1. Track 4 Building Sustainability: Partnerships and Finance Global Environment Facility – International Waters Second Biennial Conference September 25-29, 2002 Dalian, Lianing Province, China

2. Key Issues What are the existing mechanisms and limitations faced by public and private sector in developing countries in establishing sustainable partnerships? What are the existing mechanisms and limitations faced by public and private sector in developing countries in establishing sustainable partnerships? Should GEF resources be used to support Private Sector, Directly or Indirectly? Should GEF resources be used to support Private Sector, Directly or Indirectly? What kind of alternative delivery mechanisms for environmental infrastructure and services should be considered? What kind of alternative delivery mechanisms for environmental infrastructure and services should be considered? Sharing experience

3. Public-Private Partnerships: Existing Barriers Public Sector (National/local government, civil society): Lack in managerial and technical skills Existing bidding and negotiation mechanisms are not efficient due to inadequate objective ranking and selection criteria Difficult to access to direct loans guarantees Weak community participation and ownership Private sector (national and international investors and banks): Weak national financing capacity Weak national financing capacity Lack of capacity in identification of bankable projects Lack of capacity in identification of bankable projects Environmental costs and criteria are not internalized into business investment decision- making Environmental costs and criteria are not internalized into business investment decision- making

4. GEF support to sustainable “PP” partnerships - Financing the development of a transparent, balanced and service oriented partnerships: strong ownership, long-term, shared information, stakeholders participation, quicker decision making, early collaboration and consultation ( PEMSEA project) - Building the climate for investments: strengthening legal and institutional framework as a basis for political commitment and joint actions (Danube and Black Sea Programmes) - Creating local capacity within the national private sector (industry and consultancy) in identification of pollution prevention opportunities and funding Pre-Investment studies for Environmentally Sound Technologies (TEST project)

5. Challenges  Addressing local political/financial risks by providing non-Grant Financing with: concessional/ contingent finance, loans, and guarantees  Strengthening national financial capacity to be available for local private sector and local governments

6. What next? GEF could promote further consultation process with private sector to identify alternative financing mechanisms GEF could promote further consultation process with private sector to identify alternative financing mechanisms