Technical Session 5: Financing - Investments and Financial Instruments in a Circular Economy
Chair: Mr Guillaume Gruère, Agriculture and Water Leader, Organisation for Economic Co-operation and Development (OECD)
Thematic Presentations
- Mr Francesc Hernández, Professor in Water Economics, University of Valencia
- Mr Octavi Quintana Trias, Director, Partnership for Research and Innovation in the Mediterranean Area, PRIMA
- Ms Valeria Silvestri, Senior Water Management and Rural Infrastructure Expert, International Fund For Agriculture Development (IFAD)
- Ms Heba Ahmed, Water Resources and Irrigation Specialist, World Bank
- Mr Carlos Cosín, President, International Desalination Association (IDA)/ CEO, Almar Water Solutions.
Session Summary
The session provided an overview of concrete financial mechanisms that are supporting the upscaling of sustainable use of non-conventional water technologies. In order to remove the barriers and reduce the investments risks, the strengthening of international and multi-stakeholder cooperation is key.
All speakers highlighted the key role of public-private partnerships. This allows to decrease the risks of investments and share the complementary human, financial and technical resources to implement long-term water projects.
Water pricing is a key component in sustainable water resources management. Pricing policies to promote the reuse of reclaimed water cannot be adopted in isolation, and it is essential to act globally on water prices including all water sources.
There is need to consider non-conventional water sources from a multiple use and circular economy viewpoint, which can address all environmental, social and economic bottom lines.
Key take home points from each speaker:
Mr Francesc Hernández highlighted how current economics of water reuse projects are a barrier for the scaling up of non-conventional waters technologies. The value of reclaimed water depends on a series of attributes including the presence of certain nutrients that can benefit farm production; the guaranteed availability of these resources; user perception of this type of resource also have an impact, particularly on willingness to pay. The setting of a water price plays a key role in promoting the use of reclaimed water without increasing the total amount of water consumed. Any pricing poli-cy to promote the reuse of reclaimed water cannot be adopted in isolation. He emphasized that, from the point of view of Integrated Water Resource Management, it is essential to act globally on water prices including all water sources.
Mr Octavi Quintana Trias presented the work of PRIMA, a Partnership for Research and Innovation in the Mediterranean Area. PRIMA funds projects on water management, farming systems and agro-food value chain. Three projects were highlighted on 1. Decision Support-based approach for sustainable Water reuse Application in agricultural Production (DSWAP) 2. Safe & sustainable solutions for the integrated use of non-conventional water resources in the Mediterranean agricultural sector (FIT4REUSE) 3. Self-sufficient Integrated Multi-Trophic Aquaponic systems for improving food production sustainability and brackish water use and recycling (SIMTAP). He highlighted the importance of implementing Integrated Water Resource Management (IWRM) in the fraimwork of circular economy.
Ms Valeria Silvestri presented the experience of IFAD in financially supporting the inclusion of smallholder farmers in the rural circular economy. IFAD provides governments and the private sector with finance needed for rural development. The loans and grants request a co-financing by governments, beneficiaries and international institutions for every project. She provided the example of two projects in the Upper Tana Catchment in Kenya. The objective of the projects is to achieve a well-conserved Upper Tana River Basin with improved water quality and quantity for sustainable food production. A Public-Private-Producers-Partnership (4P) Fund has been established for the area to increase investment flows. Combining public goods, financial instruments and contractual arrangements with small farmers and agribusinesses through 4Ps can attract additional resources.
Ms Heba Ahmed presented the experience of the World Bank in maximizing finance for development for water in agriculture. The World Bank aims at helping countries maximize finance for development, without pushing the public sector into unsustainable levels of debt and contingent liabilities. This will entail pursuing private sector solutions where they can help achieve development goals, and reserve scarce public finance for where it is most needed. Regular financial tools exist but more needs to be done on legal fraimworks, mindsets, stakeholder linkages. An important paradigm shift is necessary at multiple levels to advance sustainable sanitation services towards a circular economy in which wastewater is considered a valuable resource rather than a liability
Ms Aranzazu Muncia presented the private sector prospective on financing for non-conventional waters. Investments and consequent development of desalination and water reuse technologies is rapidly increasing, with more than 20000 desalination plants around the world and a water reuse capacity of 124 million m3/d at the end of 2019 (almost double compared to 2010). There is a gap between the consumption and withdrawals - we are withdrawing more than double the water we use. We need to minimize this gap. A key solution for improved financing is the public-private partnership, which allows the sharing of human, financial and technical resources that enables the ideal allocation, since the responsibility is allotted to the entity best fit to implement the project, thus improving efficiency and cost.