IHE Delft is now offering courses on water financing. The courses are supported and guided by representatives from pension funds, insurers, equity funds, financial intermediaries, multilateral and bilateral financiers, regulators and other financial organizations. The courses incorporate the experience of development agencies, OECD, financial institutions, NGOs and others.
To achieve SDG 6 on water security and climate adaptation goals, furnishing the capital for the expanding water agenda is a significant challenge. The need for finance in emerging markets and developing economies to meet the SDGs is 2-4 times larger than existing flows. Of current climate financing, less than a quarter is allocated to adaptation and of this less than 5% to developing economies. Commercial finance will need to fill the gap but is constrained by the high risk profiles and small sizes of many water investments. Blended finance, local capital markets and better use of intermediary financial institutions can facilitate to expand these capital flows. Although access to finance may be difficult, the knowledge and skills of water agencies to prepare ‘bankable’ proposals to attract financial flows from the private sector is often proving even more constraining.
The course for Water Professionals and Managers (tentatively 10 days) includes:
1. Understanding how private capital markets operate and can play a key role in expanding water services and securing water. Regulatory and political contexts;
2. Having an operational grip on improving the creditworthiness of a water agency through better governance, risk mitigation, secured liquidity and earnings, accounting standards;
3. Learning how to ensure that specific investments become ’bankable’ through better design, safeguards and governance, stronger relationships with stakeholders, and secured income. Project valuation methods (i.a. Rate of Return, Net Present Value);
4. Gaining an operational insight into the financing instruments and vehicles such as long and short tenor debt, equity, bonds, blended finance and guarantees, and PPP formats;
5. Having an operational insight into agreement modalities with a consortium of financing partners and the arrangements of legal recourse and contracts.
The master class for Financiers and Regulators (tentatively 3 days) includes:
1. Appreciating the need for smart and sustainable financing for water and business investments and for achieving objectives relevant for SDGs, climate adaptation and corporate Environment-Social-Governance (ESG) objectives;
2. Understanding the demand structure and management administration of the water sector and its sub-sectors: different asset classes, water users, cost recovery modes and income stream securitization;
3. Appreciating sectoral risk profiles and how they can be mitigated: guarantee systems and blended finance;
4. Understanding how to enhance the creditworthiness of a water agency and the requirements for the ‘bankability’ of investment (projects);
5. Having an operation insight into different arrangements to channel finance, and how an agreement can be achieved combining different financing instruments. PPP and SPV arrangements; contract drafting and legal recourse and collateral options