The role of National Public Development Banks in financing the water and sanitation SDG 6, the water related goals of the Paris Agreement and biodiversity protection

This report is a global assessment of national public development banks’ (PDBs) involvement in the water sector in its broadest sense. It was commissioned by the Agence Française de Développement (AFD) in the context of the Finance in Common Initiative, which seeks to enhance PDBs’ role in financing countries’ commitments to the Sustainable Development Goals (SDG) and the Paris Agreement.

PDBs are banks located within the public sphere by mandate, ownership or governance. PDBs have a specific mandate to deliver on public policy objectives that support the economic and social development of a country or region.

Historically, national PDBs have played a significant role in water sector development in high-income countries such as France, Italy and the Netherlands. Whilst there are examples that PDBs play a similar role in middle-income countries, it also appears that their involvement in the water sector has not yet reached its full potential.

The main hypothesis of the assessment was that national public development banks are underused and that they have the potential to raise finance for achieving both the SDG 6 and the water-related Paris Agreement goals.

To test this hypothesis, this research assessed: 1) the nature and extent of PDB involvement in financing water-related investments, and 2) the drivers and constraints for PDB involvement in the water sector. Finally, the assessment sought to define recommendations for enhancing PDBs’ role in water-related investments, to see if the hypothesis could be confirmed.