Bridging the divide between water and finance

Water managers often claim that more funding needs to be invested in water security. While that is undoubtedly true, it is also true that water managers could do better in terms of spending the budgets that are already allocated to them.

On the other hand, given water’s connection to every other aspect of sustainable development, funding and financing for water should be wrapped up into the broader climate and development agendas, which can make projects more attractive to diverse funding sources, from both the public and private sectors. There is no single funding source for all water funding needs, so a diversified approach needs to be adopted to have financial sustainability of water systems.  

These are among the main conclusions of a Learning Journey on Financing for Water Security through an IWRM Approach, which was held during the second half of 2022, through the newly launched SDG 6 IWRM Community of Practice, hosted on the IWRM Action Hub. The Learning Journey brought together over 120 community members and 350 additional participants, in a series of online events, blog posts and discussions, both at a global scale, regionally for Latin America and Pan-Asia, and specifically focusing on Kenya and Guatemala, as two countries with interesting experiments to bridge public and private funding sources

“With this Learning Journey, we were going on an experiment into the unknown, with an innovative new platform, trying to reach understanding across a broad range of stakeholders with a common interest in water security, but diverse starting points in terms of knowledge of the financial world”, says Colin Herron, Senior Water Resources Management Specialist, Water Solutions for the SDGs at the Global Water Partnership (GWP), the co-convener of the Community of Practice (CoP). “We had a few collective aha moments, which broadly resonated with most participants, and which should help to improve their approaches towards achieving sustainable water financial systems in the coming years, and therefore boost progress towards the water-related SDGs”, he added

Main findings

The main findings of the Learning Journey, as summarised by GWP, are captured in an attractive multimedia product, containing key quotes, videos, data points and links to more information and tools. These findings are summarised below:  

  1. Whilst the water community needs to attract more funding and financing from a variety of sources, it also needs to make better use of existing resources. It is necessary to execute existing public funds more effectively, efficiently, and strategically for water. While public spending constituted around 86 percent of all spending in the water sector between 2009 and 2020, over one quarter of the budgets allocated was not used.  

  2. The water community needs to get stronger at creating bankable water projects that can attract financing. It is important to have a broader understanding of the term 'bankability' and focus more on other returns such as the positive economic, social, and environmental externalities that these investments can provide instead of only focusing on the immediate return on investments.  

  3. Generating formal collaboration schemes between the public and private sectors will be important to unlock additional financial resources for water security. Involving the private sector in funding water systems is increasingly a necessity in expanding the variety of investments and supplement limited government funds, since developing countries over the last two decades have only been able to cover 30-50 percent of their water investment needs through public funds.  

  4. Positioning and connecting water better with the broader development and climate agenda will attract different funds for water-related sectors. It is necessary to emphasise the co-benefits water can create and the synergies that exist with other sectors and policy agendas, including climate adaptation and mitigation, biodiversity conservation efforts, sustainable development, health, and food and energy security, etc. 

Following the successful conclusion of this Learning Journey, the SDG 6 IWRM Communityremains open for any water professional interested in exchanging with their peers on integrated means of achieving the water-related SDGs. Signing up is quick and easy, and further activities are being planned for CoP participants. A survey aiming to identify CoP members’ interests is currently open, which will be used as input to define future CoP activities.  

We are very grateful to the many organisations and individuals that have contributed to the CoP so far, in particular the Learning Journey. We hope that the community will continue to grow, so that we can bring together more individuals from across the world, from different sectors and languages, behind a common cause: a water secure world” says Sandra Bruehlmann, SDG 6Programme Associate at GWP, and co-convener of the CoP. “The community is for its members, and we encourage active participation, to facilitate peer-to-peer learning that can only help to improve water management around the world”, she added