11. 11.1 FINANCING WATER RESOURCES DEVELOPMENT AND MANAGEMENT Financial Sustainability 11.1.1 Policy: Member States shall ensure adequate financial resources for national as well as regional projects for water resources development and management. The water sector has a very high potential for increasing regional and national economic development. This potential has to be recognised and the profile of the water sector raised in terms of ensuring that budgetary allocations are aligned with this reality. Increased financial resources are needed not only for infrastructure development but also for capacity building, for institutional development as well as for research and technology development. The required financial resources may be for national projects as well as for regional projects on shared watercourses. 11.1.2 Policy: For water resources development and management at national and regional level to be financially sustainable, Member States as well as SWCIs shall strive to recover all costs for managing the resources while taking into consideration the special requirements of the poor and the vulnerable in society. The promotion of cost recovery through user fees in respect of water resources development and management, to the fullest extent possible, not only leads to increased revenue for the sector institutions but also improves the efficiency of water allocation. However, the pricing must consider the special requirements of the poor and the vulnerable in society. Cost recovery policies may be tailored to prevailing local and socio-economic conditions at national level or within a shared watercourse. Thus Member States and/or river basin organisations would develop cost recovery policies applicable to their water resources situation. For example in a country where rural water supply depends on groundwater from very deep boreholes using electric or diesel pumps, it would be unrealistic to expect the poor rural community to pay for capital investments associated with infrastructure development. 11.2 Cost Reduction 11.2.1 Policy: Member States shall institute planning and operational systems to facilitate cost reduction in the management of water resources. Cost reduction strategies, emphasizing optimisation of existing capacities (through rehabilitation and performance improvement), prior to the expansion of the capacity of the facility, least cost designs, and water demand management - 54 -