The economic value of water must be recognised as an integral part of any municipal water and wastewater project. Therefore examine:
| KEY ISSUES |
POSSIBLE RESPONSES |
- What are the current and potential economic returns related to the project?
- Have all the project benefits been fully assessed?
- Have all the project costs been estimated?
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- Ensure that all assumptions made about markets, patterns of demand, costs and benefits are fully explained to all stakeholders.
- Determine in detail the economic costs and benefits by carrying out a full economic analysis.
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Charging for services is needed to generate funds for maintenance, management, future investment and service spread. Therefore examine:
| KEY ISSUES |
POSSIBLE RESPONSES |
- What mechanisms are in place to ensure financial sustainability after project investment support ends?
- Does the implementing agency have experience in absorbing the amount of funds needed to implement the project?
- What regulatory mechanism is proposed?
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- Set the project mechanisms at a level that appears sustainable and consistent with the agency’s past performance in handling funds and for projected needs.
- Ensure that the regulatory mechanism has powers to monitor charges levied by private sector operators.
- Determine ability to pay for various groups, including industry and commercial operators, and establish a stepped tariff structure; introduce ‘polluter pays’ principle.
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Demand management, through both market and non-market measures, should be incorporated into projects.
| KEY ISSUES |
POSSIBLE RESPONSES |
- Has demand for MS changed since the identification phase?
- How do the project’s costs compare with those of similar projects?
- Are there any incentives in place to encourage more efficient water use?
- Are industrial and commercial users being charged adequately for water services?
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- Critically examine methodologies used for assessing demand variations.
- If costs are significantly different from similar projects, clarify the reasons and, if necessary, investigate alternative solutions.
- Include financial and other incentives to encourage efficient water resources use and management by multiple users in the project design.
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Projects must assess financial risks and demonstrate accountability. Therefore examine:
| KEY ISSUES |
POSSIBLE RESPONSES |
- What system will be established to audit financial information?
- What is the past experience of similar projects with regard to accountability?
- What are the risks involved in undertaking the project?
- What confidence can be placed on the demand estimates for municipal water supply and wastewater services?
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- Assist in the establishment of an appropriate auditing system and provide capacity building.
- Incorporate lessons from other projects in the region.
- Carry out a financial analysis to ensure that the enterprise is financially sound.
- Determine technical and financial risks, quantify the consequence of each and outline appropriate mitigation measures and costs.
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