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To ensure the sustainable development of the water and wastewater (WSS) sectors, new and more investments are needed. However, private financing in these sectors has not been successfully leveraged. This study conducted a systematic literature review of peer-reviewed papers in this field, to provide an overview of how researchers have been studying the financing endeavors of the WSS sectors. A three-part framework was carried out: retrieval of papers from search engines (Scopus and ASCE Library), focused on the title, abstract, and keywords; process of elimination of papers; and analysis of the selected papers based on the hybrid method combining a systematic quantitative review, a semantic network analysis, and a narrative analysis. This research resulted in the identification of four most studied areas: sustainable development; water management and public finance; project financing; and public policy. Future research should focus on existing financing instruments and how these can specifically be applied in the WSS sectors successfully. This paper makes several contributions to the literature because it addresses and emphasizes the most important financing issues in WSS, reviews the insights found, and discusses the future research needs. In addition, it demonstrates the benefits of using a hybrid methodology that could be adopted in other literature review studies.

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Water access is recognized as a human right by the United Nations since 2010. However, even when piped water is available, the economic crisis has limited poorer households to afford those services on a regular basis. Users become debtors as utilities face growing service costs and shrinking national public funds, pushing tariffs as the main source of revenue for cost recovery. The COVID-19 pandemic lit up affordability issues and health consequences of disconnection policies. Countries worldwide banned water shutoffs during the last year, ensuring water and wastewater service access for all citizens. Although disconnection is a way to reduce the number of debtors, it is, at the same time, considered a threat to human rights statements. This study gathered information on water subsidies, disconnection and vital flow policies applied among several medium- and high-income countries, in order to analyze how utilities have dealt with default rates and if there is any difference between the approaches between medium- and high-income countries. Through case studies, this paper also aims to inspire other practitioners facing the same issues. Based on the eleven case studies presented here, we concluded that high-income countries use assistance programs over water disconnection policies when compared to medium-income ones. Water shutoffs are explicitly forbidden in the United Kingdom, Australia, and France. Although a humane alternative, water flow restrictors have limited application, especially considering the technical issues involved.

Private financing mobilized in the water supply and sanitation sector has not been sufficient to cover the sector’s needs. Several barriers hinder private financing leveraging, including the risk perception of water supply and sanitation projects. This study analyzed 185 water supply and sanitation projects financed by the World Bank between 2015 and 2021 to understand how perceived project risks can influence the financing of these sectors. This study demonstrates the parallels between different types of project risks, their ratings, and the different lending instruments and amounts committed by the bank. The most prevalent risks in the analyzed WSS projects were identified, namely, fiduciary, institutional capacity for implementation and sustainability, environmental and social, and political and governance. The World Bank appears to have different levels of tolerance for the different types of risks, and this tolerance seems to vary between regions and with time. Risks seem to have different weights when financiers decide which WSS projects to finance. Global and regional risk profiles of the 185 WSS projects financed by the World Bank were developed, which can help borrowers identify risks that they can mitigate to potentially improve their ability to attract private finance for WSS projects.