Water Alternatives (Feb 2021)
Public Banks + Public Water = SDG 6?
Abstract
Sustainable Development Goal 6 aims to achieve universal access to water and sanitation services by 2030; this is expected to cost an estimated US$150 billion per year. Where will this funding come from? One possibility is private finance in the form of direct equity investment from private water companies and lending from commercial banks. Evidence suggests, however, that private investments in water and sanitation have not materialised as planned due to the sector’s risk – return profile. Water and sanitation are considered 'too risky' by private investors and returns insufficiently rewarding. One alternative that may help to fill the water supply and sanitation (WSS) funding gap is an as yet untapped source of public finance: public banks. There are over 900 public banks in the world, with US$49 trillion in assets; they have, however, been largely underestimated as an important source of water and sanitation funding and have also been neglected by academic research and by mainstream policy organisations such as the World Bank. There is a need to better understand how public banks can be mobilised as effective funders of public water. In this article we provide a brief history of public banking practices in the water sector, review their pros and cons, and discuss the significance of the emergence of a new type of public water operator and the potential these entities offer for financing in this sector.
