Financing Water Quality Protection in the Caribbean A Case Study of Trinidad and Tobago

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1 Financing Water Quality Protection in the Caribbean A Case Study of Trinidad and Tobago Stacey Isaac Berahzer Annual Caribbean Water and Wastewater Conference, in Partnership with Florida American Water Works Association and AIDIS Miami, FL August 26, 2015

2 Dedicated to enhancing the ability of governments and other organizations to provide environmental programs and services in fair, effective, and financially sustainable ways through: Applied Research Teaching and Outreach Program Design and Evaluation How you pay for it matters 2

3 Objectives To highlight causes of flooding in Trinidad To provide recommendations on addressing the problem Public Education Financial Mechanisms Public Private Public Private Partnership

4 CAUSES OF FLOODING

5 Naturally High Rainfall Levels Latitude results in high rainfall (average of 2,200 mm (86 inches) per year Wet season is from June to November CAUSES OF FLOODING

6 Deforestation Deforestation in the Northern Range is causing soil erosion and silting of rivers Reasons: Housing Agriculture Quarrying Research shows that unplanned development in the Northern Range is causing more run-off (Paul Hinds, 2015) CAUSES OF FLOODING

7 Urbanization Urbanization is occurring at a 3% rate of change on an annual basis (UN Population Fund, 2015) CAUSES OF FLOODING

8 Pollution Pollution is causing blocking of drainage ways Example of improperly discarded materials in a concrete drainage ditch CAUSES OF FLOODING

9 Concretizing of Yards Rapid vegetation growth is a challenge for homeowners with yards: Diverse flora and fauna owing to connections to the South American mainland Warm temperatures = year round growing season Result: Many yards are being concretized Could concretizing of yards be a status symbol among households??? CAUSES OF FLOODING

10 The Result Flooding in Central Trinidad After Rainfall on July 5 th, Source:

11 Effects of Flooding Loss of human life Loss/damage of property Loss of productivity Financial losses Adverse health effects Inconvenience Etc.

12 Solutions are all focused around an understanding and appreciation of the water cycle POTENTIAL SOLUTIONS

13 Public Education Teach public about the connection between flooding and actions such as deforestation and pollution Fora for education: Schools Meetings of civic, religious, neighborhood groups Hands-on activities such as beach clean-ups Financial Impact: An informed public will seek more water quality-friendly options from commercial entities POTENTIAL SOLUTIONS Grass blocks in Trincity, Trinidad, allow more infiltration into the soil than traditional concrete

14 Tax Incentives Waiver of 15% Value Added Tax on products that improve water quality Tax credit on water-sensitive products (similar to existing renewable energy incentive) Tax incentives can apply to residential as well as commercial customers POTENTIAL SOLUTIONS

15 Public (Government) Financing On public land: Install effective practices (with public dollars) On private land: Government can provide grants for residents/commercial entities to install these features Grants to do public outreach, or research effective solutions Sign Explaining "Silt Trap" and How it Protects Water Quality along the Chaguaramas Boardwalk in Trinidad POTENTIAL SOLUTIONS

16 Generating the Revenue (Public) Higher tax on products that impact water quality adversely (controversial; but proposed products include fertilizers, Styrofoam products, bottled water) Higher Fees by developers for landdisturbing activities Fines/Penalties for those who violate policies (e.g. river reserve or Hillside Development Policy) POTENTIAL SOLUTIONS

17 Private Financing Private Citizens: Educating citizens can cause them to make the financial investments themselves Commercial/Corporate Entities: Sponsorships of local clean-up or reforestation events. More effective if: Sponsor receives significant recognition (signs, media coverage etc.) Volunteer hours can be tracked and leveraged POTENTIAL SOLUTIONS

18 Public Private Financing Opportunities Public Private Partnership (P3) is an approach that many governments are considering P3 = a co-operation between a public entity and private parties (financiers, construction companies, individuals, and other businesses) P3 can involve any combination of design, build, operate, maintain, finance, and transfer P3 approach may be more relevant to a larger scale effort, e.g. a national river channel management program POTENTIAL SOLUTIONS

19 Loan Loss Reserve Fund for Water Projects A credit-enhancement mechanism that entices commercial banks to lend capital at a lowerinterest rate or with more flexible terms than they might do otherwise The government establishes a fund with public dollars that serves as a pool from which private banks lending for water related projects can draw if their loans go into default As more loans are done, a track record for these water-related projects/products is established for the lenders to set more informed interest rates etc. POTENTIAL SOLUTIONS

20 Loan Loss Reserve Fund for Water Projects an Example Installing a household rainwater harvesting system: Initially, bank may be hesitant to provide a loan, and/or charges relatively high interest rate But, the government provides a loan loss reserve fund to help bank mitigate default risks With time, more loans are made for rainwater harvesting systems Statistics on rate of default etc. is established More banks offer financing for this type of project Less government involvement may be needed POTENTIAL SOLUTIONS

21 Conclusion: An Ounce of Prevention There is a tangible financial loss when crops are affected by flooding, as food shortages ensue and prices soar. One way or the other, the country is paying when it comes to flooding. Reserving some of these funds for prevention of flooding versus a cure after a flood event is worth consideration.

22 Contact Information Stacey Isaac Berahzer EFC at University of North Carolina, Georgia Office