By Philippe Rohner
A United Nations pledge to “ensure access to water and sanitation for all” by 2030 will create investment opportunities as governments liberalise utilities and seek private sector partners to build infrastructure. But the goal is also in danger of becoming merely an aspiration rather than achievable target because, in its current form, it is too loosely defined to provide a credible framework for action by both private companies and the public sector.
The UN goal, one of 17 Sustainable Development Goals (SDG) outlined for member states to incorporate into policies, highlights that inadequate infrastructure and dysfunctional economics cause the deaths of millions of people every year from diseases associated with inadequate water supply and sanitation.
These SDGs are loosely formulated. As well as the 17 goals, there are more than 100 sub-targets covering diverse areas such as gender equality and the environment. This, surely, is a weakness. The goals for water and sanitation are not focused enough, are too far-reaching and the sub goals give “a tick-box nature” to the overall target.
From a technology point of view, the goals are not rocket science but its difficult to see a path forward. From a corporate point of view, until someone actually figures how to move ahead and fund it, people will go to the meetings and say the right things but we need a tactical plan and this is what appears to be missing from this. Nevertheless, the goal in question pledges to “achieve universal and equitable access to safe and affordable drinking water for all” as well as “access to adequate and equitable sanitation and hygiene for all.”
The challenges are considerable. The UN says 2.5 billion people – more than one third of the global population – live without basic sanitation facilities and 748 million lack access to an improved source of drinking water. To achieve universal access as outlined in its development goals, the UN recognises there are institutional and financial constraints to alleviating the problem and is calling for “behavioural change” that can mobilise investment.
In particular, it outlines private investment as a crucial pillar to meeting its goals in water supply and sanitation, alongside public money. Achieving universal coverage in safe drinking water and sanitation will require investing the equivalent of 0.1 per cent of global gross domestic product, or around USD53 billion over five years, according to the UN.
The fact that the UN recognises a pivotal role for the private sector working alongside governments and international organisation in achieving these goals gives cause for optimism. Meanwhile, the development will open up new opportunities for investors by fostering greater political will to liberalise the water sector, removing, for example, regulations that have hitherto kept out many investors, such as price caps on water tariffs.
The UN’s goal has to be positive for private participation. It’s going to be enabling technology while utilities will need to be properly financed so we are going to have bills and metering. Certain nations will take this on. We also welcome the language used in the UN sustainable development goal, particularly the adoption of the word “safe” in its pledge to ensure access to drinking water. The number of people without access to safe water is between 1.5 and 3 billion, which shows the scale of the challenge.
The important thing from an investor viewpoint is that there is the acknowledgement of a real problem rather than a hypothetical problem. Nonetheless, a primary obstacle to effective worldwide adoption of the goal is government inertia, particularly in the developing world.
Real and effective action on the part of policymakers is unlikely until the issue of access to clean water and proper sanitation becomes a public health emergency – sadly, it may need a major catastrophe in a country such as India or China to see change.
Philippe Rohner is senior investment manager of the Pictet Water fund at Pictet Asset Management.
