Since the mid 1990s, governments have attached increasing importance to urban environmental infrastructure (UEI) development in East Asian developing countries. There are two critical strategic issues for improving urban environmental infrastructure in East Asia: the enhancement of governmental capacities in financing UEI, and the mobilization of private-sector funds to ease governmental financial difficulties and improve the efficiency of environmental investments. This article examines special features of UEI investment in East Asia and argues that the most beneficial way to enhance governmental capacity is to raise the priority given to UEI in governmental agendas, diversify financing sources for UEI investment by developing Public-Private Partnerships (PPP) and use financial and tax measures and economic instruments to augment local financial capacities. This article also identifies possible roles for private finance initiative (PFI) in UEI (mainly sewerage treatment and garbage disposal facilities) and creates new policies and institutional arrangements promoting PFI in UEI projects.
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