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Costing the long-term demand for water sector infrastructure

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PurposeThe water sector is set to continue to face severe challenges in meeting the financial requirements for maintaining, extending and upgrading new and ageing water systems in the face of growing water scarcity, stricter regulatory requirements and competition for capital. The gap between the required financing and the projected financing is said to be growing but there are no good estimates available. The purpose of this paper is to present a recent analysis of the investment requirements of the water sector in OECD countries, Brazil, Russia, India and China up to 2030, taking into account the likely impact of socio-economic trends, internal politics, environmental challenges and technological change. Design/methodology/approachIn order to estimate the required financing, present expenditures as a percentage of GDP were analysed. Estimates of projected annual GDP growth coupled with an evaluation of the impact of country specific socio-economic, political, environmental and technological trends were used to derive projections for future investment needs. FindingsThe estimated level of infrastructure investment requirements to 2030 as determined by this study is considerably higher than had been expected and higher than for the energy, telecommunications and transport infrastructure sectors. Practical implicationsThe findings have enormous implications in terms of the ability of service providers for their business models and in raising the necessary finances. Originality/valueThis is one of a very few studies to report on the potential scale of the overall future investment requirements of the water sector that has been undertaken. Previous works have focused mainly on sub-sectoral goals such as meeting the Millennium Development Goals and so have under-reported the scale of the financing problem.
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Keywords: Environmental management; Forecasting; Investments; Water industry

Document Type: Research Article

Publication date: 2008-05-30

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