CLIMATE CHANGE – WATER SECTOR HIGH-LEVEL CONFERENCE ON WATER, CLIMATE AND HEALTH First International Forum on Development, Environment and Health Arezzo, Italy, November 20-23, 2012 Roberto Zocchi – Chair EU3

EUREAU is the European Federation of National Associations of Water and Wastewater Services. EUREAU gather water & waste water utilities & operators across Europe that provide sustainable water services to around 405 million European citizens. EUREAU – WHO WE ARE VISION EUREAU aims for a provision of reliable and high quality water supply and waste water services which: Protect public health; Fully respect the natural environment; Support economic development; Socially acceptable

stress Climate change stress the water sector operational activity but mostly……the infrastructural need FINANCING ISSUE! Climate change

Application of the 3Ts Framework: Action plan and way forward, beyond Marseille Roberto Zocchi EU3 Chair 13 March 2012, Marseille

3TsTT T Developed by OECD – applied by EUREAU, The 3Ts (Tariffs Taxes Transfers) framework represents a powerful tool in unlocking our understanding of the sources of the funds which underpin a sustainable future 3Ts Framework

3Ts concept into practice in order to promote: − A source contribution increasing transparency of the financing of water services and to facilitate the reporting obligations on the costs recovery principle (article 9 of European Water Framework Directive) − A useful diagnosis and decision-making tool − A means of informing on water services related investment targets − A tool to raise general awareness of sectorial financing issues TAXES/Transf (Cap.Ex.) Tariff (Op.Ex.) TAXES/Transf. Tariff (Op.Ex. Cap.Ex.) Time….. 3Ts Framework

An appropriate mix of Tariffs, Taxes and Transfers: to finance capital and recurrent costs in the long run, and leverage other forms of finance (equity, loans, bonds) Tariff policies that : are affordable to all users, including the poorest ensure the financial sustainability of service providers provide appropriate incentives (consumption, efficiency) Subsidy policies that : are predictable and reliable to facilitate investment planning meet social and environmental objectives are affordable to national/local governments (message: if the local government or the public authorities want to make water services affordable for the poorest, the funds could be targeted to this specific population through social mechanisms, with financial resources not coming from water)

long-term Relying on public funds or donors aids on a permanent basis is not consistent with the principle of sustainability of water services, and price policies and tariff structures have to incorporate a return on capital, consistent with the principle of “full cost recovery”, to cover the financing needs of the sector. Tariff structures should also ideally reflect the long-term fixed nature of investment. Rising efficiency Effective regulation Effective regulation Economic leverage Economic leverage Sustainable Future - Recommendations (1)

Sustainable Future - Recommendations (2) maintenance holiday is an expensive short term thinking! ARE WE PROPERLY MANTAINIG WATER SERVICES ASSETS FOR THE FUTURE GENERATIONS? Water Inflow Distribution Network Mains Aqueducts Storage Tanks Capacity Piezometers …… 479,8 Mm 3 /yr km 878 km 208 km m 3 n. 6 … ASSET RENEWAL (extimated value) 15 – 20 Billion Euros PLANNED GLOBAL INVESTMENT (5 Yrs): 100/150 M€/Year 50/100 M€/Year Rising Standards (ww new infrastructures): 50/100 M€/Year 45/50 M€/Year Maintenance (Ord/Extra; w/ww): 45/50 M€/Year (0,25%! Years!) NOT ENOUGTH!! WE HAVE TO DO MORE!! WE ARE LEAVING PROBLEMS TO NEXT GENERATIONS!