Water tariffs around the world will need to rise by 5.9% a year if the international community is to achieve Sustainable Development Goal 6 on water and sanitation, according to a market report published by global water data specialist GWI.
Financing Water to 2030 reported these increases are needed to fund $449 billion of investment in water infrastructure each year between 2018 and 2030, to achieve SDG6 and maintain existing infrastructure. This would take the global average combined tariff from $2.08 /cu m to $4.38 /cu. m in 2030.
GWI said: “The report comes at a time when the funding model for water infrastructure is evolving to incorporate more private and commercial finance sources, in the face of ageing infrastructure, population growth and climate change.” GWI forecasted the amount of global private finance used to fund water infrastructure will increase from $3 billion during 2013 / 2017 to $35 billion a year in the next 12 years, providing 7.7% of global infrastructure investment needs by 2030.
Within the same time frame, 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 noted 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, and towards providing more loans and encouraging public-private partnerships.
The report also examined how the trend towards mobilising more private finance for water infrastructure is being driven by development finance institutions (DFIs), pointing to the “blended finance” strategies at major DFIs like the World Bank. GWI also found 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 the SDG on water and sanitation.