Just add water: a landscape analysis of climate finance for water

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Finance, Climate change
Image: WaterAid/ DRIK/ Habibul Haque

In July 2020, we commissioned the Overseas Development Institute (ODI) to look at how much money was going to adaptation and resilience globally; how much of that was going to water and WASH (water, sanitation and hygiene) programmes; where that money was coming from; and where it was going to. This landscape analysis of climate finance for water programmes will help us establish where donors and national governments need to consider re-prioritising climate investment, and look at what barriers we need to break through to unlock much-needed investment.

The findings in the report demonstrate what we already know from our work on the ground – that, despite the climate crisis playing out before our eyes, from flooding in Pakistan to droughts in Zambia, the world is neither prepared nor responding with necessary urgency. Vulnerable communities, who have no carbon emissions to speak of, are in vital need of climate support, and yet, out of global climate finance, only 5% is currently allocated for adapting to climate change – roughly US$30 billion per year.

While flows to adaptation are nowhere near the levels we need to see, within those the critical role of water – as a key part of any resilient community, and at significant risk from droughts and floods – is well recognised. The water sector receives a substantial share of committed adaptation-related finance – 43% of the annual total since 2011, on average, with funding standing at $11 billion in 2018 for water and wastewater management.

However, WASH is a very small part of that investment, and the main recipients have been middle-income countries, who have been supported through loans that make up 86% of this finance. This climate support in many cases is not additional to existing aid commitments, which means vulnerable communities in heavily indebted nations, even when they can navigate the complex requirements of climate finance, may face a choice of further debt distress or risking the economic impacts of unpredictable crises. The result is that not only is not enough being invested, but even that investment is not going to vulnerable countries.

Update: These figures were updated in November 2022. They showed that there are still significant barriers to accessing finance for the world’s poorest communities. See more details here.