Water is vital to life yet globally 2 billion people do not have access to safe drinking water or basic sanitation. This can only be described as a crisis, and its scale may feel overwhelming, but there are organisations that are working tirelessly to turn crisis into opportunity.

One of the key issues regarding water and sanitation projects is funding. Squaring ‘water as a human right’ versus ‘infrastructure needs capital’ is a theme that rears its head throughout the water crisis discourse. There are organisations such as Water.org, a non-profit that seeks to expand access to water and sanitation through leveraging funds that aims to address this issue head-on. The organisation sees water as a catalyst for economic growth, improving communities and lives, and if funding is a hurdle their mission is help solve this.

John Moyer, President of WaterConnect says, “Water.org has historically focused on catalysing investment at a household level. This has led to the construction of facilities like pipeline connections, toilets, sewer connections, septic tanks, and so on. But we know that we must also address gaps in financing at a city or municipal level; building septic tanks is an important step, but if there are no sludge treatment facilities those tanks won’t realise their intended purpose.”

Enter WaterConnect

This is the context in which WaterConnect exists. WaterConnect is a dedicated initiative of Water.org that is accelerating the volume and pace of investment in sustainable water infrastructure by supporting early-stage project development.

“WaterConnect brings a new model to the same mission statement: provide access to clean water and sanitation for everyone, everywhere,” adds John.

WaterConnect’s model of partnering with the private sector mirrors Water.org’s highly successful approach of working with private financial institutions to catalyse their water and sanitation lending. The organisation does not operate in isolation and complements co-developers to promote investment, John adds “This ensures that each piece of the puzzle, private and public, receives the necessary attention to promote change in the sector.”

The need for this funding mechanism is clear when the sector takes into account the challenges it faces. The World Bank estimates that the sector needs to expand its investment three-fold in order to meet Sustainable Development Goal 6,” says John Moyer, a sobering thought but an actionable one according to WaterConnect.

Leveraging funds to create investment-ready projects within the water space comes at the right time when climate change is affecting the world in unpredictable ways.

“Projects need to be climate-proof. The increase in extreme weather events such as flooding and drought must be accounted for when developing infrastructure. We want to give everyone access to water and sanitation, but without climate-proofing that access could be short-lived” says John.

Funding creates investable opportunities

WaterConnect recognises that investors want fully realised projects to back. The usual risks associated with investing in the development stage are exacerbated in the water sector. Projects need to be carbon neutral, meet SDGs, and have their environmental impacts mitigated as starting points. This is the value that WaterConnect brings; by investing at the development stage, projects have the opportunity to flourish and receive more investment when they are fully realised.

“What I see at WaterConnect is that investors have capital to finance the construction of water infrastructure in emerging markets, but there are not enough investable projects coming to market as a result of the gap in spending in project development. So the gap is self-sustaining, not enough goes into development, which results in less investable projects and inadequate investments,” says John before adding, “So the solution is actually simple on its face, bring more resources to the early stage.”

WaterConnect operates by partnering with co-developers and sharing project development costs during the project development process, and then as those projects reach financial close, WaterConnect will most likely exit and seek to recover its outlays so that those proceeds can be reinvested into additional projects and continue to catalyse increased impact.

Working in unison

Another pillar of the Water.org vision is WaterEquity, a stand-alone asset manager that invests in financial institutions, enterprises and projects in low and middle-income countries, particularly focused on trying to deliver water and sanitation to communities vulnerable to the effects of climate change.

WaterEquity, the asset manager, and WaterConnect, the project developer, share common impact objectives and can play complementary roles in financing water infrastructure.

“From recent trends, we can see that governments are adopting models that allow the private sector to contribute funding to public infrastructure projects. We hope to see further collaboration in the sector to produce more projects that ensure sustainable access to water and sanitation for everyone.”