ABSTRACT
For many decades the global water problem and the related financing challenge have been central to the development agenda of developing economies, donor agencies and multilateral and regional financial institutions. There has been much debate on how to address the financing challenge in the water sector. There is now indisputable evidence that climate change will have a profound impact on the water sector through increased hydrologic variability. Climate change and water security will force a need for additional funding in the sector, but will also create the opportunity for donors to reinforce financially sustainable policies and operational efficiencies among water entities. By the year 2000, the formulation of the Millennium Development Goals for water and sanitation significantly increased the stakes, as this brought home the daunting finance challenge of achieving the targets established for 2015. Private finance is generally far more abundant than public finance, but it is also substantially more risk averse and wants to be compensated for its risk.
