2.1 - About PPPs
This section gives some general information about Public Private Partnerships.
There have been numerous studies recently regarding the importance and value of public-private partnerships in addressing the challenges facing our planet. Often the priorities of the public and private sector are quite different. However when they approach one another not in a consumer relationship but to leverage their respective interests there is an opportunity for significant innovation and impact. Contrary to impressions, public-private partnerships do not mean privatization of services. “Properly constructed public-private partnerships provide sufficient control by the public, while harnessing the management skills, technologies and financial resources of the private sector. The result is a well-executed public-private partnership that can [often] provide a better level of service on a more cost effective basis – and an answer to meeting challenges in these times of financial limitations in the public sector’s resources.”
The cumulative GEF investment in its International Waters portfolio totals $1.3 billion USD spread over 170 projects in 149 countries, catalyzing a total of $7 billion USD in managing shared waters. These projects target many of the world’s most threatened and important transboundary surface water, groundwater and coastal and marine ecosystems. However, this investment pales in comparison to the $22.649 trillion USD that we derive each year in economic services from rivers, lakes, and the marine areas, and the fact that the economic impact of poor ocean management alone is at least $200 billion USD per year. The private sector thus has a material economic interest in the sustainable management of water resources, and is well positioned to assist in this aim. While the GEF is engaged at the highest level of government and policy to bring governance, management and technology solutions to ensure the long-term stewardship, conservation and sustainable use of these critical resources, private sector involvement can add value to the GEF’s actions (with capacity, expertise, technologies and resources) and at the same time reduce the real risk that companies and the local communities where they work face if water resources are not protected.
The GEF is no exception. Public-private partnerships can bring benefits across key project functions including financing, management and implementation. It is imperative that all of these options are “on the table” to identify the right solutions and partner mix to address transboundary water issues as GEF replenishment resources become scarce. It is also important to note that a comprehensive analysis of the GEF’s current partnerships revealed that funding from the private sector is needed.
A public-private partnership is “the collaboration of two or more organizations from the public and private sectors to provide a new or improved service in the completion of a GEF international waters project.” The GEF and its project managers must seek private partners (companies, NGOs and/or private foundations) that will bring the best value to the project.
2.0 Advantages of Public-Private Partnerships for GEF Project Managers (see the Business Case for the Private Sector)
The advantages of public-private partnerships for GEF IW projects include:
- Increase long term sustainability of project deliverables.
- GEF co-finance requirements can typically be met with private sector participation.
- Ministry borrowing constraints can be overcome by leveraging in private sector finance at preferential borrowing rates that may allow projects that would otherwise not be viable to get off the ground.
- A rigorous life-cycle costing approach should ensure that ongoing maintenance costs are identified and project sustainability approaches are developed.
- Private sector expertise complements the strengths of ministries and NGOs, which should help to produce a more successful outcome.
- Long-term risks are shared between partners.
- More cost effectiveness through lower life cycle costs.
3.0 Value of Public-Private Partnerships
Public-private partnerships bring outside resources to bear on areas of local need, which is especially relevant to the implementation of GEF projects. Public-private partnerships contribute by:
- Ensuring sustainability of programs by enhancing the skills and capacities of local organizations and by increasing the public’s access to the unique expertise and core competencies of the private sector;
- Facilitating scale-up of proven, cost-effective interventions through private sector networks and associations;
- Expanding the reach of interventions by accessing target populations in their milieu (e.g., through workplace programs); and
- Sharing program costs and promoting synergy in programs. Additionally, partners contribute in-kind contributions that otherwise would be beyond the reach of implementation.
4.0 Disadvantages of Public-Private Sector Partnerships
There are disadvantages to establishing public-private partnerships:
- There may be differences in culture, ethos and working practices between the private and public sectors, though these differences are less than they were.
- There may be difficulty in apportioning long-term risk between the partners.
The following table offers a model developed by the U.S. Agency for International Development (USAID) regarding the motivation of water related organizations to join public-private partnerships that is also applicable in the context of the GEF IW portfolio and should be kept in mind while reading this guide:
Table 1 – Motivation for Joining Public-Private Partnerships
Type of Company
Companies that sell a product or service
Desire to position itself into a future market, ability to test different approaches for new markets
Companies that use water as an input to production
Desire to maintain (or more efficiently use?) input source, reduce operational risk, desire for good community relations/social license to operate
Not-for profit philanthropic
Philanthropy, desire to be more strategic and sustainable
Desire to conduct and apply research, promote science and technology, collaborate on innovative solutions to solve water problems or advance sector reform
5.0 Successful Public-Private Partnerships in the GEF IW Portfolio
Among the strongest example of a public-private partnership currently in the GEF IW portfolio is the GloBallast Partnership. This effort is a partnership between the International Maritime Organization and key shipping industry stakeholders. The primary driver is legal and regulatory requirements under the International Convention on Ballast Water Management. The partners share finance, management and implementation responsibilities as described below:
The GloBallast Partnership developed a flexible industry fund (Global Industry Alliance Fund) to promote improved environmental and sustainable performance by funding training, technical assistance, technology development and technology standards. The fund is an annual subscription model. IMO acts as the fiduciary only and GloBallast Partnerships support the execution of activities decided by the GIA Task Force. Industry, through the GIA task Force, is responsible for making the annual decisions regarding how to spend the money. Companies can enter and exit the partnership and contribute to the fund as they please on an annual basis. The aim to build the partnership is for shared problem solving, rather than just mobilizing resources.
 The National Council for Public-Private Partnerships, 2003.
 Costanza, R., and others (1997). The value of the world’s ecosystem services and natural capital. Nature, 387: 253-260.
 PEPFAR, 2010.
 USAID, “Building Alliances,” 2009.