Financing water supply and sanitation under Agenda 21

This paper assesses the financing challenges which have to be met by developing countries if water resources are to be managed efficiently, if the quality of the aquatic environment is to be improved and if water related services are to be delivered in a responsive, efficient and equitable way. This paper takes the view that attaching 'price tags' to water supply and sanitation, as was tentatively done in Agenda 21, is a misguided approach and that what is needed is articulation of clear principles which should underpin the financing of water supply and sanitation investments. To illustrate the approach the paper focuses heavily on experiences from World Bank water supply, sanitation and urban development projects over the past 30 years. The challenge is to develop appropriate institutional and financial arrangements. The essence of such arrangements is that they ensure that societies mobilize appropriate levels of resources for providing water related environmental services and that these resources are used in the most efficient and effective way possible .     

Fast Track Land Reform Programme,tenure security and investments in soil conservation: Micro‐evidence from Mazowe District in Zimbabwe

The government of Zimbabwe launched the Fast Track Land Reform Programme (FTLRP) in 2000 as part of its ongoing land reform and resettlement programme which aims to address a racially skewed land distribution. Its goal has been to accelerate both land acquisition and redistribution, targeting at least five million hectares of land for resettlement. This paper investigates the impact of the FTLRP on its beneficiaries' perceptions of land tenure security, and how these subsequently impacted soil conservation investments. Evidence suggests that the programme created some tenure insecurity, which adversely affected soil conservation investments among its beneficiaries. We find support for the contention that households make land‐related investments to enhance security of tenure. The results underscore the need for the government of Zimbabwe to clarify and formalize land tenure arrangements within the programme.     

International oil market – new directions

This article focuses on changes in the international petroleum industry during the past 20 years and examines some major trends, especially since the oil price collapse of 1986. The resumption of rapid increases in oil demand since 1986 in the developed market economies and the developing world has already led to a pronounced production shift to OPEC member countries where output increased by 6.6 million barrels per day or, 37% since 1985. Cutbacks in petroleum investments in non-OPEC countries are likely to result in even more dependence on the vast proved oil reserves of OPEC. However, the gap between peak output and sustainable production capacities in OPEC has narrowed and there is an urgent need for sizeable investments to expand capacities. Such investment programmes are already being implemented by transnational oil corporations in countries such as Indonesia and Nigeria where the companies had retained equity participation. In other countries such as Iraq and Venezuela where oil operations had been nationalized, transnational oil corporations are being invited to participate in new arrangements for oil production. New arrangements are also being considered in Eastern Europe and the USSR. New understandings, dialogue and cooperation between oil-consuming and producing countries will be necessary for the security of investments, supplies and markets in this process. The unanswered question is whether such cooperation can be achieved in time in order to avoid yet another energy crisis.     

Renewable energy programmes in India

There is increasing optimism regarding the possible role that renewable energy technologies can play in the coming decade in the energy sector in India. Some recent developments and trends within the renewable energy sector that are responsible for this optimism, and the likely investments of the order of US$1210 million in the next four to five years, are discussed. The paper includes discussion of the recent changes in the implementing institutions, innovation in financing renewable technology investments, and a shift from financial to fiscal incentives. In addition, wind power generation, small hydro, photovoltaic and gasifier programmes are analysed in some detail.     

User pay financing of stormwater management: A case-study in Ottawa-Carleton, Ontario

Stormwater management upgrade and maintenance costs in the province of Ontario are significant. As capital grant programs decline, municipalities are exploring alternative means for financing the abatement of stormwater quantity and quality problems. User pay financing represents one such option. The economic, institutional and legal issues related to implementing user pay financing of stormwater management in Ontario are addressed using the Regional Municipality of Ottawa-Carleton (RMOC) as a case-study. The paper reviews the experience with user pay stormwater management programs in Canada and the USA, and recent stormwater issues and financing needs in the RMOC. The presented spreadsheet rate model is based on stormwater quantity and quality considerations and best management practices (BMPs) for various land-use categories. The modelling results vary depending on the inclusion or exemption of certain land-use categories and whether BMPs are implemented. Preliminary results indicate the monthly stormwater user charges are comparable with those charged in USA programs. In Ontario, existing statutes provide the enabling legislation for stormwater user charges, and there are no legal or regulatory barriers to implementing them. However, program we start-up costs and public perception could be significant obstacles to instituting user charges.     

Rural market imperfections and the role of institutions in collective action to improve markets for the poor

Many countries in sub‐Saharan Africa have liberalized markets to improve efficiency and enhance market linkages for smallholder farmers. The expected positive response by the private sector in areas with limited market infrastructure has however been very limited. The functioning of markets is constrained by high transaction costs and coordination problems along the production‐to‐consumption value chain. New kinds of institutional arrangements are needed to reduce these costs and fill the vacuum left when governments withdrew from markets in the era of structural adjustments. One of these institutional innovations has been the strengthening of producer organizations and formation of collective marketing groups as instruments to remedy pervasive market failures in rural economies. The analysis presented here with a case study from eastern Kenya has shown that marketing groups pay 20–25% higher prices than other buyers to farmers while participation was also positively correlated with adoption of improved dryland legume varieties, crops not targeted by the formal extension system. However the effectiveness of marketing groups is undermined by external shocks and structural constraints that limit the volume of trade and access to capital and information, and require investments in complementary institutions and coordination mechanisms to exploit scale economies. Successful groups have shown high levels of collective action in the form of increased participatory decision making, member contributions and initial start‐up capital. Failure to pay on delivery, resulting from lack of capital credit, is a major constraint that stifles competitiveness of marketing groups relative to other buyers. These findings call for interventions that improve governance and participation; mechanisms for improving access to operating capital; and effective strategies for risk management and enhancing the business skills of farmer marketing groups.     

Availability and access of financial support for renewables: issues and an illustrative innovation

This paper examines issues related to increasing the market penetration of renewable forms of energy in developing countries. It particularly focuses on availability and access of financial support for investments relating to renewable energy and a case study is presented illustrating innovative financing. While the main focus of the discussion is on renewable energy (RE) attention is also devoted to energy efficiency (EE) projects and investment. An underlying premise is that, if RE projects are to reach their market potential, they must be fiscally sustainable and the appropriate promotion of such fiscally sustainable RE projects yields multiple environmental and developmental synergies. Commercial viability is not primarily a question of technology. There is a broad range of RE products with proven performance and commercial operation in selected market situations. The challenge of extending this market penetration is to establish the institutional, organizational and financial conditions under which a commercial market for these products can develop, particularly in developing countries. This article reflects current emphasis on increased private participation in the energy sector, as well as policy reform at the national level.     

Financing investments in water supply and sanitation

Financing investments in water supply and sanitation has been a perennial problem in all countries of Latin America and the Caribbean. The contribution to capital funding derived from the income of operating companies has been very small, a direct consequence of unrealistically low tariffs. The situation has worsened with the increasing need to provide sewage treatment to reduce the gross pollution of most water bodies in the vicinity of large cities. This paper, on the basis of recent studies conducted in EC LAC, explores the practicability of the self-financing of water supply and sanitation services, including sewage treatment, through the income derived from tariffs. If this is to be achieved then it is important that the entire population pays for services, an issue of some importance given the unequal distribution of income in most cities of the region. The conclusion reached is that on the basis of the available information on costs, together with the experience of some countries, financing through tariffs is feasible, particularly if subsidies are provided to the poorest households. Tariff based financing is probably the only means of achieving universal coverage by the year 2000 as well as sewage treatment, the rehabilitation of existing systems, maintenance and the necessary institutional development .     

Green economy: Private sectors’ response to climate change

The focus of this paper is to present a discussion of the role of the private sector in response to the need for climate change adaptations. The study, which was conducted through a literature review, investigates the concept of the green economy and climate change, as well as businesses’ commitment to advance climate actions in ways that build resilience in vulnerable communities in developing countries. The paper calls on companies with national, regional, and/or global reach to adopt or develop strategies that improve resource efficiency, reduce greenhouse gas emissions, and reduce the loss of biodiversity. Businesses can accelerate this transition by aligning their investments with climate change adaptation opportunities, and thus, “green” the economy. In addition, green growth could be achieved through tactical public and private investments in mitigating climate change. The paper concludes that the private sector is a key sector in addressing the challenges of vulnerable communities, and it has much to contribute to the planning, development, and implementation of climate adaptation strategies, including sector‐specific expertise, technology, efficiency, financing, and entrepreneurship. Finally, some social conditions and environmental boundaries have been highlighted in this paper to attract the attention of business leaders who are trying to build initiatives and advance climate actions that will reduce socio‐community risks from climate change. Also, comprehensive initiatives and strategies have been recommended to private companies seeking to address climate vulnerabilities.     

Trade-Offs Between Biodiversity Conservation and Economic Development in Five Tropical Forest Landscapes

This study explores how conservation and development are interlinked and quantifies their reciprocal trade-offs. It identifies interventions which hold a promise to improve both conservation and development outcomes. The study finds that development trajectories can either be at the cost of conservation or can benefit conservation, but in all cases sustained poverty negatively affects conservation in the long term. Most scenarios with better outcomes for conservation come at a cost for development and the financial benefits of payments for environmental services (PES) are not sufficient to compensate for lost opportunities to earn cash. However, implementation of strategies for reducing emissions from deforestation and forest degradation in locations with low population densities come close to overcoming opportunity costs. Environmental services and subsistence income enhance the attractiveness of conservation scenarios to local people and in situations where these benefits are obvious, PES may provide the extra cash incentive to tip the balance in favor of such a scenario. The paper stresses the importance of external factors (such as industrial investments and the development of the national economy) in determining landscape scale outcomes, and suggests a negotiating and visioning role for conservation agencies.     

Oil-Induced environmental Kuznets curve in organization of petroleum exporting countries (OPEC)

This study investigates the environmental Kuznets curve (EKC) hypothesis in 10 of the Organization of Petroleum Exporting Countries (OPEC). To realize the study’s aims a time series model is built based on the period 1977–2008, utilizing the ecological footprint as an environmental indicator and income, labour, capital, oil consumption and oil price as economic indicators. Employing the Autoregressive Distributed Lag (ARDL) approach, by comparing the short and long-run income elasticities, the EKC hypothesis is present in six OPEC countries namely Algeria, Iraq, Venezuela, Nigeria, Qatar and Kuwait. Moreover, the Toda–Yamamoto–Dolado–Lütkepohl (TYDL) causality tests outcome show that, after oil consumption, the most significant factors in increasing ecological footprint are labor and capital. This implies the relocation of pollution intensive industries to almost all of the OPEC countries. However, oil prices reduce environmental damage by its negative effect on the ecological footprint. From the outcome of this study it is important for the investigated countries to reduce their consumption of fossil fuel energy since it represents an important source of pollution. This can be achieved by allocating more labor and capital in projects and investments on renewable energy, energy efficiency and energy saving.     

Restructuring of Eastern Europe and its possible consequences for atmospheric environment

The environmental situation in the (former) communist countries of Eastern Europe is threatening. How will the political and economical restructuring affect the environmental conditions? This article investigates the consequences for air pollution resulting from energy uses over the next 5 yr. Since abatement investments seem unfeasible (with the exception of the former GDR) financially and to some extent also technically, the assessment of energy demand is crucial. Explicitly accounting for market prices shows that emissions will substantially decline due to conservation and the substitution of the cleaner fuel natural gas for “dirty” coal.     

“One thing leads to another”—Commodities,linkages and industrial development

With a particular focus on low income economies in SSA, this paper addresses the nature and determinants of linkages from the commodities sectors and challenges the received view that enclave development is an inherent characteristic of resource extraction, particularly in the hard and energy commodities sectors. It argues that there has been a steady increase in linkage development and that there are significant opportunities for deepening this process. The opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high income countries which have resource intensive economic structures, the geographical specificity of many resources and the growing interest of large resource extracting firms in outsourcing the production of inputs which are outside of their core competences and in supporting local production of some inputs, it sets out a general model of linkage development which distinguishes between win–win and win–lose outcomes.     

Exporting dams: China's hydropower industry goes global

In line with China's "going out" strategy, China's dam industry has in recent years significantly expanded its involvement in overseas markets. The Chinese Export-Import Bank and other Chinese financial institutions, state-owned enterprises, and private firms are now involved in at least 93 major dam projects overseas. The Chinese government sees the new global role played by China's dam industry as a "win-win" situation for China and host countries involved. But evidence from project sites such as the Merowe Dam in Sudan demonstrates that these dams have unrecognized social and environmental costs for host communities. Chinese dam builders have yet to adopt internationally accepted social and environmental standards for large infrastructure development that can assure these costs are adequately taken into account. But the Chinese government is becoming increasingly aware of the challenge and the necessity of promoting environmentally and socially sound investments overseas.     

FINANCING PRIVATE WATER RESOURCE DEVELOPMENT: ANALYSIS OF A STATE LOAN PROGRAM1

ABSTRACT. A State loan program was analyzed for its effects on groundwater development in Wyoming. The analysis focused on the effects of low-interest State financing on the economic feasibility of investments in center-pivot sprinkler irrigation systems. The feasibility analysis indicated that investments in sprinkler systems for production of cash crops are highly profitable, and would frequently be carried out whether or not the State loan program were available. Investments in sprinklers for production of forage crops are perhaps frequently made attractive by the loan program. Thus, while the program appears to have accelerated the pace of private water resource development in Wyoming, it has also subsidized some investments that would have been carried out regardless of the program's existence. Further analysis indicated that sprinkler investments carried out with State financing contribute substantially to firm growth when cast crops are grown, but have less marked, and sometimes negative, effects on growth when forage crops are produced. Some positive effects of the loan program on southeast Wyoming's regional economy were noted, though a complete empirical analysis of regional impacts was beyond the scope of the study.     

Making private capital flows to developing countries environmentally sustainable: the policy challenge

The 1990s have seen a dramatic shift in capital flows into the developing world. Despite pledges made at the 1992 UNCED Conference in Rio de Janeiro, official development aid has declined in real terms. At the same time, private direct investment and lending to developing countries has risen from $44 billion at the beginning of this decade to $256 billion in 1997, supporting a record economic boom in the developing world. Developing countries have become significant sources of capital, as well as hosts to transnational corporations.
Cases illustrating the negative impacts of large investments under environmentally lax conditions are contrasted with the rise of environmental screening of funds by commercial entities, such as banks, insurance companies and investors. Although the new inflows of foreign capital may have brought the spread of Western consumerism, this new economic potential has also contributed cutting-edge environmental technologies, that may assist developing countries leapfrog over the most damaging phases of industrialization.
The article discusses the role of public lending agencies, international organizations and NGOs in setting the investment climate that determines the effects of foreign capital on the natural resources base, communities and the environment. Various mechanisms for defining environmental standards are discussed, and a more active role for governments and the United Nations is advocated.     

POST-GRADUATE TRAINING AND RESEARCH IN APPLIED SCIENCE IN DEVELOPING COUNTRIES: THE CASE OF MINERAL EXPLORATION

If a developing country decides to devote scarce human and material resources to post-graduate training and research in an applied science - based on a realistic assessment that the potential benefits from such an investment are likely to exceed the benefits from alternative investments - several approaches exist. The authors examine these alternatives as they apply to mineral exploration. They argue that if recourse is made to overseas training, programmes should be restricted by aid agencies to universities that will provide applied research subjects in the trainees' own countries. 'Twinning' arrangements between institutions in developing and developed countries may be useful if faculty in the developed country university are interested in and available for overseas work and if university administrations are aware of potential problems. The authors also discuss the provision of short-term non-academic fellowships in applied research, an approach which has not been used to extent it deserves.     

Environmental Vulnerability Indicators for Environmental Planning and Decision-Making: Guidelines and Applications

Environmental decision-making and policy-making at all levels refers necessarily to synthetic, approximate quantification of environmental properties such as vulnerability, conservation status, and ability to recover after perturbation. Knowledge of such properties is essential to informed decision-making, but their definition is controversial and their precise characterization requires investments in research, modeling, and data collection that are only possible in the most developed countries. Environmental agencies and governments worldwide have increasingly requested numerical quantification or semiquantitative ranking of such attributes at the ecosystem, landscape, and country level. We do not have a theory to guide their calculation, in general or specific contexts, particularly with the amount of resources usually available in such cases. As a result, these measures are often calculated with little scientific justification and high subjectivity, and such doubtful approximations are used for critical decision-making. This problem applies particularly to countries with weak economies, such as small island states, where the most precious environmental resources are often concentrated. This paper discusses frameworks for a “least disappointing,” approximate quantification of environmental vulnerability. After a review of recent research and recent attempts to quantify environmental vulnerability, we discuss models and theoretical frameworks for obtaining an approximate, standardizable vulnerability indicator of minimal subjectivity and maximum generality. We also discuss issues of empirical testing and comparability between indicators developed for different environments. To assess the state of the art, we describe an independent ongoing project developed in the South Pacific area and aimed to the comparative evaluation of the vulnerability of arbitrary countries.     

Quantifying the human health benefits of curbing air pollution in Shanghai

Urban development in the mega-cities of Asia has caused detrimental effects on the human health of its inhabitants through air pollution. However, averting these health damages by investing in clean energy and industrial technologies and measures can be expensive. Many cities do not have the capital to make such investments or may prefer to invest that capital elsewhere. In this article, we examine the city of Shanghai, China, and perform an illustrative cost/benefit analysis of air pollution control. Between 1995 and 2020 we expect that Shanghai will continue to grow rapidly. Increased demands for energy will cause increased use of fossil fuels and increased emissions of air pollutants. In this work, we examine emissions of particles smaller than 10 microm in diameter (PM10), which have been associated with inhalation health effects. We hypothesize the establishment of a new technology strategy for coal-fired power generation after 2010 and a new industrial coal-use policy. The health benefits of pollution reduction are compared with the investment costs for the new strategies. The study shows that the benefit-to-cost ratio is in the range of 1-5 for the power-sector initiative and 2-15 for the industrial-sector initiative. Thus, there appear to be considerable net benefits for these strategies, which could be very large depending on the valuation of health effects in China today and in the future. This study therefore provides economic grounds for supporting investments in air pollution control in developing cities like Shanghai.     

Regulation and private participation in the water and sanitation sector

Private-sector participation is widely perceived to be the solution to the failure of many publicly owned and managed water utilities to operate efficiently and make the investments required to meet community needs. However, there are no guarantees that privatisation will actually yield the desired performance improvements. Simply converting a public-sector monopoly into a private one provides no competitive incentives for the utility to operate efficiently, make appropriate investments or respond to consumer demands. Likewise, privatisation per se need do little to improve sector performance if governments are unwilling or unable to tackle such underlying problems as overmanning, uneconomic water pricing policies, financing the provision of public and merit goods, and restricting over-intrusive political intervention.
Given the characteristics of the water and sanitation sector it is inevitable that some form of continued public regulation of the private companies will be necessary. The regulatory burden can be reduced by adopting a competitive form of privatisation, choosing a more competitive sector structure and devising an appropriate regulatory regime. However, it has to be recognised that there will be a trade-off between making a venture attractive to private firms and introducing a notionally 'ideal' regulatory system. Regulation, in practice, is as much about creating the conditions under which private firms can operate effectively and efficiently as it is about protecting specific customer and public interests.