Supplying Water Infrastructure to Developing Countries via Private Sector Project Financing

By Thomas M. Kerr

This paper suggests that use of project financing, and the Build-Operate-Transfer (BOT) model in particular, should be expanded to provide the water infrastructure that developing nations so desperately need. The author examines the role of multilateral development banks and aid providers as ineffective institutions and introduces private investment as the most viable vehicle for infrastructure development in developing countries.

In particular, Kerr proposes the BOT model as an innovative way to promote environmentally sound and sustainable development, delineating the specifics of the model and discussing a case study. He highlights the benefits and risks to the host country, consumers, multilateral development banks, and investors. Kerr concludes by pointing out the acclaimed success of utilizing the BOT model, in conjunction with standard procedures, which mitigate the risks associated with infrastructure development projects.