Water distribution, sanitation and purification require huge investments, whether to develop and modernise installations in Europe or to give non-EU countries, especially the vulnerable developing nations (drought and/or floods, lack of access to drinking water and sanitation) the opportunity to develop their own water capacities and infrastructures. The EU considers water to be a priority issue in its environment and development policies and has consequently set up a number of instruments providing the financial means for its ambitions.

LIFE+

LIFE is the only instrument available to DG Environment for implementation of the Community policy defined under the Sixth Environment Action Programme (EAP). With its three thematic chapters (LIFE-Nature, LIFE-Environment and LIFE-Third countries), this programme co-finances environmental actions in the European Union, the Central and Eastern European applicant countries and some non-EU countries. Launched by the European Commission in 1992, LIFE contributed €1.35 billon to some 2,750 projects, including hundreds related to urban water management, industrial waste water treatment, monitoring of water basins and improving the quality of groundwater. LIFE+, which runs from 2007 to 2013, has a total budget of €2.143 billion. In its first call for proposals (2007), 143 projects were selected, representing a total investment of €367 million, of which €186 million will be financed by the EU.

EIB’S KEY ROLE

“Environmental protection and improving people’s welfare are among the bank’s top priorities, for which it has decided to earmark between 25% and 35% of its lending in the member countries of the Union,” notes a March 2005 report entitled ‘The EIB and the water sector’. As the EU’s long-term financing institution, the European Investment Bank has lent, since its creation in 1958, nearly €30 billion for water distribution and sanitation projects. It supports projects for water distribution, sanitation and treatment, purification of waste water and protection against flooding and coastal erosion, drainage of rainwater and so on. In 2007, the EIB signed lending contracts for water projects in the amount of €2.6 billion, in both the EU and partner countries. This is the price to pay if Europe wants to make its contribution to meeting the Millennium Development Goals, which aim to reduce by half the percentage of the population lacking access to drinking water and basic sanitation by 2015. That will is confirmed by the EU Water Initiative launched at the global Sustainable Development Summit in Johannesburg in 2002.

EU-ACP FACILITY

In Africa, 40% of the population lacks access to drinking water. To contribute to the alleviation of this problem, the EIB lends some €338 million annually to the African, Caribbean and Pacific (ACP) states. In 2004, however, given the limited progress on access to water and sanitation, the European Council proposed, in the framework of its Water Initiative, , to allocate €500 million to the ACP-EU Water Facility to be funded from the conditional €1 billion of the 9th European Development Fund. The creation of this facility was endorsed by the ACP-EU Council of Ministers at its meetings in Gaborone in May 2004 and Luxemburg in June 2005. The two tranches of €250 million each have been made available.

The Water Facility involves the EIB much earlier in the project cycle, enabling it to provide support for the development and implementation of innovative projects, and combines EIB lending with grants. The ACP Facility is a subsidy that complements the funds raised by the applicant, whether decentralised agencies, private operators, members of civil society or NGOs.

FEMIP

To encourage the development of projects with its Mediterranean partners ⁽¹⁾, the EIB has a specific instrument, the Facility for Euro-Mediterranean Investment and Partnership (FEMIP), which gives priority to private sector ventures. The FEMIP has been operational since October 2002 and today stands as a reference for economic and financial partnership between Europe and the Mediterranean, having provided funding of nearly €6 billion from 2002 to 2006. Another EIB tool for these partner countries is the Mediterranean Environmental Technical Assistance Programme (METAP). Co-financed with the European Commission and the World Bank, this programme conducts preparatory studies for the design and management of environmental projects. In all, the EIB has lent €1.3 billion between 1995 and 2004 in these countries, where the water sector is of critical importance, ie more than half the environmental loans in the region (€2.4 billion).

⁽¹⁾ EuroMed Partnership: Algeria, Egypt, Gaza/West Bank, Israel, Jordan, Lebanon, Morocco, Syria and Tunisia.