Landmark Cape Water Performance-based Bond to Support Continued Catchment Restoration in Cape Town, South Africa

As part of the newly launched Cape Water Performance-based Bond, a first-of-its-kind, nature-linked outcomes bond valued at R2.5 billion (USD $150M*), The Nature Conservancy in South Africa (TNC-SA) today announced it will receive R150M in conservation funding in the form of donations and related catalytic funding.

The total conservation funding donated to TNC-SA from the bond, which equates to roughly USD $8.8M*, will enable TNC-SA to continue and scale its invasive alien plant (IAP) clearing and catchment restoration work through the Greater Cape Town Water Fund (GCTWF) over the next five years.

The Cape Water Performance-based Bond involves FirstRand Bank (as issuer, project agent, and conditional funding donor) and RMB (as arranger, structurer and distributor). Conservation Alpha is acting as the independent design and technical agent, providing verification oversight to ensure environmental outcomes are robustly measured. 

As the implementer of the associated conservation project, TNC-SA will oversee on-the-ground delivery of IAP clearing and ecosystem restoration across priority catchments that supply water to the Greater Cape Town metropolitan area, a continuation of the work TNC has been leading through the GCTWF since 2018. 

Statement from Louise Stafford, Country Director for The Nature Conservancy in South Africa:

“The Cape Water Performance-based Bond shows what’s possible when conservation, science and capital markets come together around a common goal,” said Louise Stafford, country director for The Nature Conservancy in South Africa. “This bond is a blueprint for how innovative, blended finance can help close the global nature finance gap by investing in nature-based solutions that strengthen water security while also unlocking long-term benefits for ecosystems, communities and economies. It breaks new ground for investors and conservationists alike, creating a financial model to restore priority catchments across South Africa’s Strategic Water Source Areas (SWSAs) on a sustainable and scalable basis.” 

Statement from Rand Merchant Bank's Martin Potgieter:

“This is a R2.5 billion market signal that natural capital has entered mainstream finance. The collaboration with TNC as project implementer, and the appointment of Conservation Alpha as independent design and technical agent, ensure that the Cape water performance-based Bond transaction is not only financially innovative, but also scientifically rigorous, ecologically grounded and globally benchmarked,” said RMB’s Martin Potgieter. 

Building on the Greater Cape Town Water Fund’s success 

Funding from the Cape Water Performance-based Bond will enable TNC-SA to continue its work through the Greater Cape Town Water Fund (GCTWF) to clear water-thirsty invasive alien plants from the region’s mountainous catchments.  

Led by TNC-SA, the GCTWF’s overarching goal is to restore 54,300 hectares by controlling invasive alien plants in remote priority catchments of the Western Cape Water Supply System, which could deliver an estimated two months of Cape Town’s annual water need at one-tenth the cost of alternatives, like desalination and groundwater exploration. To date, the program has cleared 41,000 hectares. 

The GCTWF has long demonstrated that nature-based solutions can deliver reliable, measurable returns. Yet scaling this model has been constrained by unpredictable funding sources. The Cape Water Performance-based Bond helps bridge the gap between short-term and sustainable funding through blended finance, bringing together public institutions and private capital to unlock critical new resources. It provides a powerful new mechanism to build momentum and political will for the program’s future.

* The Cape Water Performance-based Bond is denominated in South African Rand (ZAR). All USD amounts shown are converted values, included for context, and may vary with fluctuations in the exchange rate.