Report: £340bn annual investment needed to meet UN's water targets
Total worldwide investments into water infrastructure must reach £342bn ($449bn) each year between 2018 and 2030 if the globe is to meet the UN's Sustainable Development Goals (SDGs) for water and sanitation, a new report from Global Water Intelligence (GWI) has revealed.
The research group’s Financing Water to 2030 study, published on Saturday (June 16), argues that water tariffs will have to increase by 6% each year if the SDG for water is to be met, whilst reducing worldwide utility dependence on grant finance.
The move would more than double the global average combined tariff by 2030, taking it from the current rate of $2.08 per m3 to $4.38 per m3 in 2030, the report states.
GWI publisher and report co-author Christopher Gasson said the findings come at an “inflection point” in the history of water financing.
“For the past two decades there hasn’t been much change in the way utility assets are paid for, but going forward, there will be,” Gasson explained.
“We will see the utility sector steadily building its financial independence and the corollary of all this is that tariffs will have to rise.”
GWI predicts that the amount of global private finance used to fund water infrastructure will total more than £26bn ($35bn) over the next 12 years, providing 7.7% of the global investment needed by 2030. This is a notable increase on the £2.3bn ($3bn) invested between 2013 and 2015.
Within the same timeframe, funding for water infrastructure by central government grants and international transfers is expected to fall from 31% to 18% of annual investment needs, according to the report.
GWI maintains that the key driver of this trend is governments moving away from financing water projects on their own balance sheets and through grants to utilities as they provide more loans and encourage partnerships between the private and public sectors.
The research group additionally claims in the report that utility consolidation and government reforms aimed at improving the bankability of projects will be “crucial” in order to attract the infrastructure finance that utilities need to achieve SDG 6, clean water and sanitation.
Headline targets of this goal include providing universal and equitable access to safe and affordable drinking water for all; substantially increasing water-use efficiency across all sectors and facilitating the protection and restoration of water-related ecosystems.
Given that the amount of private financing for water infrastructure is set to rise as public-sector investments fall, according to GWI, the findings place the onus on businesses to improve their water stewardship actions and project funding efforts.
One of the most recent actions taken by corporates to address issues of water scarcity and quality came this week from PepsiCo, which pledged on Tuesday (June 19) to grant more than £4.5m of funding global NGO WaterAid and Chinese non-profit the China Women’s Development Foundation.
The announcement came as the food and drink manufacturing giant revealed it had invested more than £30m in water access solutions since the launch of its Safe Water Access initiative in 2006, providing 16 million people with clean water. It is now targeting 25 million people by 2020.
On a national level, more than 60 businesses and NGOs last month committed to a new initiative which aims to tackle water scarcity and stress in the UK through collaborative catchment management.
In fact, the number of big businesses investing in water security reached "record levels" in 2017, with analysis from CDP finding that more than $23bn was invested, as some companies place an "internal price on water" to justify funding decisions.