Reform of institutions in poor developing countries is needed if infrastructure projects to provide water and waste disposal are to work, the World Bank has warned in a report called: "Responsible growth for the new millennium".
The report said that an increase in investment in projects to supply clean water and provide sewers and treatment plants would not have any beneficial effect if it were not accompanied by institutional reforms in the countries receiving aid.
Reforms were vital if water systems were to be operated for any length of time and without wasting water, the bank said.
In the world today 1.5 billion people do not have piped drinking water and 2.5 billion people do not have the use of lavatories or sewer systems, the report, published late on Wednesday, said.
Development aid, to be effective, should be planned more than 10 years before projects went into operation, the bank said.
A vice president of the bank for sustainable development, Ian Johnson, said: "The policy has to be determined in the next five to 10 years. For infrastructure you need five to 10 years to build it, 50 years to operate it and 10 years to de-commission."
Therefore it was necessary to plan now for the infrastructures that would be in use in poor countries in 2050.
But far more than finance for infrastructure was needed to pull these countries out of deprivation: institutions had to be reformed.
At the Millennium Summit in 2000, and in March 2002 in Monterrey, Mexico, and in Johannesburg six months later, the international community set a target of reducing the number of poor people in the world by half by 2050.
The report said: "Massive infrastructure will have to be financed and built, with investment expenditures in developing countries rising from today's 200 billion dollars (240 billion euros) a year to nearly 1.5 trillion dollars in 2050."
But in 2050 the world population would total nine billion from six billion now, and development, notably for water supply and treatment, would have to be managed with great care for the environment.
Growth of the world economy "poses enormous risks to the natural environment, and the risks are greatest in developing countries," the report said.
On the pricing of water supplied, the report commented: "Tariff-setting must include subsidies to the poor. But advocating free water for all means no water for many ... Water pricing is an essential instrument to enhance financing sustainability.
A rural water programme in China had been effective in connecting about six million households to supply and sanitation infrastructure.
"Users pay operating costs and debt service, effectively raising their overall contribution (to the total cost) to 75 percent. Households are metred and a strong incentive system ties the salaries of operations staff to bill monthly collections."
However, the report also said that some past methods of designing infrastructures in poor countries by experts without taking due account of local practices had often not had lasting benefits.
"Spending money on infrastructure without investing in social marketing and support will not achieve the desired health or environmental gains. Why? Because behavioural change is essential. So, sanitation and hygiene programmes require long-term commitment - not just investment.
Ultimately, the benefits of improved sanitation and hygiene depend largely on decisions taken at household level," the report said.
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