1. Water and Sanitation Review Prepared for Bali Workshop Infrastructure in East Asia and Pacific – the Way Forward David Ehrhardt 28 June 2004
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2. Performance Review - is there a problem?
Outline
Service vs. GDP
Performance Review - is there a problem?
Improvement vs. other sectors
Improvement vs. goals
Investment Needs
Past investment levels
Service standards, Tariffs, Subsidies, Efficiency
Biggest problem : cost recovery
Institutional change to lock-in good incentives
Financial Intermediation Arrangements

3. Access to Improved Water vs. GDP per capita

4. Annual average percentage changes in income, teledensity and access to improved water

5. Investment needs (to 2015) vs
Investment needs (to 2015) vs. Historic actuals ( ) (US$/person/year)

6. Ratio of operating expenses to revenue

7. Social and Environmental Priorities
Cost recovery through getting service standards, tariffs and subsidies right
Cost of Service
Efficiency
Subsidies
Service Standards
Social and Environmental Priorities
Is the bundle of services, tariffs, subsidies right?
Customer Tariffs
Lock In

8. Locking in Good Incentives through Good Institutions
Public
Inform, Involve, Consult
Explain the trade-offs
Services
Politicians (Minister / Mayor)
Link good service to good politics
Commercialize, corporatize
Utility
Contract with private operator to lock in autonomy, subsidy, tariff rules

9. Section is under-preforming against other sectors and MDGs
Conclusions
Section is under-preforming against other sectors and MDGs
Meeting MDGs requires US$6.3 billion investment per year – twice current levels (but only US$3.50 per person per year)
Biggest barrier to good service and investment is lack of cost recovery
Achieving cost recovery requires:
Consistent, appropriate package of service standards / tariffs / subsidies
Institutional reforms to create informed consumers, accountable politicians, efficient utilities and reliable tariff and subsidy rules

10. Financial intermediation for the water and sanitation sector
Private Sector Savings
(US$ 8 trillion)
Bond Markets
Central Government
Public Utilities
Financeable Projects
Customers
Public –Private Partnerships
Banks
Municipal Government
Private utilities
Specialized intermediaries
Taxpayers