About ICEF

 

 The International Center for Environmental Finance (ICEF) is dedicated to the creation of permanent, nationwide, self-sustaining, market-based systems for financing environmental projects around the world.  At present, ICEF works in Russia, Ukraine, Kazakhstan and Georgia under a multi-year, multi-million dollar cooperative agreement with the Office of International Affairs (OIA) of the U.S. Environmental Protection Agency (EPA).

 

At the World Summit for Sustainable Development in Johannesburg, South Africa, in 2002, the community of nations resolved, as a “Millennium Goal”, to halve the number of people living on the planet without access to safe drinking water or basic sanitation.  There are 1.5 billion of the former, and 2 billion of the latter.  The United Nations estimates that, to do so, will cost an additional $100 billion a year.  In response thereto, the developed nations were urged to double their aid for water/wastewater.  At present such aid amounts to about $3 billion a year.  Doubling it (which no country has yet done) would yield another $3 billion out of the $100 billion needed.  Perhaps all of the international finance institutions (IFIs), such as the World Bank and the regional development banks, combined, might add another $1 billion.  This leaves the Millennium Goal effort funded at a level of about 4%, or $96 billion short.

 

It is slowly dawning on the world’s political leadership that the private sector is the only other possible source of funds.  And, with the world’s economy at about $35 trillion, the $96 billion needed represents less than 3/10ths of 1%.  So, it might just be possible.  The question is how to get it.

 

Outside of the G8 countries, there are virtually no financial systems that access the private sector for environmental infrastructure projects.  Most developing countries rely on subventions from their central governments’ budgets.  But there, water and sanitation needs battle for scarce cash with such other vital concerns as defense, food, housing, education, and so on; and seldom win.  Little, if any, thought is given to harnessing the private sector to fund environmental needs.

 

ICEF does just that.

 

The first rule in reaching the private sector is that one size does not fit all.  Private capital is accessed through the financial services sector of each nation’s domestic economy.  Developing nations all have financial service sectors at greater or lesser stages of maturity.  Mexico and Brazil have robust domestic capital markets.  Russia and China less so.  Ukraine barely has a commercial banking industry.  Other nations have even less.  So, to access the private sector, a system must be designed to reach private capital through whatever mechanisms are domestically available.

 

The second rule for reaching the private sector is that there must be a “system” for doing so.  “One-off” deals don’t work.  Nor do pusillanimously funded “programs”.  A “system” differs from a “program” in that the structures of all of the financings are fundamentally the same and that the creditworthiness of borrowers is known.  This gives a market both depth and liquidity, which are essential.

 

ICEF works with foreign governments to create such systems in three ways.  It advises on how fiscal autonomy needs be devolved from the central government to the local level, how local water/wastewater operations need to be financially organized to obtain private capital, and precisely how scarce dollars from international donors need to be marshaled to kick start local environmental finance systems.  It each country this effort takes different shapes.  But, in the end, it all leads to the same goal: the creation of permanent, nationwide, self-supporting, market-based systems for financing environmental projects.

 

Please visit ICEF’s Programs page to learn how this is being done in each country where ICEF works.