Duisenberg Lecture by the Prince of Orange, Chair of the United Nations Secretary-General’s Advisory Board on Water and Sanitation (UNSGAB)

Speech | 12-10-2008

Sanitation for all, all for sanitation!

Your Excellencies, honored guests, ladies and gentlemen,

The financial crisis has turned the world upside down. Many people are worried about their own future, the future of their country, the future of the system. Everyone is curious to know what will happen next. So do I, but I also have sleepless nights worrying what effect the financial crisis will have on the economies of developing countries. Dominique Strauss-Kahn warned that it could very well bring famine in its wake. In June, the IMF had already predicted that the economic slowdown could lead to a 15% reduction in loans and investments in developing countries.

Ladies and gentlemen, you are the experts in the field of finance and monetary policies. You all know that investments and access to capital are prerequisites for development, and so we must find a way of keeping things going. Your focus is primarily on the financial and economic crises which have gripped and lamed us for the past weeks. Rightly so! But this afternoon I would like to request your attention for another crisis that is also affecting 40% of the world population, the 40% poorest fellow citizens. We cannot allow the developing countries to slide away. The current financial crisis, coming on top of the various food and energy crises, makes them extra vulnerable.

At the Millennium Summit in 2000, Heads of State and government from all 189 then UN member states unanimously pledged to finally commit to the development of those in real need and signed a declaration which summed up the Millennium Development Goals to achieve clearly defined targets on, among others, poverty reduction, health, education, a sustainable environment, equal rights for men and women and fair trade. At the start of the new millennium, the international community agreed that by 2015 poverty, disease and hunger should have been radically reduced - by half, at the very least.

Ladies and gentlemen, it is precisely because of the financial crisis that I am so concerned about the world's poorest people. How hard will they be hit? Achieving the Millennium Development Goals is already proving difficult. Are we going to work even harder to fulfil our promise? Or will the world simply give up?

It is important that the commitment to achieving the MDGs by 2015 should be reconfirmed at the highest political level. So we need to make concrete agreements about contributions to specific goals, and to link volumes of aid to them. Sadly, only a few countries actually meet their commitments of spending at least 0.7% of GDP on ODA. In fact the majority of donor countries - the largest ones in particular - spend less than a quarter of that percentage.

Today I would like to take a few minutes of your precious time to elaborate a bit more on that other crisis I mentioned a few moments ago. That other crisis has been raging for many years now - a water and sanitation crisis. Though less well-known, it is as threatening as the financial crisis and the solution is available as long as we can generate the political will to act. As chairman of the United Nations Secretary-General's Advisory Board for Water and Sanitation, UNSGAB for short, access to a sustainable source of acceptable quality drinking water and improved sanitation is the Millennium Development Goal target that has my undivided attention.

Because, ladies and gentlemen, the need for fresh water, something we humans cannot live without for more than three or four days, and for which, unlike fossil fuels, there is no alternative, is something most people can relate to. Most people also understand that more than 70% of this precious resource is used to grow our food, which we can not do without for more than 2 months. We understand this fact mostly thanks to media attention around the unacceptable food crisis the world is experiencing, as we speak.

Understanding stops when it comes to sanitation and hygiene. As children, we were taught to wash our hands before every meal. Maybe we didn't know exactly why, but it was the way we were brought up by our parents, so we did it. It was something we did, like not speaking in public about personal hygiene and sanitation. It was just not done! That shyness around sanitation issues, ladies and gentlemen, you share with at least 2.4 billion fellow citizens on this planet. They also do not talk about sanitation, in their case because they simply do not have it! 40% of the world's population live at permanent risk because they lack something that is so normal to us we are not even allowed to speak about it. We accept 7500 people die every day, 5 000 of whom are less than 5 years old, because we don't mention the subject.

Well, let me tell you, it is time to break through the taboo, to call a spade a spade or a toilet a toilet and start doing something about this unacceptable killer that does not take rocket science to conquer but demands the political will to commit the funds required. When the globe seemed limited to Europe and North America in the first half of the 19th century, global health was primarily achieved through nothing else but sanitation. The substantial decline in mortality rates did not come from medical wonders but from toilets, sewers and personal hygiene. If you focus on global health and really want to make a quantum leap, you have the solution right there!

The same goes for education. First of all, how can you achieve universal education if half the class, usually the young girls, are absent since they are performing their primary family obligation: fetching water. And exacerbating these low attendance rates, the WHO estimates that 272 million schooldays are missed annually due to water-borne or sanitation-related diseases. If we don't get the young girls to school we will not only prevent their development, but we will also lose the opportunity to educate them on reproductive health and nutrition. And that will affect the health of the next generation.

And even if we do manage to give the young girls the education they so desperately need, many will drop out at puberty because they lack a private sanitary facility. In some rural areas of Asia, more than 50% drop out for this easily avoidable reason.

Try to envision for yourself our world at the end of this century, with nine to ten billion people. With current agricultural technology we will not be able to feed them all, even at today's caloric usage - which is bound to grow in fast developing economies like China and India, with their ever expanding middle classes. We first need a radical new green revolution, reducing to around half the water needed to produce food through, among others, biotechnology and seed improvements. And only then can biofuels become a sustainable long-term alternative to fossil fuels.

When it comes to energy, there are alternatives that also happen to be related to water. Only 4% of Africa's hydro potential has been tapped. That means that an enormous 96% is still waiting to be used for hydro and irrigation for food production and, once sustainable, also for biofuels. And here is one of the most direct and critical links between energy and climate change. It is now generally acknowledged that the effects of climate change will be greatest in the water sector: with sea level rising, land and sea-based ice masses melting, Siberian permafrost thawing, ocean currents slowing or ceasing altogether and precipitation patterns changing so drastically that they cause droughts and flooding in areas that are already severely challenged, once again Africa being on the front line when it comes to suffering the worst effects.

The MDG mid-term review took place in New York in late September. The conclusion was that progress is being made towards achieving the MDGs. The good news is that we are on track to achieve the drinking water target worldwide. Sadly, however, progress on the sanitation target is still lagging far behind. So extra investments were pledged on every goal. Financial commitments were made to a total of 16 billion dollars. 2.2 billion dollars were committed to provide water and sanitation for 30 million people by 2015.

Of course I am happy with this extra financial injection. But more money is needed. In times of scarcity, when resources are limited, we inevitably have to set priorities. As I see it, in efforts to achieve the MDGs, preference should be given to those that are critical for achieving the others. We have just seen that water and proper sanitation have direct effects on health, education, food production and poverty alleviation, so how do we expect to achieve the MDGs without decent water supplies and sanitation? The answer is, ladies and gentlemen, we can't. We need far more money. We need to increase investment. Estimates of the cost of closing the gap between current trends and what is needed to meet the target range from 10 to 18 billion US dollars a year. That is in addition to the 54 billion dollars a year required to maintain existing water and sanitation systems.

I call upon you, bankers, financial experts and ministers of finance and water, to help us develop appropriate investment plans, financial instruments and markets to facilitate further investment in the water and sanitation sector; to provide health, dignity and development to all fellow citizens.

You can make a difference!

In times of economic downturn, we tend to look for investments that yield a high return at a minimum risk. I am pleased to announce that such an investment does exist. Investing in water and sanitation pays off. WHO estimates that every dollar invested in water and sanitation contributes to at least five other MDGs and generates nine dollars' worth of productive activity.

That seems like an irrational figure, but becomes very rational when you realize that Sub-Saharan countries spend 12% of their national health budgets on sanitation-related diseases and that 50% of the hospital beds are occupied for the same reason. If the MDG water and sanitation target is achieved it would lead to three billion more working days and slash the number of premature deaths.

Fast action is required, but sanitation is about more than just building toilets. Too often in the past, sanitation facilities have been built and then left abandoned. The focus must be on demand-driven approaches that promote the benefits of installing household toilets. Possible ways to create demand include hygiene education at school, mass-media campaigns, demonstration latrines and exploiting community pressure and community dynamics to eliminate defecation out in the open.

Ladies and gentlemen, what are the costs that we are talking about to achieve the MDG on water and sanitation? WSP-World Bank and WHO did a joint study and came up with the following conclusions: in terms of the estimated total spending required, including maintaining and replacing existing infrastructure and facilities and extending coverage to take account of existing and future increases in population, spending on water and sanitation would be roughly 360 billion dollars, These are staggering figures but the total amounts to just over half of the 700 billion bailout plan that was approved by the US Congress two weeks ago and about one fifth of the money that has evaporated on Wall Street alone in the past two weeks. I remember from my Physics class that evaporation can be liquefied by cooling, at least as far as it concerns my field of activities, water!

Since I am surrounded here mainly by people with a background in finance and not in physics, I have focused so far on the vast sums of money needed to provide access to water and sanitation. But I don't think this is the biggest issue. If we take a collective decision to provide water and sanitation, the money will follow. Scarcity makes for good management. The problem is largely one of priorities and political will. This is the challenge I am working on in my capacity as Chair of UNSGAB.

In UNSGAB, we agreed that we cannot afford to reject any solution for improved access to water and basic sanitation, as long as it is sustainable. This implies that we should not have endless debates about public and private investments.

How can I look an inhabitant of Kibera, Dharavi or Rocinha in the eye and tell him that we are spending precious time debating the pros and cons of public or private operation of water services when he is paying ten times the amount of piped water to a vendor who delivers water of dubious quality and when his children are dying of waterborne diseases because of a lack of any sanitation facilities at all?

Ladies and gentlemen, in order to call attention to the sanitation crisis and create awareness and support, UNSGAB recommended that the UN declare 2008 the International Year of Sanitation. I myself, as Chair of UNSGAB, and the dedicated members of my board have spent this crucial year travelling all over the world to reach out with this message to heads of state and government, financial institutions and all those who could help to contain this sanitation crisis.

I am pleased to report that UNSGAB has received a great deal of support and cooperation this year from world leaders and governments. We have held many interesting and inspiring dialogues and I hope there will be more to come. We are getting a lot of positive responses to our call for action. Governments and organisations are recognising sanitation issues and are showing their commitment to dealing with them by placing the subject high on the political agenda. This is one of UNSGAB's most important objectives.

I can also report that many international, regional, national and local events and initiatives have been launched. The regional sanitation conferences produced unprecedented declarations, for example in Africa, South East Asia and Latin America and the Caribbean, that provide a strong foundation for developing the water and sanitation sector in these regions. I personally consider this result to be an enormous leap forward!

Fortunately, words are being translated into action. At the insistence of the African Ministers responsible for sanitation we managed to persuade the African Union to discuss water supply and sanitation for the first time in its history at last July's Sharm el Sheikh summit and subsequently have all heads of state and government adopt the Sharm el Sheikh declaration unanimously. Nice words on paper is what I hear you thinking now, but with these nice words on paper the responsible ministries have been able to secure funding in their home countries and effectively implement new projects, just because their heads of state had actually publicly acknowledged the sanitation crisis in Sub Saharan Africa by signing that document.

Thanks to an effective lobbying campaign, water and sanitation was also on the agenda at the G8 Summit in Japan in July, where the G8 leaders agreed to reinvigorate their efforts to implement the Evian Water Action Plan. At the next Summit, in Italy, they will review the plan using a progress report prepared by a team of water experts who are in close contact with my board.

This year too, the Global Sanitation Fund was launched by the Water Supply and Sanitation Collaborative Council. The fund offers all types of contributors, bilateral and multilateral aid organisations, commercial organisations, charitable foundations and private individuals, an efficient and cost-effective way of helping the world's poorest people address their basic sanitary needs.

Ladies and gentlemen, it has become clear from the work of many individuals and development fund agencies that central governments can no longer provide 100% of the finance to build the water and sanitation facilities needed, in either developed or developing countries.

Traditionally many countries supported the construction of water and sanitation facilities on a grant or if you will, free money basis. In doing so they also solicited from donor organisations technical and sometimes financial assistance in the form of loans at the sovereign level.

This approach has become more difficult with the current scarcity in both in-country budgets and equity contributions for donor organisations.

What is more, where free money or low interest loans from donors passed down to sub-sovereign municipal entities, the facilities did not have the administrative and management personnel needed for proper maintenance and so many fell into disrepair.

It is abundantly clear that there is a need for more in-depth analysis of developing countries' legal, administrative and policy frameworks. This will enable them to work with world leaders on new frameworks within which sub-national municipal entities can start financing and managing their own water and wastewater systems. Tied in with this is the absolute need to develop a debt market for infrastructure in local currency. These are tasks of Herculean proportions. But they are absolutely critical in order to dovetail with the policy changes that world leaders are embracing in response to the need for increased, improved and in some cases new water and sanitation services to meet the Goals by 2015.

It is important to understand that this work has already begun in several countries.

An example is Vietnam which has agreed to studies by the USTDA and USAID to analyze its existing legal framework for developing its local debt capital market and sub-national debt financing. The aim is to modernize and improve local governments' capability to finance their infrastructure needs in local currency. This work is ongoing.

Across the globe in Colombia, the private sector is now developing a pooled financing programme for municipal entities to finance their water and sanitation capital needs. This programme will allow constitutionally protected revenues, known as transferencias, which flow down to local governments to be pledged into trust funds allowing them to be the credit support for leveraging into the local debt capital markets.

This access to a strong, identified revenue stream will allow the pooled financing transaction to be highly rated (probably triple A) while the underlying municipal recipients of the bond proceeds raised in Colombian currency by the Trust - the pooled financing vehicle - are not rated at all.

UNSGAB is highly supportive of these efforts and the need to develop local currency-based debt markets for countries to finance their water and sanitation system needs to meet the MDG. UNSGAB is also encouraging countries to consider developing other financial techniques that can leverage scarce central resources to help poorer or distressed sub-national entities.

To that end we have been working with positive results with many multinational development and donor banks. We have agreements in place with the African and Asian development banks and the Inter-American Development Bank. Our latest initiative is with the World Bank, who's President, Mr Robert Zoellick, met with my Finance Working group and myself. We reached an agreement that we would work together to advance the excellent work that the WB and the IFC have done to provide technical and financial assistance for water and sanitation throughout the world. Our groups are working to identify three countries for a top-down barrier analysis and develop a legal, administrative and capacity framework tailored to each country to make improvements in their abilities to provide local currency financing for water and sanitation facility needs.

All of this is needed at a time when the world financial markets are experiencing significant stress. It is abundantly clear that it is neither realistic nor feasible for local governments to meet water and sanitation capital needs by borrowing on the international debt markets. In fact, it would be highly costly and, in today's market, virtually impossible. Rather than fold our tents and throw up our hands, the challenge is for all of us to work together and become more innovative and creative. We must encourage individual countries to develop their debt markets, change their policies towards the local authorities' responsibilities and provide them with the legal and administrative tools and training to develop, finance and manage their own infrastructure, particularly for water and sanitation.

In relation to this I would like to emphasise the importance of Official Development Assistance for the development of local debt markets. Targeted ODA can function as a catalyst and will allow extra time for local debt markets to mature. It is again critical that OECD and other rich countries meet their agreed target of spending 0.7% of GDP on ODA. Because in these uncertain times, it is of the greatest importance that international development aid commitments are met!

Of course, we are talking about large sums of money. But let's look at the issue from another angle. To achieve the MDG for drinking water and sanitation, we'll need as indicated before at least ten billion dollars extra a year worldwide. But at the same time, it is only a fraction of aggregate world GDP. That amounts to almost 45,000 billion or 45 trillion dollars, of which more than three quarters - around 32,000 billion - is generated in high income donor countries.

Effectively the UNDP calculated in 2003 in its Human Development Report that if the world's largest 23 donors were to deliver ODA equal to the 0.7 % of their GDP, it would amount to 165 billion dollars a year. About three times their aid level at that moment! The target of the EU member states is now to raise their average ODA from 0.39 % of GDP in 2006 to 0.51 % in 2010; this alone will mean an additional 20 billion Euros in ODA by 2010 and there is a long way to go to the minimum 0.7%!

Ladies and gentlemen,

To sum up: we all agree that the current financial crisis is unprecedented in history and calls for strong, collective measures to secure our economies and safeguard our social systems. However, the unanimous commitment made by world leaders in 2000 to fighting world poverty and achieving the millennium development goal targets by 2015 still needs to be followed up seriously and given the highest priority.

Lessons from the not so distant past have taught us that investing in social and physical infrastructure like water supply and sanitation will help to reduce poverty, and at the same time create employment and strengthen our economies.

This is our job. Only together can we help make this happen. New visions and new policy need to be shaped. In this way we can fulfill our mandate to help meet the basic water and sanitation needs of all the people in the world.

And while thinking of showers and hygiene I see this little boy in pyamas and dressing gown, hair still wet and neatly combed, brought down to say hello to his parents' friend, Mr. Wim Duisenberg, then a director at Rabo Bank. That was me, about 35 years ago, with access to more than adequate water and sanitation, able to meet the man with whom I was to meet many more times in many different capacities, both professional and in family situations, in the future. I would like to thank Rabo bank for inviting me here today to give the Duisenberg lecture and to share with you my passion, a world in which every girl and boy, woman and man, will have the opportunity to get access to that good shower and adequate sanitation. I was in the fortunate position to meet Wim Duisenberg after that shower; they will never have that opportunity, so let's do everything in our power to provide them with what is still achievable.

Ladies and gentlemen, sanitation for all means all for sanitation! Thank you!!!