Billions of dollars of new, urgent, often poorly traced climate adaptation funding are flowing through relatively untested channels into the water sector, a sector which is vulnerable to corruption because of its fragmentation, technical complexity, and the essential, irreplaceable nature of the services it provides.
Close to 80% of climate adaptation funds are directed to the water sector and related sectors – wastewater, disaster risk management, and natural resources management. This is already an inordinately small share of total climate finance: only 6.3% of climate finance goes to adaptation and not mitigation. It’s all the more important to make sure it is not wasted.
Corruption and poor integrity pose significant risks for climate adaptation
The IPCC scientific committee stated in 2021 with high confidence that floods and droughts are going to become more intense, water availability will be affected for human consumption, agriculture, industrial and economic activities, leading to food crisis and biodiversity loss. In its latest report of April 2022, it stresses the need for “accelerated and equitable climate action” and shows that the next few years are critical to avert disaster. Water is the primary vessel for climate adaptation work.
Effective “accelerated and equitable climate action” is threatened by insufficient funding and by corruption and poor integrity. These waste resources and talent, divert much-needed funding away from those who need it most, and drive inappropriate adaptation choices.
What happens when climate finance in the water sector is misused
Corruption does not just result in financial losses. In the water and sanitation sectors, it impacts directly on people’s lives, health, and livelihoods, on socio-economic development and on environmental sustainability. And it hits hardest in the most vulnerable communities, poor coastal and rural populations in developing countries, those affected by conflict and political instability, marginalised communities, those with limited choices of where to live and how to earn a living, women-headed households, the old and the very young, and people with disabilities.
In some cases, poor integrity can increase the risk of maladaptation, where the outcomes of climate adaptation programmes are subverted: climate-related risks increase instead of decrease or new additional risks and vulnerabilities are created.
In practice, there are already many troubling cases of corruption and poor integrity in climate projects, from funds gone missing, to dysfunctional flood protection systems that are not built according to specifications, from capture by elites, to cyclone shelters built for private purposes on private land inaccessible to the targeted community. We are only aware of the tip of the iceberg.
Anti-corruption initiatives in climate adaptation are improving
A number of climate finance actors, including major multilateral funds, have already put in place anti-corruption measures and evaluation mechanisms to ensure the efficacy of their programmes. These efforts are important and valuable even if there is room for improvement.
Transparency International’s new report of April 2022 recommends specific improvements in terms of accountability and transparency. It also highlights the need for policies on sexual harassment, related to gender policies focused on promoting equal participation and equitable outcomes for women. This is especially relevant for the water and sanitation sectors where women play a major role in managing household water and hygiene but have little representation at the sector level.
Wanted: Integrity initiatives built for and with the water sector
We see both a need and an opportunity for a broader approach that addresses the specific risks of the water sector. This has three major implications:
Focusing on the corporate governance and anti-corruption policies of funders themselves is an important first step. However much more can be achieved by also investing in the capacity for integrity of water and sanitation sector actors, and not only the direct recipients of funding. This means supporting their ability to take advantage of accountability mechanisms and their capacity to assess and preventively act on their specific sector, and water-energy-food nexus, integrity risks.
The water and sanitation sectors have a crucial responsibility: to provide an essential service – and human right – for all. There must a be focus in climate adaptation work on centering the voices, and water and sanitation needs, of the most vulnerable, those bearing the brunt of climate change, the left behind and those who run the risk of being left behind, including climate refugees. Only 2% of climate funds reach vulnerable communities and local communities seldom participate in decision-making on fund allocation and planning. This can and must change.
The water and sanitation sectors are not just about pumps and pipes. Existing financing mechanisms are already skewed towards major infrastructure developments even when these are not in line with people’s needs or with the capacity available to maintain or operate them. Climate adaptation funding has similar biases. Not enough funding is spent on improving the governance systems, with the result that governance failures, including corruption, may lead to significant risk of maladaptation. One way to address this is to assess and address corruption risks during procurement processes but also early on, in budget allocation, planning and design phases. This requires more long-term investment in building governance capacity and in corruption risk assessments.
We urgently need to prioritise and invest more in water and sanitation through climate work. We also need to make sure we use available funds to their utmost potential and to the benefit of those who need them most. For this, we need to invest in partnerships with water and sanitation sector stakeholders, and invest in governance and integrity.
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