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Nairobi Water Fund:

Investing in Water

The Nature Conservancy is working with partners to implement a pioneering fund to protect one of Kenya’s most important water sources the Tana River. The Upper Tana-Nairobi Water Fund supports improvements in how lands and waters are managed upstream to benefit farmers, businesses, and Kenyans throughout the watershed.

A US$10 million investment in Water Fund-led conservation interventions is likely to return US$21.5 million in economic benefits over a 30-year timeframe.

The Tana River supplies 95% of the water for Nairobi’s four million residents, and for another five million people living in the watershed. It also feeds one of the country’s most important agricultural areas and provides half of the country’s hydropower output. With Nairobi contributing 60% of the country’s GDP, the Tana River truly fuels Kenya’s economic growth.

Since the 1970s, forests on steep hillsides and areas of wetlands have been converted to agriculture, removing natural areas for storing runoff water and soil from the land. Now, as rain falls over farms, soils are washed down into the river, reducing the productivity of farmland and sending sediment into the rivers. Increased sediments in rivers negatively affect downstream water supply and hydropower generation.

Today, 60% of Nairobi’s residents do not have access to a reliable water supply. Challenges to water security will likely grow as climate change brings increasingly unpredictable rainfall.

A PROVEN MODEL

Water funds are founded on the principle that it is cheaper to prevent water problems at the source than it is to address them further downstream. Public and private donors and major water consumers downstream contribute to the Fund to support upstream water and soil conservation measures, resulting in improved water quality and supply.

The Nairobi Water Fund builds on the Conservancy’s experience addressing similar issues in Latin America, where more than 30 water funds are either underway or in development. This Fund is now the first of its kind in Africa.

ESTABLISHING THE BUSINESS CASE

A Steering Committee is in place to guide and launch the project. This Steering Committee includes representatives from the Conservancy, Kenya’s primary power utility (KenGen), Nairobi City Water and Sewerage Company, Tana and Athi Rivers Development Authority, International Center for Tropical Agriculture (CIAT), Kenya’s Water Resources Management Agency and United Nations agencies in Nairobi, as well as the water technology company Pentair, East African Breweries, Coca-Cola and Firgoken Horticulture.

The Steering Committee commissioned a study using state-of-the art modeling techniques to establish the economic return on investment of Water Fund supported conservation measures. This study demonstrates a clear business case for the establishment of the Water Fund. The research was conducted by scientists from leading institutions including The Nature Conservancy, the Natural Capital Project, and FutureWater.

The successful implementation of the Water Fund now depends on expanding public and private financial support. Support is needed from major Nairobi water users who recognize the fund as an important investment, and from generous donors interested in backing an innovative approach to development, climate change adaptation, and conservation. 

FURTHER READING

The Upper-Tana Nairobi Water Fund: A Business Case

RIOS Technical Appendix

FutureWater Appendix

Ecosystem Services Appendix

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