Financial sustainability and equitable access to water: keys to the future of a resource at risk

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The article highlights critical challenges and solutions in ensuring equitable access to fresh water amid growing populations and climate change. At the Bankinter Innovation Foundation’s Future Trends Forum, experts Howard Neukrug, Catarina Fonseca, and Lesley Pories discussed the financial, infrastructural, and management obstacles facing water sustainability globally, especially in developing countries. Neukrug emphasized the dire state of outdated water infrastructure and insufficient budgets, advocating for resilient infrastructure, equitable tariffs with subsidies, public awareness, and innovative multi-functional urban designs to enhance financial sustainability. Fonseca pointed to the vast funding gap—$141 billion annually needed globally—and stressed that effective management of funds, especially maintenance financing, is crucial. She also criticized current subsidies that often fail to reach the poorest populations, perpetuating inequality. Pories underscored the importance of integrated water resource management, linking sustainable water supply to the protection of water sources and enhanced coordination among government agencies.

All experts agreed on improving efficiency through technology, such as reducing water loss and using smart meters, but warned that technology alone cannot solve the crisis without strong incentives and policies. Financing remains a major hurdle; while private investment is limited, public funding combined with private and philanthropic efforts is essential. Ultimately, the experts advocate for a collaborative, integrated approach that combines innovation, financial sustainability, equity, and environmental protection to secure water access for present and future generations.

International experts discuss challenges and solutions to ensure equitable access to water, adapt to climate change and ensure sustainable financing of water infrastructure

Through the Future Trends Forum, the Foundation has brought together international experts under the slogan Water: our vital resource in check, to address a critical issue: how to ensure access to fresh water today and in the future? This article is part of the Bankinter Innovation Foundation’s ongoing effort to disseminate knowledge and promote debate on the major global challenges affecting Spanish and world society. On this occasion, three leading specialists share their vision on the problems of financing water infrastructures and equitable access to this vital resource.

Access to fresh water is one of the greatest challenges we face in the twenty-first century. As the population grows and climate change alters precipitation patterns, water management becomes an increasingly complex task. In addition, gaps in financing for infrastructure maintenance and development, especially in developing countries, hinder equitable access to water. At the Future Trends Forum, three experts – Howard Neukrug, Executive Director of the University of Pennsylvania Water Center, Catarina Fonseca, Senior Economist, Associate at the International Rescue Committee (IRC), and Lesley Pories, Senior Policy and WASH Finance Analyst at WaterAid, – shared their perspectives on how to address these challenges.

If you want to see the presentations of these experts, you can do so in these videos:

Howard Neukrug: “Setting priorities: What to invest in” #WaterForum

Catarina Fonseca: “Economic pathways to sustainable water use” #WaterForum

Lesley Pories: “Water sustainability: Challenges and perspectives” #WaterForum

The financial crisis of water infrastructure

Howard Neukrug, an expert in water utility management, exposes a critical reality: the water infrastructure in many cities is outdated, and the budgets available to update it are insufficient. “Budgets should always be driven by real needs, and these needs should be reflected in tariffs,” says Neukrug, but the reality is that public administrations often limit tariff increases, which prevents them from adequately financing the necessary projects.

This chronic underfunding, according to Neukrug, has long-term consequences. Cities, in addition to struggling to keep the supply of safe and affordable drinking water, must adapt to a changing climate. “There are deferred costs that we have been accumulating over the last 50 years, such as those related to new treatment technologies and regulations,” Neukrug explains, adding that many sewerage, wastewater treatment and water supply systems are operating under outdated standards.

In terms of solutions, Neukrug mentions the importance of adopting new approaches to financing and water management. In particular, it mentions:

  1. Resilient and accessible infrastructure: Develop and maintain infrastructure that ensures continuous access to safe drinking water and sanitation. This includes investment in water distribution systems in disadvantaged rural and urban areas.
  2. Tariffs and subsidies: design tariff structures that ensure that water is affordable for everyone, regardless of their socioeconomic status. Neukrug suggests the creation of subsidies for low-income families and assistance programs to avoid water cuts in situations of economic vulnerability.
  3. Education and awareness: Promote education on the efficient use of water and the importance of conservation. Awareness campaigns can empower communities to actively participate in water management and adopt sustainable practices.

Neukrug also emphasises the importance of innovations and collaborations, betting on a radical change in the way we think, plan, design, integrate, build and finance water projects to be able to adapt to climate change.

An example of these innovations is the integration of multiple functions into urban spaces, such as in Rotterdam, where a basketball and tennis court also functions as a rainwater retention basin, integrating recreational and water management needs. These innovative solutions save money by combining urban needs with water infrastructure, an important step towards financial sustainability.

Another example is floating solar panels installed in swamps and lakes, which increase solar efficiency due to the cooling effect of water and reduce water evaporation, preserving its quality. This solution is especially useful in areas with a shortage of land.

The financing gap in developing countries

Catarina Fonseca, director of programmes to improve water sector financing, discusses the alarming funding gap that plagues most developing countries. According to a World Bank report, the global cost of achieving universal access to safe drinking water and sanitation (SDG 6) amounts to 141 billion dollars per year. However, the costs of inaction, due to water-related climate events, could reach $1.8 trillion over the next decade.

Fonseca stresses that the biggest challenge is not only obtaining funds, but how they are managed. There is a clear lack of adequate financial instruments to cover the costs of maintaining water infrastructure. “We have a lot of financial instruments to finance CAPEX (capital expenditures), but we lack models to finance maintenance costs, which are just as crucial when we talk about water,” he explained.

In addition, Fonseca highlights the need to review subsidies in the water sector, as they often perpetuate inequalities. In many cities, poorer residents end up paying much more for water than those who are connected to formal water networks. A World Bank study shows that only 6% of subsidies reach the neediest people, while the rest benefit those who can afford higher rates.

The importance of integrated water resources management

Lesley Pories, an expert in international development, adds a fundamental perspective on the need to integrate water management in all its dimensions, a practice that, although essential, is not applied often enough. “We cannot continue to treat access to drinking water and the management of water resources separately,” says Pories. In his view, these areas are critically interrelated: a sustainable supply of drinking water cannot be guaranteed if water sources are not adequately protected.

Pories stresses that while governments often prioritize the provision of safe drinking water and sanitation services, this one-sided approach often undermines equitable access in the long term. The lack of coordination between government ministries and agencies is a major obstacle in most countries. “In most of the countries we work in, the priorities of the ministries responsible for water management are not aligned, which makes a cohesive approach difficult,” he explains.

In relation to water tariffs, Pories agrees with Neukrug that low pricing, driven by political reasons, often results in a cycle of underfunding. “Governments feel obliged to offer water at prices that are unsustainable,” he says.

Solutions based on efficiency and technology

Both Fonseca and Pories agree on the importance of improving the efficiency of water use as part of the solution to financial problems. Fonseca, for example, points out that a 10% reduction in non-revenue water (that which is lost due to leaks or theft) could generate huge savings, freeing up funds to improve existing systems.

For his part, Pories highlights the role of technology and innovation in improving the efficiency of water use. Examples such as desalination and the use of smart meters, along with more efficient practices in agriculture , are essential to reduce water consumption and therefore costs in the long term. “When water is cheap, consumers have less incentive to conserve it, which perpetuates waste,” he warned.

However, the three experts stress that technology alone will not solve sustainability problems. “Sustainability is not going to happen naturally just because it’s a good idea,” Pories explains, highlighting the importance of applying both incentives and sanctions to promote more efficient water use.

Challenges and opportunities in financing water infrastructure

The three experts also agree that financing, especially in developing countries, is one of the biggest obstacles to ensuring equitable access to water. Fonseca shares a concrete example of his work with the African Union, where they have committed to mobilizing more than $30 billion a year for water projects in Africa, highlighting that this has only been possible through a combination of funding sources, including efficiency improvements, private investment, and public resources.

However, funding from the private sector remains very limited. Fonseca illustrates this by saying that the private sector only contributes 9% of investments in water in Africa, compared to 87% in telecommunications and 45% in energy. For the business sector, philanthropic organizations and other non-state organizations to prioritize water as an investment, confidence must be promoted, creating attractive incentives and coherent and solid policies and projects, Fonseca points out. In any case, public financing is and will be key, as solutions driven solely by the private sector are not realistic or sustainable in the long term.

The future: an integrated and collaborative approach

Through their interventions, Howard Neukrug, Catarina Fonseca and Lesley Pories make it clear that in order to address water challenges, an integrated approach is required that combines financial sustainability, equity in access and the protection of natural resources. The future of water depends on new technologies and massive investments, yes, but also on effective collaboration between governments, businesses and civil society to ensure that this vital resource is available to all in an equitable and sustainable way.

The task is huge, but as Neukrug mentions, “if we take a disruptive and collaborative vision, we can redesign our cities and water systems to adapt to a changing climate and improve the quality of life in our communities.”

More articles from the series on The quest for clean waters forum: