From: Reuters
Published March 17, 2009 09:59 AM

Economic crisis sets back water utilities: World Bank

ISTANBUL (Reuters) - The global financial crisis could set back development in water utilities by a decade or more as investment falters and people become increasingly unable to afford water bills, the World Bank warned Tuesday.

As funding dries up a vicious circle could reemerge of poor services, low willingness to pay and low investment, said Jamal Saghir, Director of Energy, Water and Transport at the World Bank.

Speaking in Istanbul at the World Water Forum he said water utilities worldwide would have to boost efficiency to convince cash-strapped governments they were a sound investment.

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In the meantime, new ventures were likely to be canceled and existing water infrastructure projects come under cost pressure, he said.

More than 20,000 environmentalists, scientists, aid and utilities experts are discussing issues surrounding water, climate change and development with government ministers from around 120 countries at the forum.

The conference has come under fire from some action groups for not stressing enough the basic human right to clean water.

The United Nations Millennium Development Goals pledged at the start of this decade to halve, by 2015, the proportion of the population without access to safe drinking water.

Almost 1 billion people have no access to safe water and 2.6 billion people have no access to sanitation.

Angel Gurria, Secretary General of the Organization for Economic Cooperation and Development (OECD), told the conference national governments must revise how they fund water services -- typically a mix of tarifs paid by users, tax revenues and in some countries aid transfers.

If the financial crisis makes it harder for developing countries to borrow they must find ways of gradually moving to more tariff-based systems which also protect those least able to pay, he said.

In a report unveiled at the forum, the OECD said the financial crisis represented an opportunity to make water infrastructure more efficient thereby attracting new investment.

(Editing by Janet Lawrence)

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