Financing IW Partnerships

Co-financing is at the core of what separates GEF projects as grants from lending projects of private and multilateral agencies. If a GEF grant is to be a grant, then what makes co-financing any more or less relevant, or special, than other projects? One is that the GEF grant itself is to be an "increment" to add value in terms of global environmental public goods to an other-wise local provision of public goods in environmental projects. Therefore, the co-financing is the demonstration of the "local" ownership of both the local and the global benefits accruing to the intervention, through central government(s) bringing to the table of resources to add to the GEF funds in order to achieve all project benefits. Normally, for GEF IW projects, we are seeing GEF ask for a minimum of 1-to-1 cofinancing, with an average of much more than this (closer to 3-to-1, actually).

What is changing about the new GEF is what GEF is willing to fund, and therefore, the type of goods that might need to shifted to be co-financed by the benefiting countries. What exactly is this? Well, project offices, computers, vehicles, etc. as well as project-related workshops and travel, might now all need to be covered under project co-financing. GEF is becoming increasingly
convinced that the global benefit is better captured by the GEF funds as investment in the new technology to be demonstrated, through the spending of funds for the add-on to the physical infrastructure to make it an innovative and global benefit to the environment.

Just to top off this quick "tour" of cofinancing, I had an interesting discussion six months or so back with a member of the GEF Evaluation Office team. He and I were pondering "how much co-financing is too much co-financing?" The idea is that the co-financing should be the tail that wags the dog. If you have only GEF funds, then you have "no dog" and "all tail". If the co-financing is indeed too big, then the you might have "all dog" with such a little tail that it provides no function to equilibrate, or steer, the dog to producing other results other than a normal (non-GEF) project would. How much would too much co-financing be then? I don't think that I got that answer out of my GEF colleague! He is probably still visualizing about his being part of the tail,
and my being part of the dog .....

Do you have thoughts or questions on the topic of cofinancing? Please chime in!

Tracy.

Let me introduce myself: my name is Tracy Hart, and I have been working on transboundary water management for the last 10 years for the World Bank. I am a water economist by training, and so have done my share of project economic analysis and incremental cost analysis for GEF IW projects.

What do I hope that we will discuss here? Anything and everything relating to sustainable financing, starting with project co-financing, sustainable financing of multi-country transboundary institutions, valuation of transboundary assets and services, revolving funds, role of Strategic Action Programs (SAPs) for mobilizing financing, relationships with other institutions that collect water user fees, etc. This is an exhaustive list, and I will begin to write a bit on what is current thinking on each of these, week by week.

However, I encourage (and beg!) you to submit your own questions and comments to get this discussion going. No question or comment is too small, or too big. Thanks for visiting, and thanks more for participating.

Tracy Hart,
Ph.D, Senior Environmental Specialist, Environment Department,
The World Bank
Mail Stop MC-5-845, 1818 H Street NW, Washington, DC 20433, USA
Tel: 1.202.458.7465 / 1.202.522.0367
Email:  thart@worldbank.org
www.worldbank.org
skype: tracyehart
World Bank GEF IW: 30 projects leveraging $1.3 billion for global transboundary water management