Funding for green infrastructure to protect, restore the world's water supplies reaches $25B

Investments in natural water infrastructure projects which help deliver cleaner drinking water, reduce flood risks, and protect against storm damage, increased to a record high of $25 billion in 2015, a new report has found. These “green infrastructure” projects are aimed at harnessing the natural ability of forests, grasslands, wetlands, mangroves, and other ecosystems. At a time of water scarcity, increasing droughts and floods, and inadequate financing for water infrastructure, governments, companies and utilities are increasingly looking to invest in such projects as a cost-effective and climate-friendly alternative to traditional “gray” water infrastructure, like water storage, pipes and treatment plants, seawalls or dams, according to a new report by Forest Trends' Ecosystem Marketplace. This is especially relevant to developing countries, where access to water and sanitation is still a major problem. Some 2.4 billion people worldwide still do not use improved sanitation, and 663 million do not have access to improved water sources, the majority of which live in sub-Saharan Africa and Southeast Asia, according to a report by the World Health Organization and UNICEF. Current levels of spending in the water sector fall far short of what is needed to meet the 2030 Sustainable Development goal of ensuring access to clean water and sanitation for all. According to a WHO/UNICEF estimate, at current rates of progress, people living in developing countries won’t obtain the sanitation goal until 2135, 105 years behind schedule. While “gray” or built infrastructure is essential to solving the problem, green infrastructure is an “indispensable complement” and can be a more cost-effective strategy for addressing this water crisis, the report said. The findings come in the new report, “Alliances for Green Infrastructure: State of Watershed Investment 2016” which shows watershed investments grew by an average of 12 percent per year between 2013 and 2015, and that 2015 payments either protected, rehabilitated, or created new habitat on an area of land nearly 1.5 times the size of India. Programs in 62 countries made market-based investments in the natural ability of these ecosystems to ensure clean, reliable water supplies. These programs also delivered “beyond-water” benefits such as sustainable land management training for local communities, biodiversity conservation and climate adaptation. In Africa, 16 programs were funded to the tune of $118 million, including a water fund in Kenya focused on the Tana River Basin, a major water source for Nairobi. The rest of the funding was spent in South Africa. In Asia, investors spent $14.2 billion across 169 programs, including China’s “Grain-for-Green” program which reforests steeply sloping farmland and limits logging, and a large-scale forest conservation project in Vietnam. “Governments around the world paid farmers and other private landholders nearly $10 billion in 2015 to reward them for good stewardship of lands critical to watershed health,” said report author Genevieve Bennett, senior associate at Forest Trends’ Ecosystem Marketplace. “Buoyed by ambitious commitments in China and efforts by the EU to make its agriculture subsidies ‘greener,’ we’re seeing the traditional agricultural subsidy model retrofitted for a green economy — to focus on landscape health and not just agricultural productivity,” she added. The majority of the funding — $23.7 billion — came in the form of direct subsidy payments from governments to landholders to encourage sustainable agriculture practices which are critical to water conservation. Over $675 million was paid by water users, such as water utilities, cities and companies, acting to preserve water supplies in their area. Corporations including Coca-Cola and SABMiller, also contributed to water stewardship efforts to protect against supply chain risks and reputational risks, the report found. The report also looks at “marketlike” mechanisms for watershed investment such as water quality trading and offsets programs which rose to their highest ever levels, from $20.8 million in transactions in 2013 to nearly $32 million in 2015. The report looked at 472 programs and gathered data from program administrators via biannual surveys, and through independent research. Join Devex to network with peers, discover talent and forge new partnerships in international development — it’s free. Then sign up for the Devex Impact newsletter to receive cutting-edge news and analysis at the intersection of business and development.