Strong Governance: Greater Water Funding

By Brendan Smith 16 October, 2014

Smith from Gold Standard Foundation shares how their 'Water Benefit Standard' can channel funds to projects

There is an increasing realization that good governance is a fundamental element of long-term sustainable development. In fact, the High Development Panel appointed by the UN Secretary General to review the post-2015 Millennium Development Goals recommended that a governance indicator be added to the new Sustainable Development Goals framework.

water, above all, is a problem of governance

often laws, policies & institutions meant to protect & manage water aren’t strong enough

The question of governance is particularly relevant as governments, policy experts, development agencies and NGOs grapple with how to address a mounting global water crisis.

We know that many of the water systems that keep ecosystems thriving and feed a growing human population have become stressed. Rivers, lakes and aquifers are drying up or becoming too polluted to use. More than half the world’s wetlands have disappeared. Agriculture consumes more water than any other source and wastes much of that through inefficiencies. Experts predict that ‘business as usual’ water use will expose 4.8 billion people to severe water scarcity by 2050.

Challenges of governance in water

The World Water Council and the Global Water Partnership say that ‘water, above all, is a problem of governance’. WWF agrees, pointing out that often laws, policies and institutions meant to protect and manage water aren’t strong enough. This has meant that in addition to a general shortage of funding to water projects, the resources that are allocated are often poorly managed and fail to deliver their intended outcomes.

water projects are often poorly managed & fail to deliver their intended outcomes…

…in Sub-Saharan Africa over the last 20 years, some 30% of 800,000 hand pumps installed fail prematurely, representing a total wasted investment of at least $1.2 billion

The organization Sustainable WASH (Water, Sanitation and Health), for example, estimates that of 800,000 hand pumps installed in Sub-Saharan Africa over the past 20 years, some 30% fail prematurely, representing a total wasted investment of at least $1.2 billion.

Further, less than 1% of projects globally have any long-term monitoring. These figures represent a tremendous opportunity to do things better.

Whether a good governance indicator will be included in the post-2015 development framework remains unclear.

However we, The Gold Standard Foundation (a development organization) , have taken the lead from these discussions. We launched a groundbreaking programme called the Water Benefit Standard that will drive funding to critical projects that supply, purify and conserve water and ensure that each dollar invested achieves its highest potential.

By providing the first globally consistent framework defining best practice governance in the water sector, the Water Benefit Standard will ensure that initiatives lead to real, measurable and sustainable outcomes.

The Water Benefit Standard has been developed as part of a joint initiative between the Swiss Agency for Development and Cooperation, The Gold Standard Foundation and First Climate Markets AG

How the Water Benefit Standard works

The Water Benefit Standard provides rigorous methodologies for water projects and independent auditors verify their outcomes on an annual basis for a minimum of 10 years. This provides a transparent, low-risk and high-impact investment framework that increases the certainty that water projects will achieve the results that are anticipated at project start, and that they will continue over time.

Beyond certification, beyond ‘business as usual’ projects that demonstrate financial need can take advantage of a ‘results-based finance’ model maintain and expand their efforts.

A Water Benefit Public Private Partnership and an expert Technical Advisory Committee made up of more than 30 corporate, government, academic and NGO partners, have been a part of the development process, contributing to the Standard’s thinking on sustainability, the measurement and evaluation of outcomes and local stakeholder involvement.

The Water Benefit Standard on the ground

One of the first projects to be certified under the Standard and to receive Water Benefit Certificates is a safe water programme in rural Uganda. In remote Ugandan communities, the lack of clean water access points means that women and children often walk long distances to collect water, or, very commonly, use contaminated open ponds shared with livestock.

Whave will use the revenue generated from the sale of its Water Benefit Certificates to expand nationwide and beyond

Whave Solutions Ltd. provides new clean water systems that use low- or zero-carbon emitting technologies, including hand pumps, rainwater harvesting tanks, and water treatment equipment such as chlorine dispensers. They are located near rural homes, so that community members are no longer forced to choose between convenience and their own health. At the same time, the project helps to build capacity within Ugandan communities to manage their water resources and improve hygiene conditions by involving public and private sector actors as part of a long-run strategy.

Following a successful one-year pilot in 100 Ugandan communities, Whave will use the revenue generated from the sale of its Water Benefit Certificates to expand nationwide and beyond. This long-term self-financing capability is what gives the model its most powerful potential—providing an ever-expanding impact, year after year.

The value in water and beyond

The Water Benefit Standard replicates elements of The Gold Standard’s results-based finance, or ‘reward for results’ governance model, that over the past decade has driven finance into a 1,000+ clean energy project portfolio.

The Water Benefit Standard should replicate The Gold Standard’s success in financing clean energy projects by driving much needed financing into critical water programmes to supply safe water where it’s needed most

A recent report, in which economists captured and monetised the environmental and socio-economic net benefits of Gold Standard projects, found that they deliver additional outcomes beyond carbon reductions worth billions of US dollars. These include improved human health, the ‘services’ of natural ecosystems like water purification, improvements to livelihoods, and the food and economic security of communities, regions or countries.

It’s with this track record and credibility that The Gold Standard Foundation enters the water sector. The Water Benefit Standard is now expected to drive much needed additional finance into critical water programmes that help to supply safe water where it’s needed most, conserve water for nature, while ensuring other environmental and social benefits that can transform local communities.

Further Reading

• Philanthropy: Catalysing Water for All – Water philanthropy in China can play a catalytic role in ensuring water for all in Asia. Lisa Genasci, CEO of ADM Capital Foundation on why philanthropists should take more risk by supporting research, public education, pilot projects & advocacy
• Bridging Gaps to Water Innovation -Water scarcity & pollution will drive innovation in partnerships and technology but the road to commercialisation remains long. Will Sarni, Partner at Deloittes discusses the barriers to innovation in the water sector
• Corporate Conscience: Beyond Charity – Why are so few companies effectively mitigating water risk? Is it time for the conscientious corporate to transition water from purely charity and compliance to a core business activity?
• Eco-compensation – A Way Forward? – With over 91% of all global payments in 2011 amounting to US$7.4 billion, China is already a global leader in investing in watershed protection; but also plans to be the most innovative in the future
• Gansu Bathhouse Blues – Josephine Price of Village People Project tells us how the mispricing of water affects rural bathhouses and causes wastage and misery side-by-side
• Water Savings: Dollar Earnings – Energenz’s Lennox-King shows us how a water audit & savings action plan with a payback period of less than a year could result in 39% cost savings