Mobilising capital for water: blended finance solutions to scale investment in emerging markets

Finance, Climate change, Water
Sensors, produced with AI technology by Similie, are installed to monitor water levels in the water storage tank in Guguleur village, Maubara sub-district, Timor-Leste.
Image: WaterAid/ Vlad Sokhin

This report explores how water sector actors can boost global investment in water with blended finance solutions, unlocking this opportunity to address the water crisis and release economic value. 

More than a quarter of the global population lack safely managed drinking water and almost half lack safely managed sanitation. Population growth, rapid urbanisation, agricultural demand and climate change – especially climate-related natural disasters such as drought, extreme heat and flooding – amplify these challenges.

Water investments in low- and middle-income countries need to at least triple by 2030, reaching levels of at least US$200–400 billion per year. The scale of the funding gap conceals even greater opportunity. Scaling and optimising water-related investments to close the funding gap could deliver at least $500 billion a year in economic value.

This report by SYSTEMIQ, commissioned by WaterAid, explores how blended finance solutions can unlock capital for high-impact water and sanitation assets and services that serve developing economies. It makes the case that, while investment in water infrastructure and services is seen as complex for investors, there are many examples across many countries that show how this is already happening around the world. 

To rapidly unlock this opportunity and reduce the costs of an inefficient system, in this report are a number of recommendations for different actors in the water sector for how they can accelerate, scale and optimise investment. The report makes clear that using blended vehicles to better match investor criteria with project needs will be key to unlocking the outsized impact of the water and sanitation sector.

Top image: Sensors, produced by AI technology from the company Similie, are installed in the water storage tank in Lautekas in Guguleur village, Timor-Leste.