 Improved
governance will lower transaction costs and make a significant
contribution to create a favourable environment to increase
water investments and to ensure that investment is used
correctly and efficiently. A fundamental insight is
that countries cannot "construct" themselves out of
water problems and that capital-intensive infrastructure
development has to go hand-in-hand with developments
in how water and financing is being governed. For example,
the introduction of an effective autonomous regulatory
authority and transparent and accountable processes
will significantly provide better and more opportunities
to attract new financing.
Clearly, the water sector in many countries is under-financed.
Currently, government taxation funds the management
of water resources and services in many developing countries.
Most developing country governments have so far not
been able to raise adequate funds through taxation or
the application of water tariffs for cost recovery.
The challenging task of raising additional funds should
also make decision makers aware of the need to complement
capital-intensive investments with alternative low-cost
technologies. Despite the attention given them, private
companies and entrepreneurs are only modestly involved
in water-related services.
The government plays an important role in providing
incentives through clear regulatory and institutional
frameworks for increased finance and for various partnership
arrangements with clearly defined roles for all parties.
The government should also ensure that poor people are
served and can afford water-related services. Countries'
economies and prospects for economic growth remain highly
dependent on water and other natural resources. There
is a growing need to adequately reflect the use of water
and other natural resources in national income accounts
and put in place policies and institutional frameworks
that can correct market failures and the economic and
social under-valuation of water resources.
|
