Rivers and Lakes

Water Funds: Investing in Nature and Clean Water

Read the Report on Monitoring Water Funds

Our water comes from nature. The vast majority of the world’s population depends on rivers and lakes to supply water for drinking, cooking, growing crops and more (i). Yet worldwide we are crippling nature’s ability to provide the clean water we need in order to live and to thrive.

As the world’s forests and grasslands are degraded or removed, the threats to our water supplies grow. The roots of trees and other native vegetation filter water, prevent erosion and slow water down, helping keep flow levels steady. Without this protective system, lakes and rivers are exposed to soil run-off, chemicals and other debris carried across the land by rain and snowmelt. When sediment and pollution wash into our waterways, businesses, communities and governments are forced to pay higher costs for water treatment. In vulnerable communities that simply cannot afford water treatment, people face increasingly dirty, unhealthy water.

We cannot afford to abandon our rivers and lakes to pollution and degradation. Scientists predict that, if we continue on our current course, two-thirds of the world’s population will face water shortages by 2025 (ii). But funding for nature is limited.

The Nature Conservancy is working to turn the situation around. By partnering with businesses, governments and others to invest in the protection of our water sources, we can put our communities and our economies on track for a healthier future.

Bringing People Together to Protect Water

Working with partners, the Conservancy is developing sophisticated financial tools that gather investments from water users and direct the funding toward conservation of key lands upstream that filter and regulate water supply. At the same time, habitat for native plants and wildlife is preserved.

These tools, collectively called Water Funds, vary from place to place depending on local opportunities and regulations. Investors – primarily large businesses and government agencies – see the funds as a smart way to minimize treatment costs and reduce the chance of water shortages in the future.

The Conservancy’s first Water Fund was established in Quito, Ecuador, in 2000. The concept has rapidly spread across Latin America and to the United States. There are currently four distinct models of Water Funds and the concept continues to evolve as it is adapted in new places. The Conservancy is now exploring the potential to create Water Funds in Africa, Asia and Australia.

Northern Andes Water Funds: Endowment for Water
The Conservancy worked with local partners to create an endowment for nature and clean water. Water users make voluntary investments into a central fund and earnings are directed toward conservation of key lands upstream of cities in Ecuador, Colombia and Peru.

Brazil Water Funds: Providing Incentive to Landowners
The Conservancy is working with local partners to secure funding to restore and protect streams and patches of forest that lie within privately owned ranches in the Atlantic Forest region. These streams feed into water supplies for São Paulo and Rio de Janeiro.

Santa Fe Water Fund: Protecting Water through Controlled Burns
The Conservancy worked with partners to establish a Water Fund whereby water users can make small investments and the funds are used for controlled burns to reduce the chance of large wildfires that can pollute reservoirs and force expensive clean up.

San Antonio Water Fund: Voters Make Forward-Thinking Choices
Voters have elected to set aside a percentage of public revenue into a central fund to proactively protect natural lands that provide their water. The Conservancy uses science to help direct the funds toward the protection of the most important areas.

i “Groundwater and Its Susceptibility to Degradation: A global assessment of the problem and options for management” (UNEP 2003)
ii “Water in a Changing World” (UN World Water Development Report, 2007)


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