investor, an implementing organization, an evaluator, and an outcomes funder. The outcomes funder repays the impact investor only if pre-agreed outcomes are achieved.

What are the benefits of Public-Private Partnerships (PPPs) in the delivery of sanitation projects?

PPPs can deliver projects on time and within budget, introduce innovative and high-quality services from the private sector, and lower coordination costs through a bundling effect.

How does the private sector contribute to the sanitation market, and what is an example of an innovative solution they provide?

The private sector contributes by delivering product solutions like the Jokaso on-site sewage treatment system, which treats all domestic wastewater more effectively than traditional septic tanks.

Why is collaboration and cooperation between countries essential in addressing the sanitation puzzle?

Collaboration is essential because the issues in the sanitation sector are multi-layered and connected, requiring simultaneous problem-solving and coordination across different layers and sectors.