Executive Summary
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EXECUTIVE SUMMARY The sustainable and cooperative management and development of transboundary water resources is crucial for access to water, economic growth, sustainable development as well as regional stability and peace. The different elements and stages of sustainable and cooperative management, and the development of transboundary water resources, require funding. These elements must be considered when discussing the different prerequisites and requirements for successful transboundary water cooperation and basin development. A lack of financial resources, inadequate funding and/or an absence of financial mechanisms can impede this from occurring even if all riparian states are committed to cooperation and development. The main challenges in funding and financing projects related to transboundary water cooperation and basin development are:
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Water cooperation and development activities and projects, especially in emerging countries and developing countries, are often perceived as particularly risky in a transboundary setting, given that risks normally related to one country (in terms of economic developments, political stability, etc.) are often compounded in basins shared by several countries.
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Many countries face financial capacity constraints and must make tough decisions on how to allocate their scarce public funds. Although this is true for all sectors and initiatives, it is often the case that transboundary water cooperation and basin development is not at the top of countries’ priority lists.
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There is often limited consideration of the benefits of cooperation and a general lack of cooperation between riparian states in many of the world’s basins, depriving the funding of transboundary basin cooperation and development of its political and institutional basis.
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Most official development assistance (ODA), which could temporarily fill this funding gap, goes to water, sanitation and hygiene (WASH) projects and initiatives, while the majority of international private financing goes to large infrastructure projects that are developed and implemented at the national level.
This publication sets out to explore the different financial needs and opportunities associated with transboundary water management, cooperation and basin development. It aims to provide professionals with a background in water resources management, finance or other related areas of expertise a better understanding of the needs and resources available to sustainably fund transboundary water cooperation and basin development. The first chapter of the publication provides a comprehensive summary of the financial requirements for transboundary water cooperation and basin development. It differentiates between core costs (the costs associated with establishing and maintaining institutionalized cooperation mechanisms) and programme costs (the costs associated with managing a transboundary basin and developing its water resources and related activities and projects). Both types of costs tend to vary considerably across the world’s shared basins, largely depending on the focus and the objectives of cooperation which riparian states have agreed to pursue, and the mandate and the responsibilities assigned to a joint body. The second chapter of the publication assesses the different sources available to meet the aforementioned financial needs. It arranges them into different categories, namely public funding and financing and private funding and financing, acknowledging that hybrid forms exist between the two and can offer valuable solutions. On the public funding and financing side, direct member state contributions to transboundary water cooperation, management and basin development are considered, highlighting their great importance for ensuring the longterm financial but also political sustainability of cooperative action. Some of the typical characteristics and challenges associated with these contributions are also assessed. The publication then assesses other, less commonly applied direct public sources, such as regional taxes or user/polluter fees, which come with numerous challenges and have so far not developed into a broad funding base for joint bodies. The publication then reviews the sale of data and services derived from transboundary water cooperation and basin development, as well as management and administration fees/project management that joint bodies can charge for projects and which can provide a source of income, albeit it is not sustainable in the long term. Finally, public funding and financing sources are reviewed and include public loans, grants and technical assistance mechanisms. The publication acknowledges their potential importance for overcoming financial capacity constraints in basins in developing countries and to
