Water is fundamental to economic prosperity, social well-being, and environmental resilience. Yet it can no longer be taken for granted. Growing pressures from population growth, urbanisation, environmental degradation, and more frequent extreme weather events are placing unprecedented stress on water resources worldwide. In this context, the way we finance and structure water-related investments will be decisive in shaping development trajectories for decades to come.
This report comes at a critical moment. According to the Global Commission on the Economics of Water, underinvestment in water security is already projected to generate significant macroeconomic losses, equivalent to around 8% of global GDP by 2050. At the same time, water and sanitation investments yield substantial returns, generating on average around USD 4 in benefits for every dollar invested through improved health, education, food security, and environmental outcomes, according to UN estimates. Bridging this gap between costs and benefits requires not only mobilising more finance but also ensuring that such funds are deployed more effectively.
Too often water-related investments are constrained by limited access to funding. This is compounded by inefficiencies in resource allocation and utilisation, particularly in relation to operations, maintenance, and results delivery. Tariffs and revenue structures often remain insufficient to ensure financial viability, while investment decisions continue to prioritise short-term bankability over long-term resilience and impact. As a result, critical infrastructure may underperform or deteriorate prematurely, undermining both service delivery and broader development outcomes.
Against this backdrop, the report’s core message is that how finance is structured matters as much as how much is mobilised. Improving water security requires rethinking not only how much we invest, but also how we invest. This includes better aligning incentives with long-term outcomes, strengthening accountability for results, and mobilising underused sources of capital seeking impactful opportunities.
The report highlights four complementary financing approaches with strong potential to improve the durability and effectiveness of water-related investments: bond finance, mobilising finance at scale over the medium to long term; Islamic finance, as a rapidly growing and impact-oriented source of capital; results-based financing, which links disbursements to verified outcomes; and public–private partnership models, which require careful structuring to ensure balanced risk-sharing and long-term value creation.
By examining these approaches, the report supports policymakers, financial institutions, and investors in designing financing strategies that not only close funding gaps, but also strengthen resilience, equity, and long-term water security. More robust water finance is not simply a sectoral priority, it is fundamental to achieving broader development goals in an increasingly water-stressed world.
Jaime de Bourbon de Parme
Environment Director
OECD
