Investment momentum must translate into real gains. Without effective policies, clear regulations, and transparent governance, funding risks being wasted on short-term fixes.
A strong enabling environment ensures that investment in water security translates into sustainable, inclusive outcomes.
Catalysing investment for water security
Lasting water security for people, economies and ecosystems cannot be achieved through additional finance alone. Equally important is creating an enabling environment for investment, built on coherent policies, effective regulations, and strong governance frameworks.
Why the enabling environment matters
The challenge
Determining the barriers that constrain investment requires careful analysis and contextual understanding. Diverse governance systems, regulatory complexity, and market conditions vary across countries, making it hard to assess investment readiness, benchmark performance, or track progress. This lack of clarity slows down investment and reform.
The OECD Scorecard
To help address this challenge, the OECD developed a Scorecard for Assessing the Enabling Environment for Investment in Water Security. This quantitative and evidence-based tool supports governments and partners in identifying and tackling barriers to investment.
The assessment based on the Scorecard can help:
- Optimise the use of existing funds
- Benchmark performance against international standards
- Track progress and enable regional comparisons
- Receive tailored policy and regulatory recommendations
- Reduce transaction costs for investors
- Inform policy discussions with reliable evidence
- Highlight best practices for replication across regions
Key target audiences:
- Governments diagnose strengths and gaps, that help build a more attractive environment for investment.
- Donors and development partners target support where it will have the greatest impact.
- Investors and private sector partners evaluate opportunities and risks with confidence before committing resources.
How does it work?
The Scorecard evaluates four dimensions of a country’s enabling environment, combining specific indicators into an overall score:
The four dimensions that form the basis of The Scorecard:
This dimension assesses whether the wider economic and policy setting makes a country attractive for investors, focusing on:
- Macroeconomic stability and growth prospects
- Investment climate and openness to foreign and domestic capital
- Legal certainty and protection of investors’ rights
- Business environment factors that influence confidence and cost of capital
This dimension evaluates how water-sector policies and regulations create conditions for sustainable services and resource management, including:
- Clarity and coherence of water sector policies across sub-sectors (supply, sanitation, irrigation, resource management)
- Predictability and transparency of regulatory frameworks
- Alignment of water policies with national development and climate goals
- Incentives that encourage efficiency, innovation, and private sector participation
This dimension considers whether institutions and systems support the preparation and delivery of viable, bankable water projects, including:
- Transparent and efficient project approval and procurement processes
- Clear rules for risk allocation between public and private actors
- Availability of financial instruments and blended finance options
- Robust systems for monitoring project performance, including social and environmental safeguards
This dimension examines how policies in other sectors influence water security investment opportunities and risks, including:
- Impacts of agriculture, energy, and urban development policies on water demand and quality
- Exposure to physical risks such as droughts, floods, and resource scarcity
- Regulatory or pricing policies in other sectors that affect water resource use
- Existence of risk management and insurance mechanisms to safeguard investments
Compare your country’s investment environment to OECD members here:
The Scorecard’s impact: Supporting policy reforms across countries
The Scorecard has been applied in more than 15 countries worldwide to date, shaping reforms, guiding donor support, and unlocking new opportunities for investment in water security.
Questions? Reach out to us
For more information, please contact Delia Sanchez Trancon, Policy Analyst and Sophie Trémolet, Team Leader, Water team of the OECD Environment Directorate.