To achieve water and sanitation for all by the year 2030, Latin America and the Caribbean will need to mobilize an additional $372 billion over the next five years. That may seem like a hefty sum, but it requires an annual investment of less than 1.3% of the continent’s current GDP. It’s also less than the billions of dollars that the region is losing each year to water scarcity and other climate disasters.
Finance ministers have been hesitant to invest in water and sanitation, seeing these services as a drain on public budgets. Yet, these services are essential not only as human rights but also for addressing climate change and reaching development objectives.
Climate change could cost Latin America nearly a fifth of its GDP by the end of the century without new policies to curb its impact, according to a Moody's Analytics report. Additionally, the World Bank reports that damage caused by climate change has severely hampered economic growth in the Caribbean. Since 1980, the total cost of disasters in 14 Caribbean countries has exceeded half of their annual economic output.
However, we can reduce climate costs by investing in water and sanitation. So, how can we make sure that transformation happens?
First, we need to start with political prioritization. Who increases or decreases budgets for infrastructure and services? Who decides on taxes and tariffs? These are political decisions, and I believe that when political will is mobilized, the financing follows.
For example, last year, eleven governments announced they are working on Presidential Compacts on Water and Sanitation through the Sanitation and Water for All partnership. These initiatives include increased budget allocations, innovative sources of financing and plans to construct climate-resilient infrastructure that will mitigate the impact of droughts and floods. We hope to see countries across Latin America and the Caribbean – and beyond – follow suit.
Second, we must work hand in hand with finance ministers, focusing on how water and sanitation investments can spur economic growth and environmental sustainability. According to the Economic Commission for Latin America and the Caribbean (ECLAC), an annual investment of 1.3% of the regional GDP is projected to create up to 3.4 million green jobs each year.
Next finance ministers must tap into innovative sources of financing. For example, Peru has adopted a funding model for water and sanitation through the Mechanisms of Rewards for Ecosystem Services, led by the National Superintendence of Sanitation Services (SUNASS) in collaboration with the Ministry of Environment and water utilities. This approach finances conservation efforts by allocating a portion of water tariffs from users to fund projects aimed at the sustainable management of Peru’s water sources. This initiative not only ensures the maintenance and rehabilitation of water infrastructure and basins but also involves consumers directly in the conservation process.
In Brazil, the Companhia de Saneamento Basico de Estado de Sao Paulo (SABESP) received a $150 million blue loan from the International Finance Corporation to improve water quality and expand sewage collection and treatment in the poorest neighborhoods, which is also reducing the pollution of the Pinheiros River.
Finally, we must provide space for finance ministers to bring strong examples of policies that can achieve development goals. That’s the objective of our upcoming Latin America and Caribbean Finance Ministers’ Meeting which will be co-convened on 19 April by Sanitation and Water for All and UNICEF and hosted by the Inter-American Development Bank.
This is a unique opportunity for our sector to position itself not as a drain on national resources, but rather as an investment in human and economic development. Many finance ministers are already taking positive steps to finance water and sanitation in their countries, and we are excited for them to share their success stories.
There are very few opportunities where a single investment can tackle climate change, spur economic growth and improve quality of life, but investing in water and sanitation does all of these things and more.
The moment to prioritize water and sanitation is now.
Photo © UNICEFUN0821842