Student: Inês Freire Machete

Title: "Financing the Water Supply and Sanitation Sector: Strategies, Risks, and Decision-Making of Development Banks"

Date: 23/09/2025

Time: 10h00

Location: Amphitheater PA-3, Mathematics Building (-1 floor)

Supervisor: Professor Rui Domingos Ribeiro da Cunha Marques

Co-supervisor: Professor Miguel Brau Canadas Alves Pereira

Abstract: Access, quality and equitable water supply and sanitation (WSS) services are essential for sustainable development and the achievement of Sustainable Development Goal 6 (SDG 6). However, a persistent financing gap remains one of the main barriers to improving WSS services. External financing is hindered by the perceived high-risk of WSS projects, as well as the substantial sunk and upfront investments required, and the need for continuous financing throughout the lifecycle of WSS services. Development Banks (DBs) play a critical role in financing and leading WSS projects, making their analysis crucial for identifying challenges and proposing strategies to attract external financing and ensure project and sector success. It is necessary to analyze the financing environment within the WSS sector, focusing on project risk perception, available financing options, key financiers, project success, strategic prioritization of projects, and environmental factors (country- and sector-specific), among other aspects. Risk assessment and the development of mitigation strategies are essential, since different types of project risks appear to influence the decision to finance or not a WSS project, and that risks (such as environmental, social, political, and governance) appear to be good predictors of project success. The critical role of DBs in financing the WSS sector and fostering successful projects was highlighted. Furthermore, it is important to strengthen governance while implementing effective policies and regulations and enhancing transparency to increase financiers' interest in the WSS sector. DBs should attract co-financing, including private sector financing, while helping reduce reliance on subsidies to finance WSS project. The outputs provide valuable insights for decision-makers, including both financiers and borrowers, offering a framework to improve project selection and financing decisions for DBs.

Research Unit: Centre for Management Studies of IST (CEGIST)