Factsheet #33

Financial transfers/funds

Instrument Type

formal
informal

Governance Level

regional/basin
national
international

Governance Mode

market

Water management topics addressed

Drought & water scarcity
Water abstraction for irrigation and other economic activities
Water quality issues due to nutrient pollution
Water quality issues: Other reasons

Implementation requirements

Financial capacity

high

Human capacity

medium

Political buy-in

medium

Timeframe for implementation

short

#33: Financial transfers/funds

Description

Financial transfers between different levels of government are crucial tools for bridging the funding gap in water policy. Fiscal transfers from central budgets are also a source of investment capital in some countries.

Function

Well-designed intergovernmental transfers can create incentives for improved financial

Sustainability is defined as “meeting the needs of the present without compromising the ability of future generations to meet theirs” (World Commission on Environment and Development, 1987). For development to be sustainable, it must take account of social, ecological, and economic factors (United Nations Economic and Social Commission for Asia and the Pacific, 2015).

 

United Nations Economic and Social Commission for Asia and the Pacific. (2015). Integrating the Three Dimensions of Sustainable Development. A Framework and Tools. Bangkok.

World Commission on Environment and Development. (1987). Report of the World Commission on Environment and Development: Our Common Future.

. The 3Ts (taxes, tariffs and transfers), including inter-governmental transfers, are the main sources of finance. Financial transfers may include grants, funding programmes and specific agreements that can be included in contracts. 

Example: Small Drinking Water System Fund in Arizona

The Small drinking water system fund in Arizona covers funding of small public water systems in need of water quality upgrades and infrastructure repairs. The budget is provided by the Water Infrastructure Finance Authority. This funding is essential to ensuring that necessary upgrades can occur, resulting in restoration of a clean and safe water supply. The Arizona Department of Environmental Quality (ADEQ) is managing the grants for small water companies.

Source

ADEQ (2017): Struggling Small Water Systems Get Financial Boost from House Bill 2094. https://azdeq.gov/press-releases/press-release-struggling-small-water-systems-get-financial-boost-house-bill-2094, Retrieved on 30 October 2020