Financing Water Management in a Caribbean Setting

By Stacey Berahzer From Environmental Finance Blog

– A Case Study of Trinidad and Tobago

A Caribbean getaway is often on the wish list of summer plans. The warm tropical weather, accessibility to beaches, and lush rainforests beckon. But these very factors often lead to a myriad of challenges when it comes to water resource management on small islands. Increased flooding in Caribbean countries such as Trinidad and Tobago can be linked to development and behavioral practices that encourage erosion and the blocking of water channels. Stormwater is the flow of water over the land after precipitation, and is a major cause of water pollution and localized flooding in highly urbanized areas. Rain that falls on impermeable surfaces such as driveways, roofs and car parks cannot enter the ground for natural absorption and filtration by soil and plants. Water run-off across surface structures, as opposed to soil infiltration, also prevents water from replenishing aquifers needed to supply drinking water.

A framework that links drinking water security to flooding, sanitation and water quality problems is needed to address these problems. Integrated Water Resource Management (IWRM) is one such framework. The Global Water Partnership (GWP) has established a now widely accepted definition of the term “integrated water resource management” (IWRM). This definition is, “IWRM is a process which promotes the coordinated development and management of water, land and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.”

Background

Trinidad and Tobago is a twin island republic located at the southern end of the chain of Caribbean islands. The larger island, Trinidad, is about 11 kilometers (7 miles) from South America. Owing to the fact that Trinidad was once part of the South American mainland, its flora and fauna tend to be more diverse than other Caribbean islands. Due to the tropical latitude, the country has a rainfall average of 86 inches per year. With such high rainfall levels and temperatures that range from 77 to 81°F, lush vegetation occurs in the undeveloped areas of Trinidad.

Practices that Encourage Soil Erosion and Flooding

A large percentage of Trinidad’s population occurs in the Northern Range and its foothills. The continued clearing of forests on the steeper mountain slopes for housing and agriculture causes soil erosion. The widespread flooding from 3.5 inches of rainfall in Figure 1 from July, 2015 was one effect of this soil erosion.
In addition to soil erosion, pollution plays a harmful role in blocking drainage ways such as rivers. Enhanced solid waste management practices and public education on littering are needed to keep these materials out of the water channels.

Another substantial contributor to flooding and soil erosion is the concretizing of surfaces on the island. With its high rainfall levels and tropical climate, vegetation flourishes in Trinidad. The lawn in a residential front yard, for example, may need to be cut multiple times a month. As a result, more residents are electing to pave their yards. Paving almost seems to be a status symbol in Trinidad! The increase in impervious areas means fewer opportunities for water to infiltrate the soil contributing to the classic “flashy hydrograph,” where, during a rainfall event, water reaches the river very quickly, causing riverine flooding by bank overflow.

Fresh Water Scarcity

Groundwater is a critical source of freshwater in the twin island republic, where the Water and Sewerage Authority (WASA) reports that groundwater accounts for twenty seven (27%) of its raw water (Govia, 2015). However, even with 86 inches of rainfall per year, Trinidad has a $US 200,000,000 desalination plant. Since its formation in 1999, the Desalination Company of Trinidad and Tobago (DESALCOTT) has had to increase the volume of water it produces over time. On small islands, it is a common problem to lose even high levels of rainfall before that freshwater reaches the ocean.

Public Financial Incentives for Addressing Water Quality and Quantity Problems

Firstly, more public education is need to change how human behavior is negatively affecting water resources and causing flooding. In addition to the direct water quality benefits from improved public behavior, an important potential secondary effect is the public’s increased willingness to pay for the protection of water. In other words, if people understood better the value of good water quality, perhaps water customers may be open to paying a higher bill for water service. Going further, citizens may even be agreeable to paying a separate fee or tax, outside of the water bill, in order to protect water resources.

Furthermore, citizens who are better informed will seek more water quality-friendly options from commercial entities. Commercial entities such as landscaping companies will then see a demand for such products or options and as the market economy works, supply will try to meet this demand.

Trinidad is one of the pilot sites for the Caribbean Regional Fund for Wastewater Management (CReW). Related to this project, the government signed an agreement with the Inter-American Development Bank for the establishment of a national wastewater revolving fund for financing wastewater projects. Trinidad and Tobago was allocated $US2 million for the rehabilitation of the Scarborough Wastewater Treatment System and the construction of Scarborough property connections. The revolving fund has been an effective form of financing for both water and wastewater infrastructure in the United States. In theory, the funds are available into perpetuity as loans are repaid. The United States has seen very low default rates with this program. This pilot is an exciting opportunity to devise a way to adapt a similar program for the Caribbean.

The government could use public funds to install some of the most effective stormwater practices on public land. These sites can also serve as demonstration projects to teach citizens and developers more about water quality protection options.

The fifteen percent “value added tax” that the country levies at the point of sale can be waived for products and installations that improve water quality. Whether this is done on a temporary or long term basis, it would encourage consumers to consider these more environmentally friendly options due to the lowered cost.

Similarly, a tax credit on water quality-related equipment may also increase citizen installments.

Public funds can be used to provide grants to residents or commercial entities wishing to incorporate these features in their development. A new fund may be created for such a program, or money can be set aside from a related existing program, such as flood clean-up and home improvement grants. Grant funding could also be provided to do public outreach events, as well as test the effectiveness of existing technologies or develop new more appropriate local options.

Of course, allocating money to a cause such as watershed protection is different than actually generating the needed money. Taxes, fees and fines are mechanisms for actually generating this money. A higher tax on products that directly impact water quality represents an equitable way to generate these funds. Deciding on the appropriate products to tax could be contentious, but candidates could include fertilizers and/or Styrofoam-intense products. In terms of fees, developers can be required to pay higher fees related to land disruption, especially when disturbing land with a steep gradient. Fines can be charged to those who violate policies such as the river reserve (buffer) requirement. Local and national agencies should coordinate to set these fines at a level significant enough to discourage potential violators. Higher fines also have the advantage of generating more revenue when they are collected. Proper implementation of these rules and collection of these fines should be followed with a rigorous policy that restricts the revenue generated to use only for water management- related efforts.

Part 2 on this topic will include private financing options for water resource management, as well as how public and private sources can interact to enhance financing for water management.

Reference:

Govia, SJ., The State of Aquifers: Groundwater Quality and Vulnerability in Trinidad. Integrated Water Resources Management Research Symposium, 15-16/07

IMAGES;
slack-imgs_flooding Flooding in Central Trinidad After Rainfall on July 5th, 2015. Photo Source: http://www.ttonline.org/heavy-rains-cause-flooding-in-central-east-trinidad/
“Grass blocks” at a new development in Trincity, Trinidad allow more infiltration into the soil than traditional concrete. Photo Source: Stacey Isaac Berahzer

For more on this story go to: http://efc.web.unc.edu/2015/07/29/financing-water-management-in-a-caribbean-setting/