Financing the Water and Sanitation Sectors: A Hybrid Literature Review

Abstract

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.

Are the Purchase Prices of Solar Energy Projects under Development Consistent with Cost of Capital Forecasts?

“…1 The table shows the regression results of the following models: (i) the discrete version of the Vasicek (1977) model 𝑅 = 𝑎 𝑏 − 𝑅 + ε , where a is the speed of reversion of the current interest rate to its long-term mean level, and b is long-term mean interest rate, (ii) the AR(1) process of the dividend yield 𝐷𝑃 = 𝑎 + 𝑏𝐷𝑃 + ε , and (iii) the forecasting regression of the market return on the lagged weighted average dividend yield, 𝑅 = 𝑎 + 𝑏𝐷𝑃 + ε , consistent with Expression(5). Standard errors are in parentheses.…”

“…These series allow us to estimate the AR(1) process for the dividend yield and run the forecasting regression defined in Expression (5) (all data are publicly available at [42]). Table 7 shows the regression results for these models, while Figure 3b depicts the expected equity risk premiums that result from Expression (5) for Spain and UK, for the period 2020-2053. Importantly, the estimates in Table 7 show that the dividend yield is highly persistent over time and exhibits a strong predictive power in forecasting the return of the market portfolio, consistently with the results achieved for other countries and markets [43].…”

“…where b r and b d are regression coefficients, and ε r and ε d are error terms. In the next section, we use Expression (5) in levels instead of logs, together with the AR(1) process of the dividend yield, to determine the expected pattern of the market return E t R m t+j , thus exploiting the persistent nature of the dividend yield over time, as well as its strong predictive power. This allows us to explicitly consider the term structure of expected returns-and consequently the predictability pattern of stock returns-in our analysis.…”

“…Renewable energy has become a key priority in many geographical areas as it provides clean and sustainable energy, among other benefits, to companies and households [1][2][3][4]. Furthermore, investment in renewable energy is crucial to achieving the ambitious climate targets outlined in the Paris Agreement, where large investments in infrastructure are required to ensure growth and meet the basic needs of the population in developed countries [5]. Hence, according to OECD estimates [6], economic growth requires an investment in infrastructure (energy, transport, water or telecommunications) of around 95 trillion dollars from 2016 to 2030, that is, 6.3 trillion dollars per year, ignoring purely climate considerations.…”

Evolution of infrastructure as an asset class: a systematic literature review and thematic analysis

“…To the best of our knowledge, this is the first systematic review to examine infrastructure in an asset class context. Earlier literature reviews cater to specific infrastructure sub-sectors like water and sanitation (Machete and Marques 2021 ; Lima et al 2021 ), public–private partnerships/project finance initiatives (Roehrich et al 2014 ; de Castro e Silva Neto et al 2016 ; Müllner 2017 ; Kumar et al 2021 ) and infrastructure development in general (Kumari and Sharma, 2017 ). Although most of the earlier research focuses on economic infrastructure, the state of social infrastructure has gained much-needed attention during the COVID-19 crisis.…”