Title page

Contents

Acknowledgments 16

Key Findings 18

Executive Summary 25

Abbreviations 52

PART 1. STATECRAFT: The Role of Government in Water 55

Setting the Stage 56

Introduction 56

Historical Role of Governments in the Water Sector 58

Closing the Infrastructure Gap 61

SPENDING NEEDS AND THE INFRASTRUCTURE GAP IN THE WATER SECTOR 64

Making the Case for Infrastructure Investments in Water-How Families, Farms, and Firms Benefit 65

WATER SECTOR-THE NEED FOR AN INTEGRATED PERSPECTIVE 65

WATER SUPPLY, SANITATION, AND HYGIENE 66

HOW WATER SUPPLY INTERRUPTIONS IMPACT BUSINESS ACTIVITY 69

IRRIGATION AND COASTAL AND RIVER FLOOD PROTECTION 69

HYDROPOWER 70

Why Government Should Take an Active Role in Leading Investments in the Water Sector 70

THE UNIQUE FEATURES OF WATER CALL FOR GOVERNMENT INTERVENTION 70

MERIT GOODS 71

POSITIVE EXTERNALITIES IN CONSUMPTION 71

THE MONOPOLY CHARACTERISTICS OF NETWORKED SERVICE PROVISION 72

COMMON-POOL CHARACTERISTICS AND NEGATIVE EXTERNALITIES IN PRODUCTION 74

Discussion 75

Notes 77

References 77

PART 2. MONEY MATTERS: What Is Spent and What Is Needed? 89

CHAPTER 2.1. More is Better 90

The Challenge of Estimating Public Spending in the Water Sector 91

TWO BIG HURDLES 91

AN INTEGRATED APPROACH 92

Estimating the Water Sector Spending: Nuts and Bolts 92

FOUR ESTIMATES OF GLOBAL INFRASTRUCTURE SPENDING 95

Estimating Water Sector Spending: Drilling Down 101

ESTIMATING CAPITAL EXPENDITURE FOR THE WATER SECTOR AND WSS 102

Water Sector Capital Expenditure 102

WSS Capital Expenditure 103

ESTIMATING TOTAL AND RECURRENT EXPENDITURE FOR THE WATER SECTOR 104

Total and Recurrent Expenditure for the Water Sector 104

Total and Recurrent Expenditure for WSS 105

Public Spending in Irrigation 108

CAPITAL EXPENDITURE IN IRRIGATION 108

TOTAL EXPENDITURE IN IRRIGATION 109

SUMMARY TABLES 110

Water Sector Spending and Human Development Outcomes 113

WATER'S VITAL LINKS TO MANY SUSTAINABLE DEVELOPMENT GOALS 113

WATER'S PARTICULAR ROLE IN NUTRITION AND UNDERNUTRITION 114

Discussion and Closing Remarks 116

Notes 117

References 118

CHAPTER 2.2. Mind the Gap 119

The Importance of Spending Gaps in the Water Sector 120

WATER IS CLOSELY TIED TO MANY DEVELOPMENT OUTCOMES 120

SLACK PROGRESS TOWARD THE SDG WATER-RELATED TARGETS 120

SDGs 6.1 and 6.2 and Water Supply and Sanitation (WSS) 120

SDG 2 and Irrigation 122

Estimating the Spending Gaps in WSS and Irrigation 123

Estimated Spending Requirements 124

WATER AND SANITATION 124

IRRIGATION 128

Estimated Current Spending 130

WATER AND SANITATION 130

IRRIGATION 134

Estimated Annual Spending Gaps for the WSS and Irrigation Subsectors 135

WATER AND SANITATION 135

IRRIGATION 145

Summary Tables 147

WATER SUPPLY AND SANITATION (WSS) UNIVERSAL BASIC WASH ACCESS 147

SDG TARGETS 6.1 AND 6.2 148

IRRIGATION 149

Discussion and Closing Remarks 151

WHAT THE ESTIMATES DO NOT TAKE INTO ACCOUNT 151

Notes 156

References 157

PART 3. LIQUID LEDGER: Dissecting the Anatomy of Water Spending 162

CHAPTER 3.1. Money, Whence it Came, Where it Went? 163

Introduction: Sources of Spending in the Water Sector 163

Spending from All Sources 166

PUBLIC SECTOR SPENDING 167

OFFICIAL DEVELOPMENT ASSISTANCE 167

PRIVATE SECTOR SPENDING 167

Trends and Characteristics of Spending by Public Entities 168

OVERALL PUBLIC SPENDING IN THE SECTOR 168

PUBLIC SPENDING BY SUBSECTOR 169

TYPES OF SPENDING: CAPITAL AND RECURRENT 170

COMPOSITION OF RECURRENT SPENDING 172

SOURCES OF FUNDING: FOREIGN AND DOMESTIC 173

Contribution by ODA in the Water Sector 174

Infrastructure Investments by Public Entities, SOEs, and the Private Sector 179

SOE INVESTMENTS 179

PRIVATE SECTOR INVESTMENTS 182

The Correlates of Water Sector Public Spending 185

PER CAPITA GDP GROWTH 185

Discussion and Closing Reflections 189

THE MIXED MANDATE OF SOES 189

PPPS-A YET UNFULFILLED PROMISE 189

THE WATER SECTOR'S UNIQUE RISK-RETURN PROFILE 190

THE POTENTIAL ROLE OF PPPS IN TECHNOLOGY ADVANCEMENT AND THE CIRCULAR ECONOMY 190

POTENTIAL CHALLENGES SOES AND PPPS FACE AS WATER SECTOR FUNDING SOURCES 191

LOW CAPITAL AND MAINTENANCE SPENDING AMID ADVERSE CLIMATE CHANGE 194

HOW BROAD-BASED NATIONAL SUPPORT CAN OVERCOME THE PARALYSIS OF PATH DEPENDENCY 195

METHODOLOGICAL CAVEATS AND LIMITATIONS 195

Notes 196

References 197

CHAPTER 3.2. Underfunded or Underused? 202

Introduction: Why Does Budget Execution Matter? 203

Comparing Budget Execution in the Water Sector with Other Sectors 206

Trends in Budget Execution Rates among Countries and Across Time 210

COVID-19's Impact on Water Sector Public Spending 216

Correlates of Budget Execution 219

GDP PER CAPITA DOES NOT NECESSARILY MATTER 219

THE ROLE OF GOVERNANCE 222

DETERMINANTS OF BUDGET EXECUTION 223

Conclusion and Discussion 224

Notes 229

References 229

CHAPTER 3.3. Leaky Faucets, Empty Wallets 232

Introduction 233

Measuring Public Spending Productivity and Efficiency in WSS 236

INPUTS AND OUTPUTS OF WSS 236

PRODUCTIVITY AND EFFICIENCY 237

COUNTRY-LEVEL MALMQUIST INDEX 240

WHO PERFORMED RELATIVELY BETTER? 245

Measuring the Efficiency of Water Utilities 246

COST AND TECHNICAL EFFICIENCY FURTHER INSIGHTS 248

THE HIDDEN COST OF EFFICIENCY LOSSES 254

CORRELATES OF WATER UTILITY EFFICIENCY: DO SYSTEM-LEVEL AND COUNTRY-LEVEL FACTORS MATTER? 256

Two Model Specifications 257

Possible Interpretations 259

The Role of Country-Level Governance Indicators 259

Concluding Remarks 260

MAIN FINDINGS-TWO PERSPECTIVES 260

METHODOLOGICAL LIMITATIONS 260

Notes 261

References 262

CHAPTER 3.4. The Great Divide 263

Inequities in Access to Services 263

Analyzing the Role of Subsidies 266

Inequities in Access to Piped Water in Selected Countries 267

Distribution of Water Consumption Subsides in Selected Countries 268

Targeting Performance of Subsidies 275

Errors of Exclusion and Inclusion 276

Benefit Incidence Analysis of Piped Water Subsidies in Brazil-A Case Study 278

ACCESS TO PIPED WATER IN BRAZIL-PERSISTENT INEQUITIES IN ACCESS 278

COMPARING THE SHARE OF BENEFICIARIES IN BRAZIL'S EXPENDITURE DECILES 279

SHARE OF WATER SUBSIDIES ACROSS EXPENDITURE DECILES 280

Discussion: Some Thoughts on the Use of Benefit Incidence Analysis in Infrastructure Sectors? 281

Notes 283

References 283

PART 4. PROGRESS NOT PERFECTION: Recommendations for Enhancing the Flow of Funds into Water 285

Tying it Together and the Way Forward 286

Overview 286

Bridging the Financing Gap 288

THE FUNDING-FINANCING DISTINCTION 288

THE LIMITS OF TARIFF REFORM AND EFFICIENCY IMPROVEMENTS 289

FINANCING CHALLENGE AND THE EMERGING PRIVATE SECTOR 293

Making Public Spending Work Better in the Water Sector 295

IMPROVING UTILIZATION AND EFFICIENCY OF PUBLIC SPENDING 295

Improving Public Investment Management 295

Reforming Public Financial Management 296

Developing a Realistic Metric of the Performance of Public Entities and SOEs 297

CATALYZING THE FLOW OF LONG-TERM FINANCING INTO THE WATER SECTOR 297

Developing A Credible Regulatory System to Facilitate Risk Pooling and Long-Term Financing 297

REFORMING THE WATER SECTOR FOR MORE AND BETTER PUBLIC SPENDING 298

Cost Recovery and Demand Management 298

Improving State Capacity and Human Resources 299

Improving Data Access, Transparency, and Communication 299

Closing Remarks 299

Notes 301

References 302

APPENDIX A. Estimating Infrastructure Capital Spending 306

APPENDIX B. Estimating Water and WSS Capital Spending and Total Spending 308

APPENDIX C. Correlates of the Level of Public Spending 311

APPENDIX D. Correlates of Budget Execution 319

APPENDIX E. Estimating the Efficiency of Public Expenditure Using the Malmquist Productivity Index 329

APPENDIX F. Estimating Efficiency Using a Stochastic Production Function 337

APPENDIX G. Country-Level Estimations of Infrastructure Capital Expenditure, Water and WSS Total Expenditure and Capital Expenditure 346

TABLE 2.1.1. Summary Estimates for Infrastructure Capital Spending, by Region, Income Group, and Methodology (share of GDP) 100

TABLE 2.1.2. Estimated Total, Capital and Recurrent Expenditures in the Water Sector and WSS in 2017 prices (Billion, $) 110

TABLE 2.1.3. Estimated Total, Capital and Recurrent Expenditures in the Water Sector and WSS in 2017 Prices (Share of GDP) 111

TABLE 2.1.4. Estimated Total, Capital and Recurrent Expenditures in the Water Sector and WSS in 2017 Prices (Share of Total Public Expenditures) 112

TABLE 2.1.5. Estimated Total and Capital Expenditures in Irrigation in 2017 prices (share of GDP) 113

TABLE 2.2.1. Comparing the Two WSS Targets Used in the Analysis 125

TABLE 2.2.2. Comparison of Three Irrigation Spending Requirement Scenarios 128

TABLE 2.2.3. Three Estimates of Current Spending in WSS 130

TABLE 2.2.4. Comparison of Estimated Annual Total Spending in WSS from Part 2 Chapter 1 and Part 2 Chapter 2 133

TABLE 2.2.5. Three Estimates of Annual Spending Gaps in WSS 135

TABLE 2.2.6. Annual Spending Gaps to Universal Basic WASH and to SDG Targets 6.1 and 6.2, in 2017 Prices and as a Share of GDP 141

TABLE 2.2.7. Estimated Average Annual Spending Gaps in Irrigation, in 2017 Constant Prices and as a Share of GDP 145

TABLE 2.2.8. Estimated Annual Spending Requirements, Annual Total Spending, and Annual Spending Gaps to Achieving Universal Basic WASH Access... 147

TABLE 2.2.9. Estimated Annual Spending Requirements, Annual Total Spending, and Annual Spending Gaps to Achieving SDG Targets 6.1 and 6.2... 148

TABLE 2.2.10. Estimated Annual Spending Requirements, Annual Total Spending, and Annual Spending Gaps in Irrigation (2017 constant prices) 149

TABLE 3.2.1. Determinants of Budget Execution Rate, Pooled OLS 225

TABLE 3.3.1. Malmquist Productivity Index of Producing Basic-Level Service, Presented as the Geometric Mean of Regions and All Available Countries 237

TABLE 3.3.2. Malmquist Index of Producing Higher-Level Services, Presented by the Geometric Mean of Regions and All Available Countries 239

TABLE 3.3.3. Stochastic Frontier Regressions for Cost and Technical Efficiency 248

TABLE 3.3.4. Correlates of Efficiency Estimated by Random-Effects Tobit Models 257

TABLE 3.4.1. Piped Water Coverage, by Country, 2017 267

FIGURE ES.1. Estimated Annual Expenditure in Water Sector and WSS (2017 constant prices) 31

FIGURE ES.2. Estimated Annual Spending in Water Sector and WSS as a Share of GDP (lower bound), by Region 32

FIGURE ES.3. Average Annual Spending Gaps to Achieve SDG Targets 6.1 and 6.2, All Countries (2017 constant prices) 33

FIGURE ES.4. Average Annual Spending Gaps to Achieve SDG Targets 6.1 and 6.2, by Region (2017 prices) 34

FIGURE ES.5. Share of Water Sector Spending, by Source (2017 prices) 35

FIGURE ES.6. Distribution of ODA by Sector and by Region 37

FIGURE ES.7. Relative Shares of SOEs, Public Entities, and PPPs in WSS Infrastructure Development in 2017, by Region 37

FIGURE ES.8. Average Sectoral Budget Execution Rates and Degree of Variation 39

FIGURE ES.9. Correlation between Water Sector Budget Execution Rates and Governance, Regulation, State Legitimacy, and Institutions 40

FIGURE ES.10. Median Cost Efficiency and Technical Efficiency, All Service Providers, 2004-17 42

FIGURE ES.11. Monetary Value of Average Efficiency Loss as Share of Average Operating Cost, by Utility Size (2015 constant prices) 42

FIGURE ES.12. Correlation between WSS Spending per Capita and the Relative Access of Rural versus Urban Populations to WSS Services 44

FIGURE 1.1. General Government Total Expenditure, by Income Group 57

FIGURE 1.2. The Water Sector, SDGs, and Development Outcomes 66

FIGURE 2.1.1. Flow Chart of Econometric Approach to Estimating Capital and Total Expenditure in the Water Sector 93

FIGURE 2.1.2. Method 1: $588.8 Billion was Spent Annually on Infrastructure Capital Alone; LICs and MICs, Including China, Spent at Least $563.7 Billion on... 96

FIGURE 2.1.3. Method 2: $2.1 Trillion was Spent Annually on Infrastructure Capital Alone; LICs and MICs, Including China, Spent at Least $2.07 Trillion on... 97

FIGURE 2.1.4. Method 3: $2.2 Trillion Was Spent Annually on Infrastructure Capital Expenditure Alone; LICs and MICs, Including China, Spent at Least $2.17 Trillion... 98

FIGURE 2.1.5. Method 1 Augmented with SOE: A Minimum of $876.3 Billion Was Spent Annually on Infrastructure Capital Expenditure, Including SOE Investments;... 99

FIGURE 2.1.6. Estimated Annual Water Sector and WSS Capital Expenditure, by Country Groupings (2017 constant prices) 103

FIGURE 2.1.7. Estimated Water Sector and WSS Capital Expenditure (lower bound), by Region (2017 constant prices) 104

FIGURE 2.1.8. Estimated Water Sector and WSS Total Expenditure for All Countries and LICs and MICs (2017 constant prices) 105

FIGURE 2.1.9. Total Expenditure in Water Sector and WSS as Share of GDP 106

FIGURE 2.1.10. Estimated Water Sector and WSS Recurrent Expenditure for All Countries and LICs and MICs (2017 constant prices) 106

FIGURE 2.1.11. Estimated Total Water Sector and WSS Expenditure (lower bound), by Region (2017 constant prices) 107

FIGURE 2.1.12. Correlations of Water Sector Spending per Capita with Human Development Outcomes, by Income Group 115

FIGURE 2.2.1. Estimated Average Annual WSS Spending Requirements, by Target and Region, in 2017 Constant Prices and as a Share of GDP, 2017-30 126

FIGURE 2.2.2. Estimated Average Annual Spending Requirements for WSS in FCV and Low-Income Countries, 2017-30, by Target 127

FIGURE 2.2.3. Estimated Average Annual Irrigation Spending Requirements, 2015-30, by Scenario and Region 129

FIGURE 2.2.4. Estimated Annual Total Spending in WSS, by Region (2017 constant prices) 131

FIGURE 2.2.5. Estimated Annual Total Spending on WSS in FCV and Low-Income Countries (2017 constant prices) 132

FIGURE 2.2.6. Estimated Annual Total Spending in WSS as share of GDP, by Region and Country Grouping 133

FIGURE 2.2.7. Estimated Annual Total Spending on Irrigation, in 2017 constant prices and as a share of GDP, by Region 135

FIGURE 2.2.8. Estimated Annual Spending Gaps to Meet SDG Targets 6.1 and 6.2 (2017 constant prices) 137

FIGURE 2.2.9. Estimated Annual Spending Gaps to Reach SDG Targets 6.1 and 6.2, by Region (2017 constant prices) 138

FIGURE 2.2.10. Estimated Annual Spending Gaps to Achieving SDGs 6.1 and 6.2 in FCV and Low-Income Countries, in 2017 constant prices 139

FIGURE 2.2.11. Estimated Annual Spending Gaps to Achieving SDG 6.1 and 6.2 as a Share of GDP, by Region and Country Grouping 140

FIGURE 3.1.1. Share of Water-Sector Spending, by Source 166

FIGURE 3.1.2. Spending in the Water and Other Sectors as a Share of Total Government Spending, Pooled Average, 2009-20 168

FIGURE 3.1.3. Weighted Average of Water Sector Spending as a Share of Total Government Spending, by Country Income Level, 2009-20 169

FIGURE 3.1.4. Relative Shares of Public Spending in Water Sector for All Available Countries, 2009-20, by Subsector 169

FIGURE 3.1.5. Relative Shares of Capital and Recurrent Spending in the Water Sector, 2009-20 171

FIGURE 3.1.6. Weighted Average of Capital and Recurrent Spending, by Subsector, 2009-20 171

FIGURE 3.1.7. Total Recurrent Spending, Recurrent Wage Spending, and Capital and Recurrent Maintenance Spending as a Share of Total Public Spending in the WSS,... 172

FIGURE 3.1.8. Relative Share of Domestic and Foreign Funding Sources, in the Water Sector, Weighted Average, 2009-20 173

FIGURE 3.1.9. Distribution of ODA by Sector and by Water Subsector, 2011-19 176

FIGURE 3.1.10. ODA Disbursements to the Water Sector, by Region, 2011-19 177

FIGURE 3.1.11. ODA to Water Subsectors, by Region, 2011-19 178

FIGURE 3.1.12. Relative Contributions of ODA to Water Sector, by Donor, 2011-19 179

FIGURE 3.1.13. Breakdown of Infrastructure Investments in Four Sectors, 2017 180

FIGURE 3.1.14. Total and WSS Infrastructure Investment and Breakdown of Investment by SOEs, Public Entities, and Private Sector, in 2017 181

FIGURE 3.1.15. Average Value of Total Infrastructure and WSS Infrastructure Projects, by Source, 2017 183

FIGURE 3.1.16. PPI Infrastructure Investments by Sector, 2009-19 184

FIGURE 3.1.17. PPI Infrastructure Investments by Total Investment Value and Total Number of Projects, 2009-19 184

FIGURE 3.1.18. Correlations between GDP per Capita and Spending per Capita, per Country Income Group (in 2017 prices) 186

FIGURE 3.1.19. Estimated Coefficients from the Panel Regressions Showing Correlation between Change in Public Expenditure and Change in GDP Income... 188

FIGURE 3.2.1. Average Budget Execution Rates and Degree of Variation, by Sector 207

FIGURE 3.2.2. Distributions of Execution Rates in the Water, Infrastructure, and Human Development Sectors 207

FIGURE 3.2.3. Water Sector versus Other Sectors: Comparing Execution Rates 209

FIGURE 3.2.4. Average Water Sector Execution Rates, by Country, 2009-20 211

FIGURE 3.2.5. Average Water Sector Execution Rates, by Country Fragility Status Group 212

FIGURE 3.2.6. Average Water Sector Execution Rates, by Country Income Group 212

FIGURE 3.2.7. Annual Average Execution Rates across Countries 213

FIGURE 3.2.8. Country Rankings by Decadal Average Execution Rates 214

FIGURE 3.2.9. Changes in Public Expenditure and Capital Expenditure, by Country Income Group, 2019-20 216

FIGURE 3.2.10. Spending in WSS Subsector as a Share of GDP, 2019-20 217

FIGURE 3.2.11. Changes in Budget Execution Rates, by Sector, 2019-20 218

FIGURE 3.2.12. Changes in Budget Execution Rates in the WSS Subsector, 2019-20 218

FIGURE 3.2.13. Correlation between Country Income Level and Execution Rates in the Water, Infrastructure, and HD Sectors and WSS Subsector 220

FIGURE 3.2.14. Correlation between Water Sector Execution Rate and Governance, Regulation, State Legitimacy, and Institutions 223

FIGURE 3.2.15. Government Effectiveness and Execution Rates in Water Sector and WSS Subsector 226

FIGURE 3.3.1/FIGURE 3.3.3. Country-Level Malmquist Index of Access to Basic-Level WSS Services 241

FIGURE 3.3.2/FIGURE 3.3.4. Country-Level Malmquist Index of Access to Higher-Level WSS Services 243

FIGURE 3.3.3/FIGURE 3.3.5. Deviations from Total Factor Productivity, by Region 245

FIGURE 3.3.4/FIGURE 3.3.6. Cost Efficiency and Technical Efficiency in a One-Input, One-Output Case 246

FIGURE 3.3.5/FIGURE 3.3.7. The Distribution of Cost Efficiency and Technical Efficiency of Utilities, 2004-17 249

FIGURE 3.3.6/FIGURE 3.3.8. Median and Distribution of Cost and Technical Efficiencies, by Size of Water Utility 250

FIGURE 3.3.7/FIGURE 3.3.9. Median Cost Efficiency and Technical Efficiency, by Deciles of Fixed Assets 252

FIGURE 3.3.8/FIGURE 3.3.10. The Distribution of Cost and Technical Efficiencies and Median Efficiency, by Type of Service Provider 253

FIGURE 3.3.9/FIGURE 3.3.11. Median Cost Efficiency and Technical Efficiency, by Type of Service Provider 253

FIGURE 3.3.10/FIGURE 3.3.12. Monetary Value of Average Efficiency Loss as a Share of Average Operating Cost, by Utility Size (2015 constant prices) 254

FIGURE 3.3.11/FIGURE 3.3.13. Monetary Value of Average Efficiency Loss as a Share of Average Operating Cost, by Region (2015 constant prices) 255

FIGURE 3.3.12/FIGURE 3.3.14. Monetary Value of Average Efficiency Loss as a Share of Average Operating Cost, by Service Provider Type (2015 constant prices) 256

FIGURE 3.4.1. Correlation between Spending per Capita in the WSS Subsector and Access, by Quintile 264

FIGURE 3.4.2. Distribution of Water Subsidy Beneficiaries, by Income Decile 269

FIGURE 3.4.3. Distribution of Subsidies Received versus Household Expenditure on Water, by Income Group 272

FIGURE 3.4.4. Benefit Incidence (Ω), by Country 276

FIGURE 3.4.5. Graphic of Errors of Inclusion and Exclusion 277

FIGURE 3.4.6. Errors of Exclusion and Inclusion for Piped Water Consumption Subsidies in 11 Countries 278

FIGURE 3.4.7. Share of Water Subsidy Beneficiaries, by Decile; and Share of Beneficiaries in Each Decile Out of All Beneficiaries 279

FIGURE 3.4.8. Share of Water Expenditure per Decile out of Water Expenditure in All Deciles; and Share of Water Subsidy per Decile out of Total Water Subsidy... 280

FIGURE 4.1. Productivity and Efficiency: Budget Execution Rates in the WSS Subsector 288

Boxes

BOX 1.1. Ancient Rome's Legacy to the Public Financing of Infrastructure 59

BOX 1.2. A Tale of Two Cities-The "Last Mile" Sanitation Connection Problem 60

BOX 1.3. Public Investment Multiplier and the Employment Impacts of Public Investment in Sanitation 63

BOX 1.4. Lessons from the History of Western Urbanization 67

BOX 1.5. Reducing COVID Risk through Handwashing: Case Study from Zimbabwe Using the Agent-Based Modeling (ABM) Approach 68

BOX 1.6. The Private Sector, Competition, Subversion, and Water Services: A (Mis)match Made in Heaven? 73

BOX 2.1.1. Quick Summary of the Four Datasets 94

BOX 2.1.2. Statistical Approach to Estimating Water Public Expenditure 101

BOX 2.2.1. Achieving Universal Access to Safely Managed WASH Services by 2030: A Brief Review on Spending Performance and Access Levels 143

BOX 2.2.2. Achieving SDG 6.1 and 6.2: The Many Costs of Climate-Induced Water Stress 155

BOX 3.1.1. Overseas Development Assistance: Trends and Patterns 174

BOX 3.1.2. Soft Budget Constraints: How Underperforming SOEs Financially Burden Governments 192

BOX 3.1.3. Do Water Sector Public-Private Partnerships Work? The Evidence for and against Their Performance 193

BOX 3.2.1. Reducing the WSS Spending Gaps by Improving Budget Execution 203

BOX 3.3.1. Measuring Productivity and Efficiency 234

BOX 3.4.1. The Urban-Rural Divide: How WSS Spending per Capita Affects Access to Safely Managed Water Supply, Sanitation and Hygiene (WASH) Services 265

BOX 4.1. Achieving Cost Recovery through Efficiency Improvements and a Tariff Increase: A Simulation 291

Maps

MAP 2.1.1. Total Spending in Water Sector as a Share of GDP and as a Share of Total Public Expenditure 108

MAP 2.2.1. Global Map of Relative Country Spending Gaps to Universal Access to Basic WASH and to Full SDG Targets 6.1 and 6.2 by 2030 140

Box Tables

TABLE B3.2.1.1. Reducing WSS Spending Gaps by Improving Budget Execution Rates 204

TABLE B4.1.1. Closing the Tariff Gap by Reducing Inefficiencies and Raising Tariffs ($/m³) 292

Box Figures

FIGURE B1.3.1. Job Creation in Various Sectors per US$1 Million of Additional Investment, by Country Economic Grouping 63

FIGURE B2.1.1.1. Estimation Methodologies: Number of Countries, by Region 95

FIGURE B3.1.1.1. Weighted Average of Total Net ODA, by Region, 2011-19 175

FIGURE B3.3.1.1. Productivity, Technical Efficiency, and Economies of Scale 234

FIGURE B3.4.1.1. Correlations between WSS Spending per Capita and Access by Service Type and by Level, Rural versus Urban Areas 265

Box Maps

MAP B1.5.1. Risk of Severe COVID-19 Infection among Symptomatic Cases in Zimbabwe under Three Hand-Washing Risk Scenarios, by District 68

MAP B2.2.1.1. Global Map of Performance in 57 Select Countries Measured by How Much They Spent to Achieve SDG 6.1 and 6.2 versus Actual Degree of Access to... 143

MAP B2.2.1.2. Global Map of Performance in 59 Select Countries Measured by How Much They Spent to Achieve SDG 6.1 versus Actual Degree of Access to Safely... 144

MAP B2.2.2.1. Country-Level Cross Map between Spending Gaps to Achieve SDGs 6.1 and 6.2, and Water Stress Conditions 155

TABLE B.1. Comparison of Input Variables 309

TABLE B.2. Ordinary Least Squared Regression Results 309

TABLE C.1. Summary of Statistics for Dependent Variables and Independent Variables 313

TABLE C.2. Determinants of Expenditure, OLS Regression Results of Baseline Model 314

TABLE C.3. Determinants of Expenditure, OLS Regression Results with Autocorrelation Correction, with and without Additional Controls (Elasticity Model) 315

TABLE C.4. Determinants of Public Expenditure, OLS Regressions Results of the First Difference, with and without Additional Controls (Expenditure Growth Model) 317

TABLE D.1. Correlation Coefficients of Execution Rates in Water and Political and Goverance Variables 323

TABLE D.2. Determinants of Execution Rates in Water Sector, OLS Regression Results with Two-Way Fixed Effects, Country-Level Fixed Effects, and Random Effects 324

TABLE D.3. Determinants of Execution, Pooled-OLS, with and Without Economic and Political Variables 327

TABLE E.1. Regional Deviations from Neutral TFP and Overall Mean 334

TABLE F.1. Average Efficiency Loss (billion US$) and as a Share of Average Operating Cost, by Size, Region, and Service Provider Type 340

TABLE F.2. Stochastic Frontier Regressions for Cost and Technical Efficiency, with and without Missing Value Imputations 344

TABLE G.1. Estimating Infrastructure Capital Spending Comparison of the List of Countries 346

TABLE G.2. Infrastructure Capital Spending, by Methodology 349

TABLE G.3. Predictions of Total Expenditure, Capital Expenditure and Recurrent Expenditure in the Water Sector and the WSS Subsector 355

FIGURE D.1. Country-Level Execution Rates in Water, 2009-20 320

FIGURE E.1. The MPI Using a Constant Return of Scale DEA 330

FIGURE E.2. Country-Level Deviations from Benchmark and Overall Mean, Basic-Level Service 332

FIGURE E.3. Country-Level Deviations from Benchmark and Overall Mean, Basic-Level Service 333

FIGURE E.4. Year-to-Year Malmquist Index-TFP and its Components, Basic-Level Service 335

FIGURE E.5. Year-to-Year Malmquist Index-TFP and its Components, High-Level Service 335

FIGURE F.1. Cost and Technical Efficiency in a One Input and One Output Case 338