Innovative Financing Mechanisms for the Water Sector

This report focuses on mobilising market-based repayable financing (such as loans, bonds and equity) as a way of bridging the financial gap to meet the water-related Millennium Development Goals and other crucial sector objectives.



This report examines the extent to which these recommendations have been implemented and how financial innovation may need to adapt to the rapidly evolving global context and to the ongoing financial and conomic crisis.

Table of Contents
Foreword
Abbreviations and acronyms
Executive summary
Introduction
Overview
Target audience
Structure of the report
Chapter 1. Setting the stage
1.1. Financial flows for water and sanitation services
1.2. Why focus on market-based repayable finance in this report?
1.3. Why is innovation needed to increase market-based repayable finance?
1.4. Previous recommendations and their follow-up
Chapter 2. Mobilising market-based repayable finance
2.1. Potential recipients of market-based repayable finance
2.2. Potential sources
2.3. Critical mismatches driving innovation: a summary
Chapter 3. Pushing the boundaries of innovative finance
3.1. Blending grants and repayable financing
3.2. Extending the range of potential borrowers via micro-finance
3.3. Alleviating affordability constraints with output-based aid
3.4. Mitigating risks with guarantees and insurance
3.5. Creating grouped financing vehicles to increase access to finance
3.6. Increasing lending to sub-sovereigns via innovation
3.7. Strengthening the balance sheet via equity injections
3.8. Increasing transparency in the sector via credit ratings
3.9. Developing “bankable” projects through project preparation facilities
3.10. Summary evaluation
Chapter 4. Assessing the impact of the global financial crisis
4.1. Potential impact on market-based repayable finance
4.2. Potential impact on the 3Ts
4.3. In sum: glimmers of hope after the drought?
Bibliography
Figures
Tables
Boxes