Private investment in water security across EMDEs needs to account for “shocks and stresses” on ecosystems.
Water Day at COP27 highlighted gathering momentum behind cross-sector initiatives aimed at unlocking private investment to bolster water security in emerging markets and developing economies (EMDEs), with a particular focus on Africa.
New funds and initiatives were launched to support Sustainable Development Goal 6 – access to clean water and sanitation for all – and the Adaptation Agenda of Egypt’s COP27 Presidency, which seeks to reduce structural vulnerabilities to the physical impacts of climate change.
These included the Action on Water Adaptation and Resilience Initiative (AWARe), launched by Egypt in association with the World Meteorological Organization (WMO), and an increased investment in water security in Africa by British International Investment, the development finance arm of the UK’s Foreign, Commonwealth and Development Office (FCDO).
Speaking at COP27, BII Head of Infrastructure Equity in Africa Chris Chijiutomi said the climate emergency was “moving the goalposts” on water sector investment.
“As well as meeting the existing acute development need for clean water and sanitation, investment in the sector must also take into account the shocks and stresses on ecosystems that are already being felt across Africa,” he added.
Chijiutomi acknowledged that water security has previously been a “very difficult sector” for private investors to access, but it is nonetheless “one of the most important”.
Part of BII’s commitment to invest US$200 million in water infrastructure over the next five years is a partnership with water and wastewater management solutions provider Metito, which aims to bolster investment in climate resilient water infrastructure across Africa.
Metito has previously been involved in projects such as Al Mahsama in Egypt, an agricultural drainage treatment, recycling and reuse plant designed to contribute to the preservation of the Al Temsah Lake, which has been impacted by wastewater disposal. The plant has a capacity of one million cubic m3/day.
BII also plans to publish a blueprint drawing on its new Climate Adaptation and Renewable Energy (CARE) for Water approach, which will serve as guidance for potential investors in water infrastructure in EMDEs.
“The CARE for Water programme is hopefully going to be used by public and private sectors and will encourage a more integrated approach to investing,” said Chijiutomi.
An “enabling environment”
Chijiutomi also underlined the key role for policymakers in providing an “enabling environment” that will attract private investors to water-related investment opportunities in EMDEs.
A 2021 WMO report warned that 80% of African nations are unlikely to have sustainably managed water resources by 2030 unless there is accelerated policy action and investment in water security solutions.
Co-launched by the WMO, the new AWARe initiative has three main priorities: to decrease water loss and improve water supply globally, to propose and implement mutually agreed policies for cooperative water-related adaptation action, and to promote cooperation and interlinkages between water and climate action to accelerate contributions to the UN Sustainable Development Goals (SDGs), especially SDG 6.
Now open for other governments to sign up to contribute to the initiative’s priorities.
AWARe builds on the Sharm-El-Sheikh Adaptation Agenda, which outlined 30 2030 adaptation outcomes to protect the most climate-vulnerable communities across five ‘impact systems’: food and agriculture, water and nature, coastal and oceans, human settlements, and infrastructure.
Led by the World Resources Institute (WRI), a coalition of organisations has launched the African Cities Water Adaptation (ACWA) Fund, a blended finance vehicle which is targeting US$5 billion of investment in urban water resilience solutions across 100 African cities by 2032. The fund will catalyse implementation of projects through concessional loans and grants for project preparation, alongside direct equity and/or subordinated debt investments.
The fund is further supported by commitments to action from 23 institutions that will provide technical assistance as well as investment.
“Because the water sector has been so under-invested over the years, particularly from a resilience perspective, it’s crucial that there is blended or concessionary capital available to drive sustainability across the sector,” said BII’s Chijiutomi.
Need for urgent action
Separately, the UK FCDO provided an update at the summit on the country’s efforts to increase water security in EMDEs, outlining its support of three global initiatives.
The first is the Water Tracker for National Climate Planning tool, which was designed by the Alliance for Global Water Adaptation (AGWA) and launched at COP27. It aims to help countries assess and enhance water resilience during major weather events, such as droughts and floods, in their national climate action plans.
The UK also supports the Glasgow Declaration for Fair Water Footprints, which was launched at COP26. Signatories of the initiative – including Peru and Panama – have committed to zero water pollution, sustainable and equitable withdrawal and water use, full access to safe water, sanitation and hygiene for workers, protecting nature, and planning for droughts and floods by 2030.
The third is the Resilient Water Accelerator, which was launched by NGO WaterAid and King Charles III’s Sustainable Markets Initiative. It aims to ensure 50 million people in water-stressed areas have access to reliable and sustainable water sources by 2030 by encouraging cross-sector collaborations between the private sector, development banks, governments and civil society organisations to raise capital.
“We are experiencing a global water crisis and the action currently being taken is nowhere near the scale of what’s needed. Climate change itself is a guarantor that the water crisis will only get worse unless we take urgent global action. It is only right that we focus our attention on an issue that disproportionately impacts this continent [Africa],” said Lord Goldsmith, FCDO’s Minister for Overseas Territories, Commonwealth, Energy, Climate and Environment, speaking at COP27.