Focus on the bottom of the iceberg! Notes on three water and sanitation finance statements heard at the World Bank – IMF Spring Meetings 2025

by Barbara Schreiner, Water Integrity Network Executive Director

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In the water and sanitation sectors, there is a great deal of discussion around three proposals on financing: leveraging private finance, innovative funding sources, and better valuing water. In my view, this is like focusing on the tip of the iceberg instead of looking at the likelihood of your ship foundering on the hidden mass lurking below the surface.

By concentrating discussions on reforms required to ‘crowd in’ private finance, these narratives divert attention and resources away from addressing the deeper, perhaps more intractable challenges of weak public financial management, inadequate regulation, and systemic corruption. Attracting new money without fixing these foundational problems, is like building a castle on sand.

Integrity, accountability, and public capacity must be preconditions for adequate financing for the water and sanitation sectors, not afterthoughts.

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“We need to scale up private investment”

At the World Bank – IMF Spring Meetings of 2025, scaling up private investment and creating jobs were the big takeaways. And generally, the notion of mobilising private finance for water and sanitation often dominates discussions on financing the sectors.

We know that the water sector faces a huge funding gap. Private finance can make an important contribution but it is not a silver bullet. It now stands at about 2.7% of total sector funding and is unlikely to increase sufficiently to quickly cover a substantial portion of the 300% increase in total funding that is needed. And it is not without risk: for example, risks related to current, or complex financial structures, opaque contracts and missing safeguards. There also remains a huge capability gap between financiers and regulators – the UK being a case in point.

Scaling private investment also costs money and demands returns. Are we being realistic about what is needed to address financial stability, risk management, and regulation, in the context of private finance? Are we also sufficiently and honestly emphasising the trade-offs being made? When international financiers seek to de-risk through guarantees, it can lead to offloading risks to the public sector — socialising losses while privatising gains.

When we focus primarily on private investment, we overlook deeper issues and miss out on the important gains we need to make first from better governance, better public finance management, and effective regulation. Otherwise, we are trying to fill a leaking bucket.

More recent sector specific discussions on gains from efficiency and more detailed financing strategies are important first steps that could be expanded with a focus on integrity. Unfortunately, they still seem to take a back seat at large events like the Spring meetings. This needs to change.

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“We need to tap into new financing”

This statement is one we hear most often in relation to climate or private finance. New funding is needed but it’s unlikely to pop up with no strings attached.

Climate adaptation finance – which is particularly relevant in the water and sanitation sectors – is still a minute portion of total climate finance. We do need this to increase, substantially. Adaptation in the water and sanitation sectors is going to demand significant investment, whether through building new dams, harnessing untapped groundwater, or climate proofing water and sanitation infrastructure.

But even climate finance is not risk free. New channels of funding, difficulties in tracking funding flows, large amounts of money to be spent quickly, all pose integrity risks. We’ve seen climate finance channelled through new users or disbursed under emergency rules with fewer safeguards leading to increased possibility of maladaptation. Then there’s the issue of governments taking on hidden liabilities that divert public funds away from equity-focused water services.

Injecting new finance without fixing the fundamentals will only amplify existing dysfunctions and integrity challenges. For example, scaling private finance without rights-based safeguards can deepen inequality. In contexts of limited regulatory capacity, we’ve seen tariff hikes, cut-offs, or exclusion of low-income users. PPPs come with their own risks as well.

The funding gap in water and sanitation isn't merely about insufficient capital. It's about how effectively we use existing resources and also attractiveness for investment. Integrity is essential to both.

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“We need to value water better”

One other statement we hear often is that we need to value water better in order to sort out many of the funding challenges. It strikes me that a woman walking five kilometres to fetch water in rural South Africa understands water's value profoundly. Families in Delhi slums paying three times what their wealthier neighbours pay to informal vendors know water's value in ways that those of us with reliable tap water never will.

The “value of water” is used as a broad brushstroke in the context of tariffs, and risks, and externalities. We should be more specific.

What is often meant is that we need to price water correctly to attract private sector investment. "Proper valuation" often translates to pricing strategies that minimise water as a human right and common good.

Valuing water means respecting its multiple dimensions—social, ecological, and cultural—not just its economic utility. True valuation recognises water as a human right and as essential for meeting other rights to food, dignity, education, and more.

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Conclusion – first things first: more honesty and transparency

When it comes to water and sanitation financing, we need deep integrity, clear risk-sharing frameworks and full transparency on financial arrangements. The tip of the iceberg is not enough.

We need more focus below the surface: better use of the resources we have, concrete plans for anti-corruption and integrity promotion, safeguards to limit abuse, strong regulatory oversight as well as input and oversight form civil society. The last points are a growing concern and must be prioritised.

Restrictions on civic space and decreases in funding will have grave consequences. And, from what I am seeing, there is also insufficient support to regulators – at the national or global level. Regulators are a key pin in the effective use of sector finance and they are calling for recognition, training and support.