Increasing economic value of multi-purpose water infrastructure

1. Matthew Griffiths
OECD/GREEN Action Task Force Secretariat
INCREASING ECONOMIC VALUE OF
MULTI-PURPOSE WATER
INFRASTRUCTURE

2. • National Policy Dialogue in Kazakhstan
• OECD country programme for Kazakhstan
• Large capital investment portfolio under
consideration
• Need to maximise economic benefits of
investment decisions
• Concerns over operation and contribution
of dams and reservoirs to the economy
– Technical and financial aspects
Background

3. • Recently emerged
• Water infrastructure used for more than
one purpose!
• Globally over 8,000 MPWI by design
• Many more by practice……….
The term

4. • Dams used for hydropower
• Reservoirs connected to irrigation canals
• Reservoirs supplying water for drinking
purposes
• Transport and navigation
• Flood control
• Strategic storage
• Commercial fishing
• Recreation
Examples of use

5. • Seasonal usage
• Public v private good
• Evolution of multiple use
Conflicts

6. • Long asset life
• High capital cost
• Emergence of unforeseen risks and
externalities
• 70% large dams and reservoirs single
purpose by design
• Evolution of use
• Financial difficulties
The issue

7. OECD work

8. • Single purpose infrastructure
– Perception of fewer risks
– Fewer stakeholders, easier contracts
• Multi-purpose projects more attractive to
international financial assistance
– Regional development goals
• Private financing typically directed to high
reward/low risk projects
– Hydropower
Financing

9. • Strategic planning decisions
– Need
– Legal, regulatory and operational principles
• Cost-benefit analysis
– including social and environmental impacts
• Sharing risks, costs and benefits
• Day-to-day operations
– Balance trade-offs
Good practice

10. • Stakeholder engagement
– Water allocation conflict prevention
– Policy dialogue (national and basin level)
• Participatory tools
– Water supply agreements
• Regulation
– Economic
– Technical
– Environmental
Supporting tools

11. • Models are highly country specific
– Technical
– Affordability
• Brownfield v greenfield
• Clarity on objective
– Operator profit v welfare of society
• Financing models
• Equity position
• Most MPWI are public or PPP
• Split ownership
Sustainable business models

12. • Large scale infrastructure
• High cost, long asset life
• Many uses and users
• Evolution of purpose
• Sub-optimal
• Build confidence
• Number of tools and policies exist
• Plan carefully
• Risk identification and mitigation
• Support with flexible business models
Summary

13. Thank you