Water is fundamental to life — it underpins health, food security, economic activity and climate resilience. Yet, despite its centrality to our economies, water remains one of the most underfunded sectors globally. At the same time, traditional financing models often fail to address equity and overlook long-term resilience.
Effective water finance is not just about mobilising more capital. It’s about making finance works better: more strategically and in a way that delivers incentives to recipients to manage assets sustainably.
The 12th Roundtable on Financing Water, held in Jeddah on 16–17 April 2025, co-convened by the OECD and the Islamic Development Bank (IsDB), explored funding and financing models that can foster greater sustainability of water investments, including models that take a balanced approach to risk-sharing, place a strong emphasis on asset maintenance and incentivise the delivery of results in line with customers’ needs and desirable outcomes.
What did we learn at the 12th Roundtable on Financing Water?
Here are four key areas we discussed:
Public-private partnerships should be built for long-term outcomes, not just service delivery
Across the world, public-private partnerships (PPPs) are evolving to meet long-term water and sanitation goals. In Rio de Janeiro (Brazil), PPPs are helping to achieve universal service coverage. In Jordan and India, private partners are being engaged to sustain and improve treatment services beyond construction. Meanwhile, in France, climate pressures are pushing cities like Lille to embed water efficiency targets into contracts. These shifts highlight a broader trend: successful PPPs depend on clear policies, legal frameworks, capable public institutions, inclusive stakeholder engagement and strategic use of blended finance to deliver on clear public policy goals.
Water is missing out on the green bond momentum – but it doesn’t have to
While bond markets are expanding as a source of long-term capital, the water sector still receives only a tiny share of global green, social, sustainability and sustainability-linked (GSSS) bond issuances — between just 1% and 4%. This gap reflects a broader underinvestment in water, despite its alignment with the goals of sustainable finance. Unlocking bond finance for water will require stronger standards, clearer guidelines, credit enhancement tools, and better data to demonstrate impact and investment readiness.
Results-based finance is emerging as a driver of water sector reform
Results-based finance (RBF) is gaining traction in the water sector — from rural sanitation to stormwater management — by linking funding to tangible results. While early models focused on outputs like new service connections, there is a growing shift toward outcomes that reflect service quality and sustainability. RBF is also proving valuable for driving institutional reforms, as seen in Egypt’s World Bank–supported Sanitation Program for Results. However, broader adoption requires addressing key challenges, such as i) reducing design and implementation costs (particularly for setting commonly agreed performance metrics and for the verification agent), ii) increasing the pre-funding capacity of recipients, and providing them with technical assistance to mitigate the risks of failure, and iii) facilitating replicability at scale.
Islamic finance holds untapped potential for driving sustainable water investments
With a market that has expanded from USD 200 billion in 2000 to USD 3.4 trillion in 2023, Islamic finance is a growing force in both Muslim-majority countries and other jurisdictions. Yet, water investments remain a marginal part of this landscape — revealing a missed opportunity. Rooted in principles like risk sharing, asset backing, and social responsibility, Islamic finance offers sizeable pools of untapped capital that could be deployed for water investments whilst providing valuable inspiration for sustainable, inclusive and resilient water financing models.
What’s next?
The 12th Roundtable on Financing Water highlighted the role of financing approaches in promoting sustainability and resilience in water investments. Its outcomes, along with those of forthcoming OECD publications and Roundtable meetings, will help inform the finance agendas of the UN 2026 Water Conference, the 11th World Water Forum and other key platforms moving forward.
Stay tuned — the conversation is just beginning!
