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A Matter of Survival

bilateral and global donor agencies. Private sector philanthropic and oceans. The Blue Fund could subsidize any combination
funding is available for conservation, education and other of interest, insurance and feasibility costs in a joint project
grassroots activities. Sovereign wealth funds provide financing promoting transboundary water cooperation between riparian
for large infrastructure projects at the national level, without countries, which has an investment promise from MDBs, and
any concern for the implications on transboundary relations. which involves capital costs of $100 million or above. At the
Financing offered by Multilateral Development Banks (MDBs) very least, the Blue Fund should aim to cover about 3 percent
for large infrastructure projects at the national level is available of the annual cost of the project, including interest subsidies,
without any incentives for collaboration or consideration of the insurance, and project proposal preparatory expenses.
impacts of the project on other riparian countries.
The Blue Fund will provide financing only if the following
It is thus necessary to create financial incentives for large conditions are met:
infrastructure projects, which are collaborative in nature so that
the risk of conflicts is mitigated. The objective must be to create a. Developing countries: The Fund will be available only for
preferential support for the countries that collaborate with one countries that are in most need of assistance.
another instead of competing within the nationalistic mold. b. Transboundary freshwater resources: The Fund will only
be available for infrastructure related to shared fresh
Such incentives could include preferential and concessional watercourses between nations, such as lakes, rivers and
finance for transboundary collaborative projects in water aquifers.
resources and infrastructure of a significant size, including c. Substantial Infrastructure projects: The Fund is for water
hydro-electricity, irrigation, navigation, eco-tourism, among infrastructure projects that are worth $100 million and above,
others. Incentives can be provided in terms of interest subsidies, and not for capacity building or institutional strengthening
preparatory costs, insurance costs, and matching grants.
activities, which are the priorities of many conventional
funds.
Many new instruments can be created while some current
mechanisms can be reshaped. We provide a possible Blue Fund d. Enabling finance: The Blue Fund is not envisaged to finance
model that meets the objective of incentive financing for using infrastructure projects, but to ensure that interest rates
water for peace. and other related costs of such projects are covered. Due
to the fact that interest rates grow when countries borrow
The Blue Fund is conceived as a fund that can be replenished a substantial sum of money from MDBs or bilateral donors,
on an annual basis for concessional and preferential funding of they are often discouraged from taking the loans. The Blue
transboundary water cooperation on freshwater resources only, Fund can help by granting them access to larger funds.
such as rivers, lakes and aquifers, and is not meant for seas

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