How can we finance a future of safe water, sanitation and hygiene for all?

WaterAid/DRIK/Habibul Haque
13 May 2021

How much will it cost to achieve water and sanitation for all by 2030? Amid the COVID-19 pandemic, an accelerating climate crisis and rising global poverty, a new report by End Water Poverty and WaterAid sets out the financial challenge.

We have a little under a decade to deliver on our collective promise that everyone, everywhere should have access to safe water, sanitation and hygiene (WASH) by 2030. COVID-19 has highlighted just how fundamental these needs are, and despite its many tragic and devastating impacts, the pandemic should strengthen our resolve to deliver the pledges made at the United Nations in 2015. Rather than framing this promise as a casualty of uncontrollable events, 2021 should be the year in which the international community reaffirms its determination to achieving sustainable development goal (SDG) 6. It should be the year in which we put in place the foundations needed to make the goal a reality, such as better governance, stronger institutions and the necessary finance.

A new report from End Water Poverty and WaterAid — Blueprint: financing a future of safe water, sanitation and hygiene for all — sets out the scale of the task ahead. Based on research by Development Initiatives, it updates recent work from the World Bank and others on the costs of achieving SDG6, and includes an assessment of the additional costs of building resilience to climate change. The report finds that an estimated US$229bn is needed each year to 2030 to fund the total capital and rehabilitation requirements for reaching new and unserved populations in low-income countries (LICs) and lower middle-income countries (LMICs). This is a higher estimate than recent studies, reflecting stalled progress in many countries, the reduced time to 2030, and the cost of building resilience to climate change. The impact of the pandemic and a growing developing country debt crisis add to the challenge, and signal the priority and types of policy needed to succeed.

What types of finance are needed?

As well as assessing the costs, the report is a “blueprint” for what is needed in financing terms, such as:

  • increased volumes, realistic to the goal of universal access
  • more transparency, affordability and sustainability
  • investments which contribute to a stronger sector overall and where key institutions - public and private - operate and interact efficiently and effectively

At the heart of this is a call for renewed efforts on domestic resource mobilisation (DRM); for national governments to strengthen their tax revenues and increase spending and investment on WASH. Ethiopia’s One WASH national programme has shown what can be achieved when a government uses a growing economy to strengthen DRM and chooses to prioritise water and sanitation in public spending programmes. And though India is now facing a tragic and devastating second wave of COVID-19, the government had made significant improvements in access to WASH through its Swachh Bharat and Jal Jeevan missions prior to the pandemic. These countries illustrate that political priority backed by substantial public budgets are a necessary condition for progress

But it is also clear that, for many countries, DRM can only go so far. Low-income countries need almost 9% of gross domestic product to finance their SDG6 capital and rehabilitation requirements. They can only do this with the support of the international community, through official development assistance (ODA), debt relief, climate finance and philanthropic investment. The vast majority of this support must come in the form of grants as more loans risk pushing low-income countries into unsustainable debt.

The costs of providing WASH services may seem high, but they pale into insignificance against the cost of a failure to provide these services.

As the reports highlights, loans account for a growing share of ODA to the sector: 62% in 2018 compared with 54% in 2014. This is a concerning trend for two reasons. First, water and sanitation systems, particularly in rural areas or in the world’s poorest countries, may not have a clear return on investment to make them viable. Second, ODA loans and climate finance are now adding to growing problems of debt sustainability. In 2017, Mozambique and Sudan — two countries classified by the IMF and World Bank as in debt distress — were among the top 50 recipients of ODA loans. Five other ODA loan recipients were at high risk of debt distress, and a further six at moderate risk. The recent decision by the UK government to cut its bilateral ODA to the sector by over 80% is particularly damaging, given its practice of providing ODA as grants. It has consistently been the largest donor, for example, to rural sanitation.

Looking beyond COVID-19

The COVID-19 pandemic, as well as other diseases such as SARS, Ebola or cholera, expose the fragility and folly of underinvestment in vital areas such as health, water, sanitation and hygiene. The costs of providing WASH services may seem high, but they pale into insignificance against the cost of a failure to provide these services. There is strong evidence that we need to renew our commitment to achieve SDG6, whatever the cost, and use the “three Ts” — tariffs, transfers and taxes — in a way that is dependent on country context and framed by the status of water and sanitation as human rights.

The report also places SDG6 within the broader framework of financing Agenda 2030. SDGs 6, 13 (climate action), 14 (life below water) and 15 (life on land) are together critical for keeping the earth on a sustainable pathway; financing them will require a level of ambition equivalent to a modern-day Marshall Plan. In an increasingly unequal world, one in which wealthy countries continue to spend billions of dollars on fossil fuel exploration, space programmes and military budgets, Blueprint argues for a re-evaluation of priorities. We can do it, we only have to draw inspiration from what we collectively achieved under the Jubilee 2000 debt cancellation campaign.

With rising global poverty, new waves of COVID-19, declining biodiversity and an accelerating climate emergency, it is time to focus on what is important for humanity and the natural world. Over the coming decade, we must place common interest before self-interest. Nobel Laureate Wangari Maathai, who dedicated her life to the development and environment of Africa, said: “In the course of history, there comes a time when humanity is called to shift to a new level of consciousness, to reach a higher moral ground. A time when we have to shed our fear and give hope to each other. That time is now.” These words expressed in Oslo in 2004 seem more relevant than ever, everywhere, in 2021.

Al-hassan Adam is the International Coordinator of End Water Poverty, John Garrett is WaterAid’s Senior Policy Analyst – Development Finance, and Katie Tobin is WaterAid’s Advocacy Adviser. Featured image: WaterAid/DRIK/Habibul Haque.