Challenge<\/h1>How do we overcome fragmentation in order to bridge the $1.5 trillion SDG6 funding gap?<\/span><\/div><\/div><\/div><\/div><\/div>In September 2015, the United Nations announced the Sustainable Development Goals; among them was a commitment to providing access to clean water and safe sanitation to all people: SDG 6.<\/p>
While significant capital has been deployed against the SDGS, the\u00a0GLASS 2017 report notes that one of the greatest barriers to their successful resolution is financing. Meeting the targets of SDG6 alone will require a tripling of the current financing to US $114 billion, or $1.5 trillion - not including the increased operating and\u00a0maintenance costs. GLASS\u00a0also highlights that the WASH sector is highly fragmented, with numerous\u00a0government and non\u00a0government organisations, corporations, and\u00a0communities seeking to address\u00a0this wicked problem.\u00a0Yet despite these efforts the overall problem is not being resolved; to the contrary, in some regards it is only becoming larger.<\/p>
Neither of these challenges are limited to WASH - they are endemic across all seventeen of the SDGs. Novelty is valued over utility, competition over collaboration and financial return over positive impact. Further, collaboration is not incentivised, and people and organisations work in silos, resulting in enormous replication of effort, and unnecessary and inefficient competition.\u00a0These common inefficiencies have been estimated at upwards of US$100 billion.<\/p>
Another major challenge of the development sector is that there are no royalty, annuity or other on- going revenue payments. Social innovators rarely benefit financially from the value they create. Every non-profit and social enterprise must absorb its own research and development (R&D) costs, with little or no hope of protecting its intellectual property. Nor do these actors receive system-level rewards for discovering cost-effective solutions for the people they serve, even if impact metrics validate their work. Despite recognising WASH as a systems issue, the dominant financing mechanisms result in a focus on innovation over collaboration and scale.<\/p>
Today, under the auspices of a wide range of organisational and academic programming, numerous individual innovations are produced. But what works is not catalogued and analysed effectively. Nor are successful innovations deployed in a coordinated and aggregated fashion.\u00a0Hence, true collaboration, is rarely achieved; true scale even less so.<\/p>
Against this background, not only do existing financing mechanisms for development create a misalignment of incentives. They also lead to an insufficient proportion of available funding if we are to reach the SDGs by 2030.<\/p>
Among UN agencies and other development players, there is much hope that private capital will participate in filling the SDG financing gap. There is indeed an estimated US$218 trillion of private capital available in global financial markets to bridge this funding gap.\u00a0However, because the social impact market is unstructured, unstable and illiquid, asset managers have no easy ways to participate in funding solutions to difficult problems, such as SDG 6 and others.<\/p>
For a more comprehensive breakdown of this challenge, please refer to a concept paper generated by four of the six primary authors of this report: From Billions to Trillions<\/a>:\u00a0How a transformative approach to collaboration and finance supports citizens, governments, corporations, and civil society to share the burdens and the benefits of solving wicked problems.\u00a0<\/strong><\/p><\/div><\/div><\/div><\/div><\/div><\/div>Opportunity<\/h1>why water, sanitation & hygiene?<\/span><\/div><\/div><\/div><\/div><\/div>Against such institutional and financial challenges in the development space, the sector of water, sanitation and hygiene sector (WASH) emerges as a leading candidate for piloting a new model to scale innovation and collaboration. And, more critically, to mobilise private finance in support of it:<\/span><\/p>- After climate, WASH has the highest negative externalities, estimated conservatively at between US$300bn and US$600bn annually.<\/span><\/li>
- Unlike other international development sectors, the major players \u2014 WHO, UNICEF, World Bank, WSP \u2014 have reached a consensus about the cost of these externalities, providing the basis for a clear metrics framework.<\/span><\/li>
- Water and sanitation are crucial to public health.\u00a0<\/span>They also affect a wide range of people and issues, including children, women, education, health, environment and economic development.<\/span><\/li>
- If not addressed properly, WASH issues could lead to major political instability.<\/span><\/li><\/ol>
It's our considered opinion that given what we already know about WASH, it's possible to develop a market based solution that transforms the cost of inaction into a trillion dollar market opportunity.<\/strong><\/p><\/font size><\/div><\/div><\/div><\/div><\/div><\/div>Approach<\/h1>What is the most effective & efficient process for approaching this work?<\/span><\/div><\/div><\/div><\/div><\/div>Design Principles<\/font size><\/strong><\/p>Overall, there are ten design principles that Project 1800 is using because we consider them essential for this work.<\/p>
<\/a><\/p>These principles are used to develop the framework to address the challenges mentioned above, and to inform how it will evolve. While philosophical in nature, these principles have a direct bearing on the way in which an SDG 6 market network is built, deployed and governed. They inform the legal, financial and technical structures defined in the market network described below, and serve as standards against which we continually evaluate the performance of that network.<\/p>
Citizen Centred Design<\/font size><\/strong><\/p>Citizens live in communities. They interact with and are part of governments, markets and civil society. They bring their physical, intellectual and other forms of capital to bear on different functions and mechanisms that create outcomes within the SDG 6 market.\u00a0This model contains seven primary elements. From the centre out, these are:<\/p>
<\/p>
In September 2015, the United Nations announced the Sustainable Development Goals; among them was a commitment to providing access to clean water and safe sanitation to all people: SDG 6.<\/p>
While significant capital has been deployed against the SDGS, the\u00a0GLASS 2017 report notes that one of the greatest barriers to their successful resolution is financing. Meeting the targets of SDG6 alone will require a tripling of the current financing to US $114 billion, or $1.5 trillion - not including the increased operating and\u00a0maintenance costs. GLASS\u00a0also highlights that the WASH sector is highly fragmented, with numerous\u00a0government and non\u00a0government organisations, corporations, and\u00a0communities seeking to address\u00a0this wicked problem.\u00a0Yet despite these efforts the overall problem is not being resolved; to the contrary, in some regards it is only becoming larger.<\/p>
Neither of these challenges are limited to WASH - they are endemic across all seventeen of the SDGs. Novelty is valued over utility, competition over collaboration and financial return over positive impact. Further, collaboration is not incentivised, and people and organisations work in silos, resulting in enormous replication of effort, and unnecessary and inefficient competition.\u00a0These common inefficiencies have been estimated at upwards of US$100 billion.<\/p>
Another major challenge of the development sector is that there are no royalty, annuity or other on- going revenue payments. Social innovators rarely benefit financially from the value they create. Every non-profit and social enterprise must absorb its own research and development (R&D) costs, with little or no hope of protecting its intellectual property. Nor do these actors receive system-level rewards for discovering cost-effective solutions for the people they serve, even if impact metrics validate their work. Despite recognising WASH as a systems issue, the dominant financing mechanisms result in a focus on innovation over collaboration and scale.<\/p>
Today, under the auspices of a wide range of organisational and academic programming, numerous individual innovations are produced. But what works is not catalogued and analysed effectively. Nor are successful innovations deployed in a coordinated and aggregated fashion.\u00a0Hence, true collaboration, is rarely achieved; true scale even less so.<\/p>
Against this background, not only do existing financing mechanisms for development create a misalignment of incentives. They also lead to an insufficient proportion of available funding if we are to reach the SDGs by 2030.<\/p>
Among UN agencies and other development players, there is much hope that private capital will participate in filling the SDG financing gap. There is indeed an estimated US$218 trillion of private capital available in global financial markets to bridge this funding gap.\u00a0However, because the social impact market is unstructured, unstable and illiquid, asset managers have no easy ways to participate in funding solutions to difficult problems, such as SDG 6 and others.<\/p>
For a more comprehensive breakdown of this challenge, please refer to a concept paper generated by four of the six primary authors of this report: From Billions to Trillions<\/a>:\u00a0How a transformative approach to collaboration and finance supports citizens, governments, corporations, and civil society to share the burdens and the benefits of solving wicked problems.\u00a0<\/strong><\/p><\/div><\/div><\/div> Against such institutional and financial challenges in the development space, the sector of water, sanitation and hygiene sector (WASH) emerges as a leading candidate for piloting a new model to scale innovation and collaboration. And, more critically, to mobilise private finance in support of it:<\/span><\/p> It's our considered opinion that given what we already know about WASH, it's possible to develop a market based solution that transforms the cost of inaction into a trillion dollar market opportunity.<\/strong><\/p><\/font size><\/div><\/div><\/div> Design Principles<\/font size><\/strong><\/p> Overall, there are ten design principles that Project 1800 is using because we consider them essential for this work.<\/p> <\/a><\/p> These principles are used to develop the framework to address the challenges mentioned above, and to inform how it will evolve. While philosophical in nature, these principles have a direct bearing on the way in which an SDG 6 market network is built, deployed and governed. They inform the legal, financial and technical structures defined in the market network described below, and serve as standards against which we continually evaluate the performance of that network.<\/p> Citizen Centred Design<\/font size><\/strong><\/p> Citizens live in communities. They interact with and are part of governments, markets and civil society. They bring their physical, intellectual and other forms of capital to bear on different functions and mechanisms that create outcomes within the SDG 6 market.\u00a0This model contains seven primary elements. From the centre out, these are:<\/p> <\/p>Opportunity<\/h1>why water, sanitation & hygiene?<\/span><\/div><\/div><\/div><\/div><\/div>
Approach<\/h1>What is the most effective & efficient process for approaching this work?<\/span><\/div><\/div><\/div><\/div><\/div>