Publication // Background Study on Funding and Financing of Transboundary Water Cooperation and Basin Development

Background

This background study has been developed under the framework of the Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Water Convention) in 2020 and its programme area on facilitating the financing of transboundary water cooperation, whose main aim is to support countries and River Basin Organizations in understanding and identifying sustainable financing mechanisms for transboundary water cooperation and management. This work started on 9 October 2018, with a high-level workshop on financing transboundary basin development which UNECE organized in partnership with Switzerland, the Netherlands, the World Bank, the Global Environment Facility International Waters Learning Exchange and Resource Network (GEF IW:LEARN), the Asian Development Bank (ADB), the European Investment Bank (EIB).

This study will be turned into a full publication, to be available for the 9th session of the Meeting of the Parties (MOP 9) of the Water Convention in September 2021.

Executive Summary

The sustainable and cooperative management and development of transboundary water resources is crucial for access to water, economic growth, sustainable development as well as regional stability and peace. The different elements and stages of sustainable and cooperative management and development of transboundary water resources require funding. This element is often overlooked when discussing the different prerequisites and requirements for successful cooperation and development. Moreover, a lack of financial resources and adequate funding and financial mechanisms can impede transboundary water cooperation and basin development even if all riparian states are committed to it. The main challenges in funding and financing transboundary water cooperation and basin development related projects are:

• Water initiatives, especially in emerging countries, are often perceived as particularly risky in a transboundary setting, given that risks normally related to one country (in terms of economic developments, political stability, etc.) are often compounded in basins shared by several countries.
• Many countries face financial capacity constraints and must make tough decisions on how to allocate their scarce public funds. Whereas that is true for all sectors and initiatives, transboundary water cooperation and basin development is often not at the top of countries’ priority lists.
• Most official development assistance (ODA) that could temporarily fill this funding gap goes to the Water, Sanitation and Hygiene (WASH) projects and initiatives, while most international private financing goes to large infrastructure projects that are developed and implemented at the national level.
• Limited consideration of the benefits of cooperation and a general lack of cooperation by riparian states in many of the world’s basin.

This report sets out to explore the different financial needs and opportunities associated with transboundary water management and cooperation as well as basin development. It aims at providing professionals – with a background in water resources management, finance, or other– a better understanding of the needs and the sources available to sustainably fund transboundary water cooperation and basin development.

Published

November 2020

By

The background study has been prepared by Ms. Susanne Schmeier and Mr. Wim Verdouw, UNECE consultants. It was developed in collaboration with representatives of the African Development Bank (AfDB); ADB; EIB; the Global Environment Facility (GEF); the Global Environment Facility International Waters Learning Exchange and Resources Network (GEF IW:LEARN), the Inter-American Development Bank (IDB); the Netherlands (Ministry of Infrastructure and Water), the Organization for Economic Cooperation and Development (OECD); Senegal (Ministry of Water and Sanitation); Switzerland (Swiss Agency for Development and Cooperation), the United Nations Capital Development Fund (UNCDF); the World Wildlife Fund (WWF) and the World Bank who provided inputs and contributions during the process.

Further Information

• Nexus Blog // Multiple ways to finance transboundary water cooperation exist but significant gaps remain, concludes a high-level workshop convened by UNECE and partners
• Presentation // How can water-energy-food-ecosystems nexus investments be an opportunity to finance transboundary water projects?

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