Foreword

Expanding access to clean reliable water sources entails a number of direct and indirect economic benefits. Clean reliable water supplies strengthen human capital by improving both health and economic outcomes, and attracting human migration and commerce. According to the latest edition of the Economic Outlook for Southeast Asia, China and India, demand for clean water supply and infrastructure remains high throughout the region, and has become an even greater concern in times of COVID-19. Difficulty accessing clean, reliable water means that COVID-19 can spread more easily, with potentially deadly consequences.

Innovation for Water Infrastructure Development in the Mekong Region, jointly produced by the OECD Development Centre, the Asian Development Bank Institute (ADBI) and the Mekong Institute, aims at providing relevant analysis and recommendations for policy makers working to improve water-related infrastructure in the region. This publication covers five main topics, addressing the challenges faced by policy makers, and providing a global perspective through references to case studies outside the Mekong region. The five main topics are: the socio-economic benefits and environmental challenges of the Mekong River; the potential of digital infrastructure financing, with a focus on Fintech and blockchain; the merits of generating private financing for water supply and inland water transport, using spillover tax revenues; the resilience of water infrastructure to natural disasters and COVID-19; the challenges of water regulation in the Mekong region.

The Mekong River spans five countries and is the backbone of several ecosystems and societies along its course. Therefore, pollution, anthropogenic environmental changes and climate change are critical threats that must be addressed collectively among the Mekong River Basin economies. From a financial point of view, a large part of funding for Mekong River Basin infrastructure projects comes from public coffers; however to bring vital projects to fruition, there is a need for more private participation. This is especially true under the COVID-19 pandemic, as state finances across the globe have been heavily strained, with a sharp decline in incoming tax revenues coinciding with a need to disburse public funds. Digital tools, such as Fintech and blockchain, can be leveraged to promote private contributions, and arrangements that enable private investors to recover funds through spillover tax revenues could potentially make the return on investment worthwhile. Efforts in improving water infrastructure resilience to natural disasters can follow two complementary approaches: on one hand, promoting multi-purpose and nature-based solutions to improve hard infrastructure, and on the other, institutional collaboration and community engagement to strengthen soft infrastructure. Finally, the publication examines the challenges facing water regulation. Several issues need to be addressed: tariffs are currently too low to cover operation and maintenance, and collection is ineffective. Water quality oversight can be weak, infrequent, and even absent in some countries. In cases where strong regulations do exist, they can still be undermined by weak enforcement. Horizontal and vertical intergovernmental communication as well as bilateral communication among officials and the public are essential for resolving these issues.

The OECD Development Centre is committed to working alongside the governments of developing and emerging economies and regional actors to identify and address challenges in infrastructure investment and other policy areas. The Centre enjoys full membership of two Mekong region countries: Thailand and Viet Nam. We hope that this report, through its rigorous analysis, peer learning and sharing of best practices, will highlight the importance of investing in water-related infrastructure and contribute to discussions on its role in the region’s development.