OECD Report - Financing Water and Sanitation in Partner Countries. Background report - 2019 Arab-DAC Dialogue on Development.

1. At the Arab-Swiss Water Day, which followed the Arab-DAC Dialogue on
Development in 2017, Arab donors and DAC members agreed to explore
collaboration on water and sanitation. Since then, the Kuwait Fund for Arab
Economic Development, on behalf of the Arab Coordination Group (ACG), and
Switzerland, on behalf of the DAC, lead an ACG-DAC Task Force on Water and
sanitation, with support from the OECD. This brochure outlines the main volumes
and trends of Arab and DAC providers in financing water and sanitation, using
the OECD development finance database, and provides further information on
the OECD’s work on water and sanitation.
The water and
sanitation sector is
substantially
underfunded, even
if support to the
sector stood at
USD 11.5 billion in
2016
 Finance for Development (FFD) supports progress towards
the Sustainable Development Goal 6, which aims at
ensuring access to water and sanitation for all. However, with
water and sanitation support standing at USD 11.5 billion in
2016, external funding remains insufficient relative to the
needs (estimated at USD 114 billion per annum in 2015-
2030, according to UN Water and the World Health
Organization).
 DAC providers’ support to water and sanitation
decreased by 27% between 2012 and 2016 (USD 5.6
billion on average per year), while the Arab donors that
report to the OECD (which include both bilateral and
multilateral providers) decreased their investments by 22%
over that period (USD 765 million annual average).
 Over 2013-15, private foundations’ giving to the water
and sanitation sector in developing countries amounted
to over USD 152 million on average per annum.
 Over 2012-2015, USD 1.54 billion of private finance was
reported as being mobilised by official finance in the
water and sanitation sector. Arab providers do not report
yet to the OECD on amounts mobilised.
Financing water and sanitation
in partner countries
These statistics are based on Arab and DAC providers’ reporting to the OECD. Summary statistics for these
and other providers of development co-operation and, when available, project-by-project data can be found
at: www.oecd.org/dac/financing-sustainable-development and www.oecd.org/dac/stats/non-dac-
reporting.htm. The information regarding philanthropies has been extracted from an OECD survey comprising
data from 2013 to 2015.

2. January 2019 • OECD Development Co-operation Directorate
Arab and DAC
providers target
Sub-Saharan
African countries,
where the needs
are greatest
 Both Arab and DAC donors targeted Sub-Saharan Africa in
their water and sanitation-related interventions. Yet, while
the DAC provided 33% of its water and sanitation-related
support to fragile contexts over 2012-16, Arab providers
directed 63% of financing to this sector.
 Over 2012-16, an annual average of USD 133 million was
committed by all providers towards water and sanitation-
related humanitarian ODA, representing 0.8% of all
humanitarian assistance.
The OECD
Recommendation
on Water provides
guidance on a
variety of issues,
including finance,
governance and
managing water
risks
 The OECD facilitates a Roundtable on Financing Water,
which brings together the water and finance communities to
overcome the global challenges of financing the investments
needed in the sector. Arab donors do not yet participate in
Roundtable meetings. Active participation would be an
opportunity to share experiences and contribute to good
international practices that can accelerate water-related
finance.
 The OECD Principles on Water Governance identify a
number of important governance areas for sustainably
managing and securing access to water for all. Arab donors
could support implementation of these Principles in their
priority partner countries.
 Managing water-related risks and disasters (i.e. the risks of
too much, too little and too polluted water; and disruption to
freshwater systems) are critical to prioritise investments. The
OECD works to identify such risks and could benefit from Arab
inputs in this area.

3. January 2019 • OECD Development Co-operation Directorate
TRENDS IN TOTAL SUPPORT TO WATER AND SANITATION
There has been significant progress in the water and sanitation sector in recent decades.
Since 1990, millions have gained access to improved water resources and sanitation.
However, according to the WHO and UNICEF, 2.1 billion people still lacked access to safely-
managed drinking water services and 4.5 billion lacked access to sanitation in 2015. Poor
sanitation, water, and hygiene lead to about 675,000 premature deaths annually and to
estimated annual economic losses of up to 7% of GDP in some countries. Two thirds of the
world’s population live in areas that already experience water scarcity for at least one month
per year,1
and over 500 million people live in areas where water consumption exceeds the
locally renewable resources by a factor of two. Against this background, the returns of
investing in water and sanitation are high, estimated at USD 4.3 for every dollar invested,
thanks to reduced health costs and greater productivity and participation in the workplace.2
Chart 1. Trends in total FFD support to
water and sanitation
2012-16, gross commitments, USD billion, constant 2016
prices
Note: Commitments translate into disbursements in coming years
(spending on multi-annual commitments are spread over several
years).
The Sustainable Development Goals (SDGs)
could usher in a transformative shift in
developing countries, as the goals
encompass economic, social and
environmental dimensions that will promote
sustained growth and shared prosperity.
Hence, SDG 6 enjoins policy makers to
“ensure availability and sustainable
management of water and sanitation for all”.
External Financing for Development (FFD)
commitments for water and sanitation from all
providers of development co-operation,
including both official and private financing,
reached USD 11.5 billion in 2016 (Chart 1).
However, UN Water and the World Health
Organization estimate the needs of the water
and sanitation sector at USD 114 billion per
annum in 2015-2030 (or USD 1.7 trillion for
the whole period). Given this, there is still a
significant funding gap for water and
sanitation that current flows can only
partially bridge with direct interventions.3
Notwithstanding, it is important to mention
that according to UN Water, excluding
household contributions, external assistance
represents only 12% of water and sanitation
investments, while 68% stems from domestic
sources and 20% from repayable finance.
1
OECD (2018), Financing Water – Investing in Sustainable Growth. Policy Perspectives – OECD Environment Policy Paper No. 11. Available at:
https://www.oecd.org/water/Policy-Paper-Financing-Water-Investing-in-Sustainable-Growth.pdf
2
World Health Organization (2017), Financing Universal Water, Sanitation and Hygiene under the Sustainable Development Goals, UN-Water Global
Analysis and Assessment of Sanitation and Drinking-Water. Available at: http://www.who.int/water_sanitation_health/publications/glaas-report-2017/en/
3
World Health Organization (2017), Financing Universal Water, Sanitation and Hygiene under the Sustainable Development Goals, UN-Water Global
Analysis and Assessment of Sanitation and Drinking-Water. Available at: http://www.who.int/water_sanitation_health/publications/glaas-report-2017/en/
The OECD development finance database
contains detail of almost 8,183 water and
sanitation-related activities per year. The note
focuses on the period 2012-16, a period when
flows to water and sanitation hit record levels in
2015.

4. January 2019 • OECD Development Co-operation Directorate
MAIN PROVIDERS OF THE WATER AND SANITATION SECTOR
This note covers DAC members, as well as 20 bilateral providers that report to the OECD
(which are not members of the DAC) and 35 multilateral organisations. Regarding the Arab
countries and institutions, the note includes activity-level data from the Arab Bank for
Economic Development in Africa, the Arab Fund for Economic and Social Development,
Islamic Development Bank and the OPEC Fund for International Development. The OECD
also receives activity-level data from the United Arab Emirates (which includes the Abu
Dhabi Fund for Development) and Kuwait (including the Kuwait Fund for Arab Economic
Development). The note draws on these Arab development finance flows, which
inevitably only provides a partial picture of total Arab flows.
DAC members committed an annual average of USD 5.6 billion (45% of total water and
sanitation support) between 2012 and 2016. Non-DAC providers committed an annual
average of USD 114 million in the same period for the sector, with the Arab bilateral
providers (for which information is available) committing most of it, with USD 112 million.
Multilateral agencies also committed USD 6.8 billion on average over that period (54% of
total water and sanitation support), of which Arab multilateral agencies committed USD 654
million. Bilateral and multilateral Arab providers represented 6% of total water and
sanitation support (see Box 1). These flows to the water and sanitation sector represented
5.7% of total sector allocable FFD for DAC members and 7.9% for Arab countries and
institutions.
Table 1 ranks the main FFD providers to the water and sanitation sector between 2012 and
2016, with the World Bank Group providing 24% of the total. In addition, a number of
providers have significantly increased their amount to this sector in recent years, notably the
UAE (632% increase over that period), Kuwait (87% increase), as well as other DAC
members such as the Slovak Republic, Portugal or Italy – although these providers started
from relatively low levels to the sector.
Among the Arab providers, the United Arab
Emirates, the Islamic Development Bank and
the Arab Fund for Economic and Social
Development were the most important FFD
providers to the water and sanitation sector
between 2012 and 2016. Arab institutions
decreased their FFD commitments to the
water and sanitation sector by 22% over
2012-16. Box 1 provides an example of the
Saudi Fund to the water sector – information
that is currently being processed by the
OECD as Saudi Arabia started reporting in
2018 at activity-level.
Box 1. Rehabilitation and Construction of
Water Network in Uzbekistan
The Saudi Fund for Development is improving
drinking water services in the Republic of
Uzbekistan and to improve the living conditions
of the residents in the Kashkadarya area by re-
establishing the water supply system in Kasane
and Mubarak and the rural communities adjacent
to the newly-installed water pipes, transferring
water from a reservoir. The project also aims to
raise water quality and reduce the level of
poverty by raising public health and living
standards and increasing the supply of drinking
water in these areas.

5. January 2019 • OECD Development Co-operation Directorate
In 2016, the Asian Development Bank,
Japan, the International Development
Association and the International Bank for
Reconstruction and Development were the
top 4 FFD providers of water and sanitation-
related flows, providing over USD 4.9 billion
over that period (39% of total water and
sanitation support). Regarding Arab
providers, the UAE’s commitments reached
USD 178 million in 2016, while the Arab
Fund and the Islamic Development Bank
committed USD 167 million and USD 157
million respectively.
The OECD also collected data in a survey
on philanthropic institutions’ spending on
water and sanitation in developing countries
for the period 2013-15. During this period,
philanthropies provided over USD 457
million to the sector, representing 1.9 % of
total sector allocable philanthropic flows.
The main sub-sectors targeted were basic
sanitation (43%) and basic water supply
(18%). Almost half of these funds (45%)
were provided by the Bill and Melinda Gates
Foundation, followed by the Coca-Cola
Foundation (13%), Howard G. Buffet
Foundation (7%), Conrad N. Hilton
Foundation (5%) and the H&M Foundation
(4%).
Table 1. Top 10 providers of
water and sanitation flows
2012-2016 average, gross commitments,
USD million, constant 2016 prices
Provider Amount Share
IBRD 1 618 13%
Japan 1 435 11%
International Development
Association 1 227
10%
Asian Development Bank 1 017 8%
Germany 924 7%
France 811 6%
Inter-American Development
Bank 801
6%
European Union 660 5%
United States 434 3%
Islamic Development Bank 427 3%
Total 9 395 75%
GEOGRAPHICAL TARGETING OF WATER AND SANITATION SUPPORT
Looking at all flows to the water and sanitation sector between 2012 and 2016, providers
targeted regions most in need: 24% of total support to the sector targeted Sub-Saharan
Africa, while South and Central Asia commitments represented 21%. The middle-income
countries represent 70% of total commitments. The top ten recipient countries represented
38.4% of total commitments to the sector (see Chart 2 and Table 2).
Focusing on DAC members, they targeted Sub-Saharan Africa (30% over 2012-16), followed
by South and Central Asia (17% over 2012-16) and Far East Asia (10.8%). Their main
recipients were India, Jordan, Viet Nam, Ukraine and Morocco. If we look at Arab providers,
they targeted Sub-Saharan Africa (37.6%), the Middle East (24.3%) and North Africa
(19.8%). Iran (from the Islamic Development Bank), Morocco, Lebanon, Gabon and Gabon
were among their main partners.

6. January 2019 • OECD Development Co-operation Directorate
Chart 2. All donors Regional FFD
allocation of water and sanitation
activities
2012-16 annual average, gross commitments
Note: Percentages next to country labels represent shares of total
water and sanitation support to all developing countries
Table 2. All donors’ top 10 FFD recipients
in the water and sanitation sector
2012-16 annual average, gross commitments, USD million
Partner Amount Share
India 1,201 9.6%
People’s Republic of
China 772
6.2%
Viet Nam 615 4.9%
Morocco 453 3.6%
Brazil 377 3%
Jordan 318 2.5%
Bangladesh 294 2.3%
Argentina 274 2.2%
Kenya 260 2.1%
Egypt 252 2%
Total 4,816 38.4%
Commitments to the Middle East and North African (MENA) region reached an annual
average of USD 1.8 billion between 2012 and 2016 for the water and sanitation sector, of
which 17.5% was committed by the International Bank for Reconstruction and Development,
17.1% by Germany and 14.2% by the Islamic Development Bank. Arab providers committed
44.1% of total flows going to the sector in the MENA region. Their main partners were Iran
(21.8% of total water and sanitation support from the Islamic Development Bank only),
Morocco (10.9%), Lebanon (9.2%) and Tunisia (6.4%).
Not all providers are focusing on fragile contexts to the same degree.4
The share of water
and sanitation flows targeting these contexts was stable over 2012-16 (32.7% of total DAC
water and sanitation support, while for Arab providers this figure represented 62.8%). The
water and sanitation sector spills over other sectors, such energy, infrastructure, health,
agriculture or private sector development. All these sectors have direct impact on the
development of a country recovering from fragility. Beyond that, water crisis and fragility are
threats to the prosperity and well-being of millions of people, and water and sanitation are
important factors for environmental fragility.5
Water crises can contribute to fragility and,
according to the FAO and the World Bank (2018)6
, water crises are one of the top risks for
the MENA region (see the last section on the OECD work on managing water-related risks).
4
According to the latest OECD States of Fragility Report (2018), fragile contexts are in Afghanistan, Angola, Bangladesh, Burkina Faso, Burundi, Cameroon,
Central African Republic, Chad, Comoros, Congo, Cote d’Ivoire, Democratic People’s Republic of Korea, Democratic Republic of the Congo, Djibouti, Egypt,
Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guatemala, Guinea, Guinea-Bissau, Haiti, Honduras, Iran, Iraq, Kenya, Lao People’s Democratic Republic,
Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Nigeria, Pakistan, Papua New Guinea, Rwanda, Sierra Leone,
Solomon Islands, Somalia, South Sudan, Sudan, Swaziland, Syrian Arab Republic, Tajikistan, Tanzania, Timor-Leste, Uganda, Venezuela, West Bank and
Gaza Strip, Yemen, Zambia, and Zimbabwe.
5
OECD (2018), ‘States of Fragility 2018’. Available at: http://www.oecd.org/dac/states-of-fragility-2018-9789264302075-en.htm
6
FAO and World Bank (2018), ‘Water Management in Fragile Systems – Building Resilience to Shocks and Protracted Crises in MENA’’.

7. January 2019 • OECD Development Co-operation Directorate
Chart 3. Income group breakdown of
water and sanitation FFD support
2012-16 annual average, gross commitments
DAC members Arab countries and institutions
Note: The “unspecified” category is used when the country targeted cannot be identified.
The ‘Arab providers’ refers to both Arab bilateral and Arab institutions.
Most Arab and DAC water
and sanitation-related
activities focus on middle-
income countries (MICs),
which received 67.5% of total
Arab flows (USD 514 million)
and 59.6% of DAC flows
(USD 3.4 billion).
About 31% of water and
sanitation commitments from
DAC members targeted low-
income and least-developed
countries (LICs and LDCs),
while this was 32.4% from
Arab countries and
institutions, on average over
2012-16.
WATER AND SANITATION-RELATED AID TARGETED BY ARAB AND DAC
DONORS WHEN PROVIDING HUMANITARIAN ASSISTANCE
Between 2012 and 2016, an annual average of USD 133 million was committed by all
providers towards water and sanitation-related humanitarian Official Development
Assistance (ODA, see Box 2 for a methodological overview on how these amounts were
calculated), mainly by Canada (23.9%), the United States (18.6%) and Germany (15.8%).
This suggests that water and sanitation humanitarian ODA reached a minimum of 0.8% of
total humanitarian aid. This humanitarian ODA mainly targeted Iraq (17.9%), the Syrian Arab
Republic (12.5%) and Kenya (11.6%).
Box 2. Methodology for estimating humanitarian water and sanitation-related ODA
Data shown in this flyer cover development co-operation in the water and sanitation sector. The definition
of ODA to water and sanitation excludes humanitarian aid. Humanitarian aid can be delivered directly by a
provider or channelled through a multilateral organisation; and can include various activities, including
water and sanitation-related ones, provided they are a humanitarian intervention. To calculate water and
sanitation-related humanitarian aid, we identified water and sanitation-related projects within the total
humanitarian activities through a key-word search using the words “water” and “sanit-”. Note that the
limitations of this methodology can lead to underestimations.

8. January 2019 • OECD Development Co-operation Directorate
The United Arab Emirates committed
an annual average of USD 2.5 million
in water and sanitation-related
humanitarian aid between 2012 and
2016 (see Box 3 for UAE Water Aid
Foundation and its initiative on water-
related humanitarian aid). This
humanitarian ODA mainly targeted
Yemen (53.8%), Jordan (33.6%) and
Afghanistan (11.3%).7
MAIN MODALITIES AND FINANCIAL INSTRUMENTS USED
Between 2012 and 2016, Arab and
DAC providers respectively committed
99.8% and 90% of their flows to water
and sanitation in the form of projects.
Both Arab and DAC providers also
implement triangular co-operation
projects to deliver their water and
sanitation-related support (see Box 4
for an example of a triangular co-
operation project by the Islamic
Development Bank’s through the
Reverse Linkage modality).
Grants were the most frequently used instrument by both DAC and Arab providers in their
water and sanitation ODA, accounting for 97% of total DAC and 65% of Arab FFD
commitments over 2012-16.
7
Regarding the Arab donors, note that the OECD only has water and sanitation humanitarian data from the United Arab Emirates.
Box 3. United Arab Emirates Water Aid Foundation
and the Suqia campaign
The UAE Water Aid Foundation is a non-profit
organisation that provides humanitarian aid and
contributes to find permanent and sustainable solutions
to water scarcity. In 2014, the UAE Water Aid
Foundation launched the ‘Suqia’ campaign in co-
operation with the Emirates Red Crescent Authority,
which provided access to fresh drinking water to over 7
million people around the world. Some of the UAE’s
partner countries were Ghana, Benin, Mauritania,
Bangladesh, Afghanistan and Somalia.
Box 4. Reverse Linkage Project between Burkina
Faso and Morocco in Water Quality Treatment
The Islamic Development Bank, Burkina Faso and
Morocco implemented a triangular co-operation project
from 2015 to 2017 to improve the capacity of Burkina
Faso in water quality treatment. The project aims at
improving the quality of water in Ouagadougou and
surrounding areas by i) protecting water resources
against eutrophication in the Ziga and Loumbila dams,
ii) optimising the process within the water treatment
plants and iii) strengthening the capacities of the
ONEA Central Lab in water quality control.

9. January 2019 • OECD Development Co-operation Directorate
MOBILISING PRIVATE FINANCE FOR DEVELOPMENT IN THE WATER AND
SANITATION SECTOR
Water-related investments vary according to their
funcion, scale and, among others, asset longevity.
Historically, official finance has played a central role in
financing water and sanitation investments, and is
likely to continue doing so in the future. However, due
to the constraints on public finance and substantial
investment needs, leveraging contributions from other
sources of finance can help scale up investment.
Blended finance, which is the strategic use of
development finance for the mobilisation of additional
finance towards sustainable development in
developing countries,8 can harness private sector
resources for water and sanitation investments, being
capable of strategically adresssing the risk-return
relationship in developing countries. The OECD has
put forward five principles to ensure blended finance is
successful in mobilising private resources for
development (see Box 5 on the OECD Blended
Finance Principles).
From 2012 to 2015, USD 1.54 billion (USD 375 million
on average per year) of private finance was mobilised
in the water and sanitation sector, as reported to the
OECD. Private finance flows in the water sector have
been limited to date (1.9% share of total private finance
mobilised). This private finance was mobilised mainly
in upper middle-income countries (43%) and least
developed countries (39%). Over 2012-15, private
finance mobilised by official development finance
interventions in the sector took the form of guarantees
(more than 60%) and syndicated loans (25%).
In order to understand how private finance can be mobilised at greater scale in the water
sector, the OECD is undertaking a project on blended finance and water investments in
order to identify good practices and examine challenges in applying blended finance to
specific geographic areas and in particular water-related sub-sectors (see Box 6).
As seen, Arab providers are important donors in the water and sanitation sector. We can
therefore expect they would be important actors in mobilising private finance for water and
sanitation. However, Arab providers do not report to the OECD on the amounts their official
finance is mobilising additional private finance. As a result, Arab donors are not represented
in the blended finance flows from the OECD. Arab providers could consider reporting on
8
OECD (2018), Making Blended Finance Work for the Sustainable Development Goals, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264288768-
en
Box 5. OECD DAC Blended Finance
Principles
1. Anchor blended finance use to a
development rationale
2. Design blended finance to
increase the mobilisation of
commercial finance
3. Tailor blended finance to local
context
4. Focus on effective partnering for
blended finance
5. Monitor blended finance for
transparency and results
Box 6. OECD project on blended
finance and water investments
The project, to be launched in 2019,
seeks to answer which types of water
investments are most appropriate for
private sector investment in the
following sub-sectors:
- Large-scale urban water utilities
- Small-scale off-grid sanitation,
wastewater collection and treatment
- Multipurpose infrastructure and
landscape-based approaches.

10. January 2019 • OECD Development Co-operation Directorate
these amounts, which would link with the OECD DAC Blended Finance Principle 5 of
increasing transparency.
THE ROUNDTABLE ON WATER FINANCING
The Roundtable on Financing Water is a global public-private platform established by the
OECD, the World Water Council and the Netherlands. It draws upon political leadership and
technical expertise, with the ambition of facilitating increased financing of investments that
contribute to water security and sustainable growth. The Roundtable engages a diversity of
actors – governments and regulators in developed, emerging and developing economies,
private financiers (e.g. institutional investors, commercial banks, asset managers, impact
investors), development financing institutions, bilateral donors, international organisations,
academia and civil society organisations – focused on finding novel ideas and solutions on
financing water investments.9
Roundtable meetings are substantiated by robust analytical work, developed by the OECD
and its partners along several themes (see Box 7). The OECD is considering regional
meetings of the Roundtable, which provide a deeper dive on issues of particular importance
in the region. The OECD could facilitate a regional meeting of the Roundtable on financing
water, with Arab donors, in the future.
GOVERNING WATER ACTIVITIES
Managing water for all is not only a question of resources availability and money, but equally
a matter of good governance. Policymakers inevitably face challenges in designing and
implementing water policies: institutional and territorial fragmentation, but also limited
capacity at the local level, and questionable resource allocation. These obstacles are often
rooted in misaligned objectives and poor management of interactions between stakeholders.
The OECD has developed Principles on Water Governance as standards to help
governments understand whether their water governance systems are performing optimally
and help to adjust them where necessary (see Chart 7). The OECD has also developed
water governance indicators and collected evolving practices to help implement these
principles. The Sebou River Basin in Morocco pilot tested the indicator framework,
contributing to the development of the framework and the methodology, while Jordan and
the Palestinian Water Authority shared their experiences on stakeholder engagement and
9
More information in http://www.oecd.org/water/roundtable-on-financing-water.htm
Box 7. Roundtable on Financing Water issues
1. Tracking financing needs and capacities. This stream of work endeavours to produce robust data on
investment needs. This can help identify hotspots and target support.
2. Harnessing private finance. The focus currently is on blended finance, in particular domestic finance.
3. Supporting strategic investment pathways. The emphasis is on ensuring that funding goes to projects
that contribute most in terms of water security and sustainable growth. This requires new metrics and
data but also capacities to combine and sequence projects along pathways.

11. January 2019 • OECD Development Co-operation Directorate
water reform, respectively.
The OECD engages stakeholders through the
OECD Water Governance Initiative, a unique
international policy forum that meets twice a year
to share experience on water reforms and produce
knowledge and guidance in support of better water
governance. The 8th
Meeting of the OECD Water
Governance Initiative (January 2017) took place in
Morocco. Moreover, the OECD carried out Policy
dialogues in Jordan and Tunisia jointly with the
Global Water Partnership-Mediterranean in the
context of the project labelled by the Union for the
Mediterranean on “Governance and Financing for
the Mediterranean Water Sector”. The reports
diagnose the main governance and financing
challenges to private sector participation in water
supply and sanitation and suggests ways to
address them. Arab donors could engage in
further work in the MENA region with the OECD to
promote the principles on water governance.
Chart 4. Overview of OECD
Principles on Water Governance
ENSURING RISKS ARE TAKEN INTO ACCOUNT
Water-related disasters represent 43% of all disaster events, 42% of the casualties but 74%
of the economic losses in the world, and the bulk of these socio-economic impacts are
suffered by developing countries. In a global economy, the impacts of water-related
disasters, such as floods, can disrupt global supply chains, causing propagation effects
across borders. Droughts are a major contributor to the volatility of food prices, which have
been linked to recent episodes of social unrest and political instability. Partner countries
need appropriate water-risk management policies and international solidarity can support
these countries. Economic and social vulnerability to water-related disasters is the result of
several long-term trends, such as the steep increase in concentrations of people and assets
in cities and coastal risk-prone areas, climate change, and increased interdependencies
across critical infrastructure and value chains.
The OECD High level Risk Forum provides a venue for risk managers from governments
and the private sectors to discuss these challenges and exchange solutions to reduce water-
related disaster risks. This resulted in the adoption of the OECD Recommendation on the
Governance of Critical Risks by the OECD Ministerial Council in May 2014, which provides a
framework against which risk management policies can be evaluated and compared.
Adequate preparation for water-related disasters requires governments to invest in risk
analysis, structural protection, policies in support of prevention and emergency response
capabilities. It also entails social policies and financial mechanisms to mitigate the welfare
impact of losses and ensure a quick recovery and reconstruction that reduces future
vulnerability. Such investments pay dividends in the long term.
TRUST &
ENGAGEMENT
Clear
roles &
responsibilities
Capacity
Policy
coherence
Appropriate
scales within
basin systems
Regulatory
Frameworks
Data &
information
Financing
Innovative
governance
Trade-offs
across users,
rural and urban
areas, and
generations
Integrity &
Transparency
Monitoring
& Evaluation
Stakeholder
engagement
WATER
GOVERNANCE

12. January 2019 • OECD Development Co-operation Directorate
The OECD High level Risk Forum provides a venue for risk managers from governments
and the private sectors to discuss these challenges and exchange solutions to reduce water-
related disaster risks. This resulted in the adoption of the
OECD Recommendation on the Governance of Critical
Risks by the OECD Ministerial Council in May 2014, which
provides a framework against which risk management
policies can be evaluated and compared. Adequate
preparation for water-related disasters requires
governments to invest in risk analysis, structural
protection, policies in support of prevention and
emergency response capabilities. It also entails social
policies and financial mechanisms to mitigate the welfare
impact of losses and ensure a quick recovery and
reconstruction that reduces future vulnerability. Such
investments pay dividends in the long term.
The critical policy challenge is how to prioritise investments suited to different
risks. Managing water-related risks requires improved policy coherence across water
management, disaster risk reduction and climate change adaptation. When co-ordinated,
these efforts can set an incentive structure that delivers more resilient societies. Governance
is therefore one of the fundamental challenges to managing water-related risks. The OECD
Recommendation on the governance of critical risks proposes a fundamental shift in risk
governance towards a whole-of-society effort. It proposes actions that governments can take
at all levels of government, in collaboration with the private sector and with each other, to
better assess, prevent, respond to and recover from the effects of extreme events, as well as
take measures to build resilience to rebound from unanticipated events.
The OECD, through its Reviews of risk management policies, assists governments in
developing tailored policy responses to these challenges. As an example, the OECD Review
on Risk Management in Morocco was conducted in 2016 and proposes a series of policy
recommendations to improve flood risk governance there (see Box 8).

13. January 2019 • OECD Development Co-operation Directorate
Box 8. The benefits of improving water risk governance in Morocco
Strengthening the governance of critical risks in Morocco is key to support its development
path towards inclusive growth, and socio-economic well-being. Morocco’s territory indeed is
exposed to a series of water hazards, which can lead to severe socio-economic impacts. The
high concentration of the national GDP in risk-prone areas, and the sensitivity of key sectors
of the national economy to disasters (agriculture, tourism) make economic resilience to
disaster a key issue for Morocco. Since 2014, Morocco has partnered with the OECD High
Level Risk Forum to advance this policy objective and benefit from the expertise of the Forum.
The adoption of the OECD Recommendation on the Governance of Critical Risks by the
Government of Morocco in 2014 was a strong signal in that direction. The OECD Peer Review
of Risk Management Policies in Morocco conducted in 2015-2016, in collaboration with the
Ministry of the Interior and financed by the German Development Co-operation, was another
major milestone. The peer review process led to the development of 30 policy
recommendations to improve risk governance across the risk management cycle. As a follow-
up, the Moroccan government has asked the HLRF to support the implementation of the
recommendations, by proposing a roadmap to strengthen the risk governance structure in
Morocco, by supporting capacity-building activities as well as the development of flood early
warning systems in the country, which benefitted from the support of the Swiss Development
Cooperation.
This note was prepared by Juan Casado-Asensio, Marisa Berbegal Ibañez and Néstor Pelechà Aigües,
with inputs from Wiebke Bartz-Zuccala, Charles Baubion, Antonio Canamas Catala, Ana Fernandes,
Tomas Hos, Xavier Leflaive, Tansher Singh and Hakan Tropp.
For further information contact: juan.casadoasensio@oecd.org