Impact investing could give farmers in water-scarce countries the tools to sustainably irrigate their land, according to a report by environmental organisation The Nature Conservancy.
The charitable body estimates that around 50 percent of the world’s cities, and 75 percent of all irrigated farms, lack water frequently throughout each year. Traditional ways of tackling water deficiency, such as building reservoirs and aqueducts, carry a significant risk of displacement and environmental damage among communities. Hydroelectric dams, for example, power around 30 to 40 percent of the 271 million hectares of irrigated land globally, each costing around US$2 billion to inefficiently generate 170km of reservoir water to the detriment of biodiverse habitats.
In the report, entitled Water Share: Using water markets and impact investing to drive sustainability, the Nature Conservancy says impact investing, which matches attractive returns to positive social and environmental change, could provide a new way to reduce water scarcity while supporting farmers and restoring ecosystems.
NatureVest is a programme created by the organisation that uses water trading, a technique by which a seller sells rights to a specific allocation of water to a willing buyer, in order to create long and short-term trades between farmers and their cities or communities. These include water trades targeting chronic scarcity of water (long-term), as well as trades to reduce the use of water for a period before selling saved water rights on to new buyers who need to supplement their water supplies (short-term).
“We need to get smarter about how we use every drop of water,” said Brian Richter, chief scientist for the water programme at The Nature Conservancy.
NatureVest is based on a Water Sharing Investment Partnership (WSIP), which mobilises investor capital to acquire water-use rights in established water markets.
“Thirty-seven countries in water-scarce regions have established water allocation systems based on the issuance of water rights and these countries are potential candidates for impact investment-driven solutions if the right enabling conditions are put into place,” Richter said.
In 2015, The World Resources Institute released a study of countries likely to become some of most water-stressed places on Earth by 2040. Of the 33 countries surveyed for groundwater and desalinated sea water, many Middle Eastern countries, including Bahrain, Kuwait, Qatar and San Marino, are projected to suffer “severe and continuous water shortages” by 2040.