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Water Funds: A Natural Solution for Water Security in Sub-Saharan Africa

by

Andrea Erickson

The Nature Conservancy's Managing Director, Water Funds

August 2016

Red gum trees hanging over the banks of the Murray River in Victoria, Australia. Photo © Paul Sinclair/Trust for Nature
Red gum trees hanging over the banks of the Murray River in Victoria, Australia. Photo © Paul Sinclair/Trust for Nature

Nairobi, Kenya, has a growing water crisis. The conversion of forests and wetlands to agricultural uses in the Upper Tana River catchment, which supplies Nairobi’s water, has led to heavy sedimentation in the river, reducing the capacity of reservoirs and increasing the cost of water treatment—by up to 30 percent during heavy storm periods. During drought periods, on the other hand, the Nairobi government has had to implement water rationing, with some residents finding their taps turned off entirely for days at a time1, forcing them to buy water from unlicensed vendors at marked-up prices.

Nairobi’s problems are not unique: nearly half of all cities around the world experience periodic water scarcity, and cities that rely on surface water are particularly vulnerable. Poorly managed land development can lead to heavy runoff laden with sediment and fertilizer, polluting the rivers and lakes that cities rely on for water. These pollutants are expensive to filter and can reduce water availability during droughts. And as the world’s population grows and concentrates in cities, not only will demand for water itself increase, but a projected 10 percent increase in cropland over the next 15 years could lead to more pollution and sedimentation, further reducing supplies and increasing expenses.

Cities can improve their water by investing in nature-based solutions within water catchments that protect water before it reaches their outskirts. A healthy water catchment serves as a natural filter, removing sediments and nutrient pollution long before they enter the pipes and reservoirs that bring water to cities. Investing in the health of catchments can also offer a range of co-benefits, improving the livelihoods and well-being of those living within source catchments, and protecting the fish and wildlife that inhabit these ecosystems.

The Nature Conservancy’s Urban Water Blueprint2 maps out the global potential for addressing the growing urban water challenge through nature-based strategies. Focusing primarily on the world’s 100 largest cities, this report found that more than 700 million people globally could benefit from improved water security through catchment conservation. One strategy to carry out this work is through water funds.

Water funds provide a mechanism for downstream users to directly or indirectly compensate upstream users for activities that deliver water benefits to the payer. Public and private water users, including businesses and local governments, invest collectively in conservation of the catchments from which they source their water. Many cities are coming to see these funds as a way to minimize treatment costs and reduce the chance of water shortages in the future.

The Urban Water Blueprint identifies five strategies water users can invest in to reduce sedimentation and nutrient pollution and improve their water security: forest protection, reforestation, agricultural best management practices, riparian restoration and forest fuel reduction. Each strategy has costs and benefits, and different strategies will make more sense in different catchments. Agricultural best management practices, such as the use of terraces and cover crops, have the broadest applicability across our sample of cities, potentially improving water quality for 85 million people. Forest protection and restoration—while spatially more limited in their applicability—could achieve reductions in pollution that would benefit up to 52 and 11 million people, respectively.

The Conservancy is working with 60 water funds around the world, in different stages of development and operation. While the majority of water funds are currently located throughout Latin America, new regional versions of the Urban Water Blueprint show great promise for establishing water funds in China and Sub-Saharan Africa. The recently released Sub-Saharan Africa Urban Water Blueprint3 identified 28 cities that could improve their water security by investing in conservation activities, benefiting more than 80 million people.

"It’s important now more than ever to restore the natural water catchments that support water security, biodiversity and economic productivity."
- Andrea Erickson

The Conservancy has already launched one water fund in Africa, the Upper Tana-Nairobi Water Fund. A number of water users and conservation groups, including the Nairobi City Water and Sewerage Company, the Conservancy and the Kenya Electricity Generating Company, came together to establish Africa’s first water fund, which would invest in conservation activities in the Upper Tana River catchment. The fund is working with farmers in the catchment to improve their land management practices. By planting cover crops and digging trenches that trap soil runoff, farmers are able to improve their crop yields, while also reducing sedimentation in the Tana and other rivers.

The reduced sedimentation, in turn, means improved water quality and quantity for users in Nairobi and throughout the catchment. It will also likely also reduce water treatment costs and increase hydropower generation in the region. Overall, these investments in land management are expected to provide more than $2 in benefits for every $1 invested over 30 years. Using the experience gained from the Nairobi Water Fund, and the data collected for the Sub-Saharan Africa Urban Water Blueprint3, the Conservancy is responding to local requests to help in the creation of Africa’s second water fund in Cape Town, South Africa.

There are, of course, financial costs and other challenges to implementing any of these strategies, and some catchments may have more potential benefits others. But those costs must be considered next to the $90 billion per year that cities around the world spend on treatment plants, pipes and other infrastructure to maintain their water supplies, as well as the co-benefits offered by catchment conservation.

These considerations will only become more important in the future. With climate change promising to exacerbate water scarcity in many regions, it’s important now more than ever to restore the natural water catchments that support water security, biodiversity and economic productivity. While many of our efforts around water funds are still nascent, we believe they offer great potential to address the some of the growing threats to people and natural ecosystems alike.

References

  1. SDE - In-depth Irony of Dry Taps in Nairobi City Estates
  2. Urban Water Blueprint Overview
  3. Sub-Saharan Africa Urban Water Blueprint

Andrea Erickson Quiroz is the state director for The Nature Conservancy in Wyoming, where she leads the planning and management of conservation operations. Her areas of specialty include community-based planning and program development, government relations, and institutional development.


Originally Posted on Global Water Forum

August 23, 2016