WATER FUNDS — ONE MECHANISM THROUGH WHICH BUSINESSES CAN ENGAGE COLLECTIVELY TO ADDRESS WATER SECURITY
Water Funds unite the public and private sectors and civil society around the common goal of securing water for communities by protecting natural water systems in a way that promotes sustainable economic development.
The Water Fund model — spearheaded initially by The Nature Conservancy, but now taken up by an increasing number of partners — looks to improve water governance via on-the-ground interventions that benefit both nature and people.
Water funds help to make sense of and manage the significant complexities associated with water risk and nature-based source water protection. The model offers business a template for a collective effort that connects them with multiple groups to manage and finance improvements in water security. For business, this means that, over time, the burden of investing in water security is shared with others.
How water funds channel finance from downstream beneficiaries to upstream communities that provide ecosystem services. Source: TNC
As the above graphic suggests, Water Funds work with people living upstream to help them manage watersheds, improving the productivity and resilience of their lands. Water security is improved for downstream communities, cities and businesses — this supports social development and reduces economic risks. It also introduces a mechanism for the long-term financing of water security programs.
HOW CAN WATER FUNDS HELP BUSINESS ADDRESS WATER SECURITY?
For corporate water users the interest in addressing water security unilaterally is strong. They can do this by ‘looking within their fence’ at ways to further improve water efficiency or by adjusting supply chains. However, at a certain point, such efforts may be thwarted without collective action at a larger scale. For example, an operation site may still face 'outside the fence' water challenges, such as water pollution or unsustainable water use from other water users in the basin.
Source: CEO Water Mandate
Unfortunately, in the past there have only been limited ways for corporate users to engage in multilateral action. Moreover, the scale at which these larger engagements apply — for instance across an entire country — can be so large that generating localized corporate benefit can be challenging.
Fortunately, the Water Fund model allows companies to engage in collective action in such a way that local issues are addressed — and in doing so, pool resources, capacity, money and expertise together with other stakeholders to deliver durable outcomes at the required scale.
Water Funds’ approaches thus lower the cost to each stakeholder, even as they expand the resources to the scale required to address water security within the basin. By creating an effective and durable governance and management structure, Water Funds promote confidence in investors and, thanks to their ambition to work at scale, they tend towards an inclusive approach to water security. Both these factors help deliver tangible long-term gains to water security for individual companies.
Through participation in a Water Fund, companies can thus break down barriers to collective action and attain greater gains in water security than they can achieve by working on their own.
Collectively through partnerships, Water Funds identify and implement means for the long-term financing of water security programs, programs that deploy robust natural solutions that improve water quality and supply, in a way that is adaptive to changes in climate and populations. This helps to restore the health of local watersheds in a way that provides diverse benefits to communities, ecosystems and cities.
Organized on this scale, Water Fund activities ‘pay for themselves.’ For instance, 1 out of every 6 cities can pay for natural solutions through savings in water treatment costs alone. Water Funds also improve the credibility and legitimacy of any actions to address water security, providing corporate partners with an improved legal and social license to operate. Transport yourself to the Upper Tana Nairobi Watershed to learn more about a Water Fund in action.