Finance in Water Management

Abstract

Shortage of funding, high costs, and the balance of business strategies with social equity are common in IWRM. Financial issues include lack of capacity, low fees, political interference, and capital-intensive infrastructure. Strategic financial planning considers broad issues such as the need for subsidies and transfers, while projects and programs require plans for revenues and expenses. Financial planning also considers risk factors such as institutional capacity and ability to pay. It is desirable that users of services pay the full costs of infrastructure and operations, but subsidies to users may be needed when the ability to pay is low. Development banks often can make loans to aid water authorities. Water authorities require sophisticated financial models and tools such as asset management to control infrastructure.