Legislation & Policy

The result 1 will ensure the continuity of work, carried out under the umbrella of the EU Water Initiative as of 2006.

Most importantly, the process of national and regional policy dialogue will be sustained and further strengthened. The goal is covering all six countries of the EaP region, allowing for differentiation of specific focus and goals pursued at the national level.

Further reforms of water policies, establishment of an adequate governance framework, and development of institutional capacities in support of policy implementation will be at the core of this Result.
 OECD Policy Perspectives on Reforming Economic Instruments for Water Management in EECCA countries

Water is a key pillar to support transition to a green economy model. Economic instruments (EIs) could and should play a greater role in achieving water policy objectives in EECCA, including in EaP countries.

This concerns objectives established both in national water and environmental strategies, as well as under such international commitments as SDGs, Paris Agreement on Climate and – for Georgia, Moldova and Ukraine – also in Association Agreement with the EU. In EECCA, the use of EIs – of tariffs/prices, taxes and subsidies (state support measures) – needs to improve in terms of their design, implementation and enforcement. Specifically, building on extensive work in EECCA, it is recommended: (i) to close the gap between policy objectives and performance of EIs, to create right incentives; (ii) to develop and assess scenarios for reform of priority instruments, and develop an Action plan for reform; and (iii) to pay greater attention to the political economy of the reform oif EIs and such critical elements as appropriately sequencing proposed  reforms and progressively implementing them, applying appropriate accompanying measures, and stakeholder consultations.

Expected outcomes: implementation of the recommendations will generate a number of benefits for both: citizens of EECCA countries and donors providing support to the water sector in the region: more efficient use of water resources; less costly demand for water infrastructure extension and higher cost-effectiveness of interventions in the sector from the public budget of beneficiary countries, and by donors.

Benefits for EUWI+ project: the output will be used in regional exchange of experience in EIs for water management, and for local capacity development through regional and country trainings

 OECD Policy Perspectives on Managing Multi-Purpose Water Infrastructure (MPWI)

Several EECCA countries have Multi-Purpose Water Infrastructure systems (e.g. Belarus, Kazakhstan, Russia and Ukraine) used for hydro-power generation, irrigation or water transport, and recreation. MPWI typically generate larger economic benefits that single purpose infrastructure. Moreover, dams designed for single purpose often evolve into multi-purpose over time. If not properly managed, this evolution and performance does not allow full realisation of the benefits and synergies generated by MPWI systems. The latter task as well as attracting finance for MPWI project remain difficult due to the inherent complexity of dealing with multiple stakeholders and emergence of unforeseen risks and externalities.

Based on an overview of, and lessons learnt from, international experience, this publication explores the complexity of designing, financing, managing and regulating MPWI projects, with the aim to inform policy and decision making. It identifies and discusses key issues related to managing MPWI, and possible solutions to the challenges. It presents several principles, approaches and instruments to enhance the sustainability of, and economic and social returns from, MPWI schemas. The tool-kit includes a computer-based WHAT-IF model for economic assessment of MPWI systems, developed through a recent case-study implemented by the OECD in Kazakhstan. Knowledge and experience gaps, needs for further research and possible areas of future work are also identified.

Expected outcomes: better knowledge by water planners and managers in EECCA of specificity of MPWI and of pre-requisites of sustainability of MPWI projects and business models to operate, maintain and finance them. And as a result of that: more efficient use of water resources and higher economic return from existing MPWI systems; less costly demand for MPWI extension and higher cost-effectiveness of respective interventions from the public budget of beneficiary country, and by donors.

Benefits for EUWI+ project: the output will be used in regional exchange of experience in managing MPWI, and for local capacity development through regional and country trainings.

 Improving Domestic Financial Support Mechanisms for Moldova’s Water and Sanitation Sector (OECD Water Series)

In the present economic and fiscal situation in most EECCA and donor countries, including EaP and EU MS, cost-effectiveness of public and donor interventions in the water sector is of utmost importance. Furthermore, beneficiary countries cannot indefinitely rely on external support and would need to strengthen their domestic mechanisms of financial support to the sector. In Moldova, financial support to capital investments in the water sector is provided through several line ministries and dedicated funds, foremost the National Environmental Fund (NEF) and the National Fund For Regional development (NFRD), as well as a number of donors (EU, Austria,  Germany, Switzerland, EBRD and KfW - to list a few).  Apart of donor funding, the sector receives about 2% of consolidated public expenditure budget. However, analysis of domestic financial support mechanisms (DFSMs) in Moldova’s water sector have revealed that the sector suffers from lack of co-ordinated and effective planning and ineffective support mechanisms – both if the NEF and NFRD or co-ordination with donor funding are concerned, as well as lack of appropriate economic regulatory system. Several other EECCA countries face similar challenges.

To address the issue, the report recommends: (i) to address fragmentation of financial support to the sector through better co-ordination between the key actors – inter alia, to consider options for reforming planning in, and co-ordination between, NEF and NFRD, including through introducing uniform templates and co-ordinated procedures and establishing a dedicated water fund within the NEF; (ii) improve regional development planning, budgeting and accountability, monitoring and evaluation systems, aggregating plans and performance data at the sector level, and introduce performance-based contracts with operators of WSS systems. Finally, (iii) it recommends to update design and construction standards for WSS systems, especially for small-scale ones, as it would help to drastically increase cost-effectiveness of the donor and state support to WSS through streamlined DFSMs.

Expected outcomes:  implementation of the recommendations will help to significantly improve cost-effectiveness of interventions in the water sector from the public budget of the beneficiary country, and by respective donors.

Benefits for EUWI+ project: the output will be used in regional exchange of experience in applying DFSM, and for capacity development through regional and country trainings.

DISCLAMER : The views expressed in this website do not necessarily reflect the views of the European Commission
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