The Economic Crisis and the Water Sector: Rising to the Challenge

Abstract from paper “The Economic Crisis and the Water Sector:Rising to the Challenge”
-Katherine Sierra ,Vice President, Sustainable Development-The World Bank

presented at
5th World Water Forum, Istanbul, Turkey
on
March 17, 2009
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1. Climate change is emerging from a question of “science” and becoming an issue of “policy and practice”.
2. Most developing countries are not the epicenter of this economic earthquake but rather the victims of the global shock.But unlike many developed countries, many developing countries do not have the fiscal resources to support these solutions.
3. Support for a Vulnerability Fund is already mooted.
4. The cost of borrowing money has gone up significantly. This will likely put a brake on much needed investments in water – to meet the Millennium Development Goals by expanding water supply, to deal with the food crisis by investing in irrigation, or to mitigate climate change by investing in hydropower.
5.  The global financial crisis comes to a water sector that is chronically under-funded. It comes when even larger investments are needed to cope with new challenges produced by increasing urbanization and demographic growth. The “flight to quality” by investors is evident more than ever, and this will greatly affect the poorest or weakest countries.
6. Finally, the emphasis on “green investments” may provide an opportunity. A couple of years ago, few decision-makers talked about “the water-energy nexus.” Today, we have a deeper appreciation of its importance in development.