Financial aspects of water supply and sanitation in transboundary waters of South-Eastern Europe

The countries of South-Eastern Europe (SEE)3 face daunting water resources challenges as the needs for investments into water supply, sanitation, irrigation and hydroelectricity grow; as water quality is often described as not adequate coupled with an increase in environmental and social concerns; and as the threats posed by floods and droughts are exacerbated by climate change which was illustrated by the most recent floods in Bulgaria and Romania during the summer of 2005. Although the SEE region can be broadly characterised as water abundant, the water resources are unevenly distributed among the countries thereby leading to water shortages in some countries and during dry periods (i.e. an uneven spatial and temporal distribution of water flows) causing water shortages in localities throughout the SEE region. Moreover, surface as well as groundwater resources shared among a variety of users from different South-Eastern European countries are under a range of natural but also man-made
pressures.

The objective of this study is to provide an overview of the current situation of the reform process regarding water legislation and the institutional arrangements prevailing in the seven South-Eastern European countries. The study also discusses the use of economic instruments in the countries of the SEE region and highlights the investments needs for water infrastructure programmes although this information is not available in a comprehensive and consistent format. Furthermore, it presents a
concept developed by the German bank Kreditanstalt für Wiederaufbau (KfW) as a tool for
funding water investment based on transparent selection criteria.