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A Framework for Financing Water Resources Management
OECD Publishing, August 2012, Pages: 96
This report provides a framework for policy discussions around financing water resources management that are taking place at local, basin, national, or trans-boundary levels.
A lack of finance for water resources management is a primary concern for most OECD countries. This is exacerbated in the current fiscal environment of tight budgets and strong fiscal consolidation, as public funding provides the lion’s share of financial resources for water management.
The report provides a framework for policy discussions around financing water resources management that are taking place at local, basin, national, or trans-boundary levels. The report goes beyond the traditional focus on financing water supply and sanitation to examine the full range of water management tasks that governments have to fulfill; when appropriate, a distinction is made on distinctive water issues.
The report identifies four principles (Polluter Pays, Beneficiary Pays, Equity, Policy Coherence), which have to be combined. In addition, it identifies five empirical issues, which have to be addressed on a case-by-case basis. Finally, it sketches a staged approach that governments might wish to consider, to assess the financial status of their water policies and to design robust financial strategies for water management. Case studies provide illustrations of selected instruments and how they can be used to finance water resources management.
Chapter 1. Why is financing water resources management an issue?
-Future challenges regarding water resources management
-Financing WRM: Expenditures and sources of finance
Chapter 2. Four principles for WRM financing
-A case for public funding
-Two well-established principles: Polluter Pays and Beneficiary Pays
-Two additional principles: Equity and Policy Coherence
Chapter 3. The value added of economic instruments
-Economic instruments for water management
-Abstraction charges in OECD countries
-Pollution charges in OECD countries
-Putting a price on water
-Innovative instruments to finance water resources management
-A note of caution: Requisites for economic instruments to deliver
Chapter 4. Issues related to the implementation of the four principles
-Earmarking revenues from water-related taxes: Balancing efficiency and financial security
-How can costs of water management be reduced: Efficiency and costeffectiveness as drivers for financial performance
-Roles for the private sector: Harnessing private sources of finance
-How to value water services: A precondition for sound financing
-Governance arrangements that match financing strategies
Annex A. Cost-recovery strategies in selected OECD countries and BRICS
-Cost-recovery strategies in Australia
-Cost-recovery strategies in Brazil
-Cost-recovery strategies in the Czech Republic
-Cost-recovery strategies in France
-Cost-recovery strategies in India
-Cost-recovery strategies in Sweden
Annex B. An OECD survey on investment needs for water supply and sanitation
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