Investing in water resilience is crucial – it is also an untapped opportunity

Humanity’s complex and essential relationship with water is one of the most pressing challenges as we adapt to a warming planet.

Already, 50% of global drinking water resources are significantly degraded from climate change, population growth, poor planning, land use and more. Two-thirds of the global population are anticipated to be water-stressed by 2025, with 1.8 billion people facing absolute water scarcity.

Threats to water security, from ravaging floodings to severe water scarcity, already affect us. As we have seen in 2024, the impact of climate change, exacerbated by human interventions, is leaving its mark and putting millions at risk.

For example, in a matter of minutes last October, deadly flash floods took the lives of over 200 people in eastern Spain and destroyed the livelihoods of thousands more. With Europe heating twice as fast as the global average, these types of extreme local weather events will likely become more frequent.

At the same time, millions of people across Southern Africa are suffering from one of the worst droughts in decades, wiping out up to 80 percent of harvests and exacerbating human-wildlife conflicts as pressure on resources mounts.

In our Earth’s closed system, water is a finite resource – and if we fail to protect it, it will become an increasingly scarce resource with devastating consequences.

Nature holds the key to repairing our broken relationship with water. Forests, wetlands, grasslands and rivers already play a crucial role in ensuring we have enough clean water and helping communities become more resilient to climate impacts.

Nature-based solutions, or “green” infrastructure – as alternatives to human-built “grey” infrastructure such as dams or river regulations – are proven to deliver cost-effective, measurable and sustainable benefits to drive water resilience for people and nature, especially those most vulnerable to climate impacts. However, organizing efforts to safeguard local watersheds and improve both water quantity and quality is complex and requires substantial expertise.

Over the last two decades, The Nature Conservancy (TNC) has pioneered investments in watersheds globally through collective action mechanisms like The Greater Cape Town Water Fund. TNC, as part of a wider coalition, is working with private and public sector stakeholders and local communities to restore natural infrastructure to improve water supply to key dams that serve Cape Town – and move the city further away from the risk it faced in 2018 of running out of fresh water.

To scale nature-based water solutions globally, TNC and management consultancy Pegasys, with the support of early partners such as LGT Venture Philanthropy, created the “Nature for Water” (N4W) Facility. Launched in 2022, this partnership has supported local partners to establish more than 30 watershed programs across Africa, India, the US and Latin America to date, impacting millions of people and protecting large areas of land and water.

Each watershed programme is grounded in the local context and developed together with local communities and sponsors, such as utilities, government agencies and NGOs. For example, the Cuenca Verde Water Fund in Colombia invests in nature-based solutions projects that improve water quality for the country’s second largest city, Medellín, and the surrounding Aburrá Valley. To date, the water fund has benefited 866 families, improved the management of approximately 20,000 hectares and planted more than 255,000 trees to improve the ecological integrity of the basins that supply the region’s water.

The Upper Tana-Nairobi Water Fund in Kenya was founded on the principle that it is cheaper to prevent water problems at the source than it is to address them later. The fund brings together public and private downstream users like the city of Nairobi and its residents and upstream watershed stewards such as small-holder farmers through their shared stake in a healthy water future. The water fund engages local communities in conservation, particularly through the promotion of agroforestry and tree growing for carbon sequestration, thus also generating carbon credits that support agricultural livelihoods.

In the UK, though famed for its iconic wetlands, the agricultural county of Norfolk is one of the country’s driest – and it faces a perfect storm of challenges including a growing population, degradation of ecosystems and a changing climate. TNC’s first water fund in Europe launched in 2024 in collaboration with the local water company, municipal government and other partners backing a business plan for a £30 million ($38 million) portfolio of nature-based solutions that offer a holistic approach to managing the region’s water resources.

With a combination of large populations in big cities and relatively short rivers, TNC modeling shows that the Asia-Pacific region has a high potential for nature-based solutions for water. If the region experiences the 50% population growth expected by 2050, investing in nature for water now could prove critical.

So far, re-orienting water sector investments towards nature has been a largely untapped market opportunity. The World Bank estimates a $2.7 trillion GDP loss by 2030 if key ecosystem services collapse. By contrast, coordinated nature-smart policies could boost global GDP by up to $150 billion in 2030.

But we have a long way to go in a few short years. Today, traditional investments in grey water infrastructure gross approximately $800 billion per year, compared to only $1 billion of investments in nature-based solutions.

Public-private partnerships, which address water resilience holistically, still remain the exception, and will require new financing mechanisms combining public and private investments to drive the momentum for nature-based water solutions desperately needed now. On average, watershed investment programmes like water funds are estimated to be 15-30 years in duration, and an average of $30 million in size.

Catalytic philanthropy like LGT Venture Philanthropy’s approach has proven critical to provide the much-needed early-stage capital required to set these models up for scale. Indeed more – and more innovative – investments will be needed to turn the tide on humanity’s relationship with water: harnessing the opportunity nature holds in Asia, Europe and around the world.