The end of the 20th century witnessed an unprecedented change in the pattern of human settlements. Today, at the start of the new millennium and for the first time in history, more people live in cities and towns than in rural areas.

• During the past three decades, the urban population of developing countries has tripled.
• Over the next three decades, the urban population will grow to twice the size of the rural population.
• Africa, currently the least urbanised continent, will have almost two-thirds of its population living in urban areas by the year 2025.

While urbanisation in developing countries has contributed to wealth accumulation, it has also been accompanied by an alarming growth in the incidence of poverty. Today, one out of four people in cities lives in "absolute poverty," while another one in four is classified as "relatively poor".

This rapid concentration of hundreds of millions of people has placed an extraordinary strain on the ability of governments – both municipal and national – to meet the needs of city dwellers for basic services. For the urban poor in developing countries, the most threatening environmental problems are those close to home: lack of access to clean water, accumulating garbage, and a lack of energy services. Urban environmental problems are particularly acute, and growing worse, as available government services and resources are overwhelmed by expanding populations:

• The World Health Organisation estimates that 25 to 30 percent of urban residents in Latin America, Africa, and the Middle East lack access to potable water; more than one-third in Asia are not serviced.

• Less than half of the waste generated each day in large cities is collected by municipal authorities.

• In many cities, no refuse disposal service is provided to slums and squatter settlements.

Deficiencies in the provision of urban services are caused by several factors: the rapidly increasing size of cities, the high concentration of the poor, and the inadequate management and technical skills of municipalities and government agencies to deal with the accelerating growth in demand for urban services.

At the core of the current breakdown is the issue of insufficient government resources. Both supply and demand of services are affected by limited budgets that prevent municipalities from providing adequate services, especially to the poor. Yet, users are willing, and often able, to pay for such services. Very often, poor people even pay higher rates to independent suppliers. Thus, although limited government funds represent a challenge, the high willingness to pay creates opportunities to use partnerships to optimise the application of available public and private resources.

What are Public-Private Partnerships?

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