t in order to address emerging resource and supply issues; and the need for an overhaul of federal financial support mechanisms (USHR, 2004). Russia The water sector in Russia is experiencing problems associated with the deterioration of its assets, a lack of management capacity, and weak public finance mechanisms. Many of these problems can be traced back to the late 1980s, when investment in the sector all but stopped. In the last 20 years INFRASTRUCTURE TO 2030: TELECOM, LAND TRANSPORT, WATER AND ELECTRICITY - ISBN 92-64-02398-4 © OECD 2006 5. THE IMPACTS OF CHANGE ON THE LONG-TERM FUTURE DEMAND FOR WATER SECTOR INFRASTRUCTURE replacement rates have nowhere exceeded 25% of that needed (Ivanov and Shalukhina, 2005). Water losses between abstraction and consumption are in excess of 50% due to the lack of investment and maintenance. Municipalities are a leading source of water pollution, discharging some 52% of non-compliant wastewater into the environment as some 69% of the systems lack the capacity to treat the current flows. In 1997, 10% of the wastewater requiring treatment was treated to the required standards (NIC, 2000). Urban sprawl from unregulated developments is posing an increasing threat to water sources, especially in Moscow. Drinking water supplies are often contaminated, such that in the 1990s there was a marked increase in water-related diseases. One estimate put the cost imposed by water pollution at 1% of GDP, about USD 13 billion. With only 30% of water consumption metered, revenue collection and conservation is extremely limited, per capita consumption rates are between 450 and l/capita/day. Weak institutional arrangements and a lack of regulation compound the physical problems. In the Soviet era, water services were largely funded from central budgets and industry often provided such services free to the communities around them. Responsibility has now shifted to local governments and public utilities, which lack the ability or political will to generate the necessary revenues. Revenue paymen