This document discusses key issues around public-private partnerships for sustainable development. It notes barriers that currently exist for both the public and private sectors in developing countries when establishing partnerships. These include a lack of technical skills, inefficient bidding processes, difficulty accessing loans, and a lack of capacity to identify bankable projects. The document proposes that the Global Environment Facility could help support more sustainable partnerships by financing transparent and balanced partnerships, strengthening legal frameworks, and building local private sector capacity in areas like pollution prevention. It suggests the GEF could provide non-grant financing options and help strengthen national financial capacity. Finally, it recommends the GEF promote further consultation to identify alternative financing mechanisms.

1. Track 4
Building Sustainability:
Partnerships and Finance
Global Environment Facility –Global Environment Facility –
International WatersInternational Waters
Second Biennial ConferenceSecond Biennial Conference
September 25-29, 2002September 25-29, 2002
Dalian, Lianing Province, ChinaDalian, Lianing Province, China

2. Key Issues
 What are the existing mechanisms and limitationsWhat are the existing mechanisms and limitations
faced by public and private sector in developingfaced by public and private sector in developing
countries in establishing sustainable partnerships?countries in establishing sustainable partnerships?
 Should GEF resources be used to support PrivateShould GEF resources be used to support Private
Sector, Directly or Indirectly?Sector, Directly or Indirectly?
 What kind of alternative delivery mechanisms forWhat kind of alternative delivery mechanisms for
environmental infrastructure and services should beenvironmental infrastructure and services should be
considered?considered?
Sharing experienceSharing experience

3. Public-Private Partnerships:
Existing Barriers
Public Sector
(National/local government, civil society):
• Lack in managerial and technical skills
• Existing bidding and negotiation mechanisms
are not efficient due to inadequate objective
ranking and selection criteria
• Difficult to access to direct loans guarantees
• Weak community participation and ownership
Private sectorPrivate sector
(national and international investors(national and international investors
and banks):and banks):
 Weak national financing capacityWeak national financing capacity
 Lack of capacity in identificationLack of capacity in identification
of bankable projectsof bankable projects
 Environmental costs and criteriaEnvironmental costs and criteria
are not internalized into businessare not internalized into business
investment decision-makinginvestment decision-making

4. GEF support to sustainable “PP”GEF support to sustainable “PP”
partnershipspartnerships
-- Financing the development of a transparent, balanced and serviceFinancing the development of a transparent, balanced and service
oriented partnerships: strong ownership, long-term, shared information,oriented partnerships: strong ownership, long-term, shared information,
stakeholders participation, quicker decision making, early collaborationstakeholders participation, quicker decision making, early collaboration
and consultationand consultation
((PEMSEA projectPEMSEA project ))
-- Building the climate for investments: strengthening legal andBuilding the climate for investments: strengthening legal and
institutional framework as a basis for political commitment and jointinstitutional framework as a basis for political commitment and joint
actionsactions
((Danube and Black Sea Programmes)Danube and Black Sea Programmes)
-- Creating local capacity within the national private sector (industry andCreating local capacity within the national private sector (industry and
consultancy) in identification of pollution prevention opportunities andconsultancy) in identification of pollution prevention opportunities and fundingfunding
Pre-Investment studies for Environmentally Sound TechnologiesPre-Investment studies for Environmentally Sound Technologies
((TEST project)TEST project)

5. Challenges
 Addressing local political/financial risks by providingAddressing local political/financial risks by providing
non-Grant Financing with: concessional/ contingentnon-Grant Financing with: concessional/ contingent
finance, loans, and guaranteesfinance, loans, and guarantees
 Strengthening national financial capacity to beStrengthening national financial capacity to be
available for local private sector and localavailable for local private sector and local
governmentsgovernments

6. What next?
 GEF could promote further consultationGEF could promote further consultation
process with private sector to identifyprocess with private sector to identify
alternative financing mechanismsalternative financing mechanisms

7. What next?
 GEF could promote further consultationGEF could promote further consultation
process with private sector to identifyprocess with private sector to identify
alternative financing mechanismsalternative financing mechanisms