Finding Funding for a Water-Secure Future: How Much Do Governments Spend on Water and What Are the Financing Gaps?
The World Bank estimates a staggering $7 trillion global water infrastructure investment gap by 2030, a figure that reflects the scale of underinvestment and highlights the urgency of systemic reform across countries. According to World Bank analysis, about 91% of current water spending comes from public sources, while private sector contributions remain below 2%.
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Introduction: What Will It Take to Unlock Investment in Water Infrastructure?
Water is the foundation of life, public health, food security, and economic prosperity. Yet, despite its critical importance, water infrastructure around the world is aging, underfunded, and increasingly unfit to meet the demands of growing populations, urbanization, and climate change. In both developed and developing nations, inadequate investment in water systems—ranging from drinking water supply and wastewater treatment to irrigation and stormwater management—poses serious risks to communities, ecosystems, and economies. The question is no longer whether we need to invest in water infrastructure, but what it will take to unlock the scale and type of investment required to ensure sustainable, resilient, and equitable water systems for future generations.
Historically, water infrastructure has suffered from being "out of sight, out of mind." Unlike roads or energy grids, much of it is buried underground or hidden in treatment facilities, making it less visible and politically prioritized. Moreover, water services are often provided by public utilities or municipal governments with limited budgets, constrained by regulatory frameworks that discourage price increases or private investment. This has led to chronic underinvestment, deferred maintenance, and service disruptions. In many low- and middle-income countries, large swaths of the population still lack access to safe drinking water and sanitation, while in high-income regions, crumbling pipelines, lead contamination, and sewage overflows highlight the urgent need for upgrades.
Unlocking investment in water infrastructure will require more than just public awareness or political will. It demands a fundamental shift in how water is valued, financed, and governed. One of the primary challenges is the perceived financial risk of water projects. Unlike energy or telecommunications, water systems often generate low and unpredictable returns, making them less attractive to private investors. Additionally, the social and environmental costs of water mismanagement—such as floods, droughts, or pollution—are rarely factored into decision-making or pricing, leading to inefficient use and weak incentives for long-term investment.
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To address these barriers, innovative financing models, regulatory reforms, and public-private partnerships are increasingly being explored. Blended finance—using public or philanthropic capital to de-risk private investments—has shown promise in mobilizing funds for water projects in emerging markets. Meanwhile, outcome-based financing models and green bonds are opening new channels for investment linked to measurable improvements in water access or ecosystem health. At the same time, digital technologies, real-time data, and smart infrastructure are improving the efficiency and transparency of water systems, making them more attractive to investors.
Ultimately, unlocking investment in water infrastructure is not just a financial or technical challenge—it is a governance and equity challenge. Who decides what to invest in, who pays, and who benefits are deeply political questions. Ensuring that investment strategies are inclusive, sustainable, and resilient will require collaboration between governments, private sector actors, civil society, and communities. It will also require a long-term vision that treats water not just as a commodity or service, but as a shared resource essential to human and planetary well-being.
🌍 Elevating Urgency & Economic Relevance
Water is an important foundation for a country. It supports health, agriculture, energy, digital systems, and climate resilience. Yet it frequently lacks visibility in national investment frameworks. Closing the investment gap demands recasting water not just as environmental infrastructure but as a strategic economic asset—essential for growth and stability.
The World Bank emphasizes the need for comprehensive reforms to create an enabling environment for water sector investment. These reforms include modernizing policies, clarifying regulatory frameworks, restructuring utilities, and promoting transparent governance—all essential for fostering effective public-private collaboration and developing bankable water projects. To convey the urgency of investment, it is critical to highlight the substantial social and economic returns associated with water infrastructure—particularly in terms of improved livelihoods, public health, climate resilience, and productivity. Framing water investment in this way can help mobilize capital through mechanisms such as blended finance, green bonds, public-private partnerships, and performance-based contracts.
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Opportunities & Initiatives by Country: India (Ganga Basin PPPs)
India has made significant strides in promoting innovative financing mechanisms to address water infrastructure challenges, particularly in the Ganga River basin. With support from the World Bank, the International Finance Corporation (IFC), and the 2030 Water Resources Group (2030 WRG), a pioneering public-private partnership (PPP) model has been implemented to fund wastewater treatment projects. This performance-based framework provides a balanced risk-sharing mechanism: the government disburses 40% of the capital cost upon completion of construction, while the remaining 60% is paid out through annuity payments over 15 years, contingent on the operator’s ongoing performance.
This structure not only ensures accountability and long-term sustainability but also addresses critical environmental challenges. By improving wastewater management, the initiative significantly reduces pollution in the Ganga River, enhances water quality, supports biodiversity restoration, and revitalizes tourism-related economic activities in the region. It also sets a strong precedent for replicable, scalable water infrastructure investment across other river basins in India.
Beyond wastewater treatment, India is also leveraging multi-stakeholder platforms under the 2030 WRG to advance climate-smart agriculture and improve irrigation efficiency. These initiatives fall under the broader "Water for Food" agenda, which aims to optimize water use in agriculture—a sector that consumes over 80% of India’s freshwater resources. By promoting innovative technologies, policy reforms, and collaborative action, these programs seek to enhance agricultural resilience, ensure food security, and contribute to sustainable water resource management across the country.
Opportunities & Initiatives by Country: Jordan (As-Samra Wastewater Treatment Plant)
Jordan's As-Samra Wastewater Treatment Plant stands as a landmark example of how innovative financing and sustainable technology can transform water infrastructure in resource-scarce environments. As one of the largest and most advanced wastewater treatment facilities in the Middle East, the project serves over 3.5 million people—covering approximately 70% of the country’s total wastewater needs.
The success of the As-Samra plant is largely attributed to its pioneering use of blended finance, combining multiple funding sources to share risk and attract private investment. The financing structure includes a mix of donor grants, government funding, commercial loans, equity investment, and political risk guarantees provided by the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group. This strategic blend of capital made the project bankable and sustainable, while ensuring long-term public service delivery.
Equally impressive is the plant's commitment to energy efficiency and environmental performance. Around 84% of the facility’s energy needs are met through onsite renewable energy, primarily solar power, making it one of the few large-scale wastewater treatment plants in the region operating close to energy self-sufficiency. This not only reduces operational costs but also lowers the facility’s carbon footprint, aligning with Jordan’s broader climate and sustainability goals.
The As-Samra project serves as a powerful model for other water-scarce nations, demonstrating how integrated planning, innovative finance, and clean technology can work together to deliver reliable and climate-resilient water services. It highlights the potential for scalable infrastructure solutions that simultaneously address environmental, social, and financial objectives.
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Opportunities & Initiatives by Country: Uganda (Gulu Water Supply & Sanitation Project)
The Gulu Water Supply and Sanitation Project represents a transformative investment in northern Uganda’s water infrastructure. Valued at approximately US$75 million, the project is jointly financed by the World Bank, KfW (the German Development Bank), and CDC Group, signaling strong international support for Uganda’s efforts to expand access to safe and reliable water.
The project involves the construction of a new water intake system on the Victoria Nile, a modern water treatment plant, and a 75-kilometer pipeline that delivers clean, treated water directly to the town of Gulu and surrounding areas. Once completed, the initiative will provide improved water and sanitation services to nearly 490,000 people, significantly enhancing public health, hygiene, and quality of life across the region.
Beyond access to potable water, the project includes vital investments in sewerage infrastructure, supporting sustainable urban growth and helping prevent waterborne diseases. This is particularly crucial in Gulu, a rapidly growing urban center recovering from years of conflict and displacement. The improved infrastructure will support both domestic and commercial needs, boosting local economic development and resilience.
For Uganda, the Gulu project marks a shift toward long-term, climate-resilient water management. With growing pressure from urbanization and climate change, such large-scale infrastructure investments set a strong foundation for future water security. The success of this project also opens the door to replicable models in other secondary cities across Uganda.
Looking ahead, opportunities exist to integrate digital water management, energy-efficient technologies, and public-private partnerships to further enhance operational efficiency and sustainability. The Gulu project is not just an infrastructure upgrade—it’s a strategic move toward inclusive, resilient urban development in Uganda’s north.
Opportunities & Initiatives by Country: India (Bengaluru Lakes Revival)
India is witnessing a growing recognition of the need for integrated urban water management, and one of the most ambitious recent efforts is the Bengaluru Lakes Revival initiative under Karnataka’s Water Security and Resilience Programme. Backed by a substantial US$426 million loan from the World Bank, this program aims to restore and strengthen water systems in and around the city of Bengaluru, one of India’s fastest-growing metropolitan regions.
At the heart of the program is the rejuvenation of 183 lakes, many of which have suffered from decades of pollution, encroachment, and neglect. These lakes once formed a natural network of reservoirs that regulated groundwater recharge, flood mitigation, and urban biodiversity. Reviving them is not only an ecological imperative but also a strategic urban resilience measure for a city frequently facing both drought and flooding.
The project also encompasses the construction of nine new sewage treatment plants (STPs) to intercept and treat wastewater before it enters the lake systems, significantly reducing pollution levels. By combining STPs with groundwater recharge structures, smart water meters, and flood modeling systems, the program creates a holistic approach to managing urban water.
The initiative is expected to benefit over four million residents of the Bengaluru Metropolitan Region, enhancing their access to clean water, reducing flood risks, and improving overall urban livability. The project is particularly relevant in the context of rapid urbanization, where population pressure has strained both surface and groundwater resources.
In addition to public investment, the program is mobilizing private capital, with US$5 million already committed to support the deployment of technologies, community engagement initiatives, and decentralized water management solutions. This signals a promising move toward blended financing models, where private and public sectors collaborate to deliver outcomes more efficiently.
Another critical component of the program is the enhancement of early warning systems and data-driven water management tools. By investing in real-time monitoring, flood forecasting, and climate adaptation planning, the initiative aligns with broader climate resilience goals and positions Bengaluru as a potential model for other urban regions in India and beyond.
Advantages to the Country
The Bengaluru Lakes Revival is more than a city-level initiative—it holds significant national implications. First, it supports India’s broader mission under Jal Shakti Abhiyan and AMRUT 2.0, which prioritize water conservation and urban water infrastructure. Second, it demonstrates how urban ecosystems, when restored and managed sustainably, can serve as critical assets for water security, disaster resilience, and public health.
Additionally, by leveraging both international financing and domestic technical capacity, the project builds institutional knowledge that can be replicated in other Indian cities facing similar challenges. It also opens up future opportunities for green bonds, climate finance, and community-based water stewardship models.
Future Opportunities
Looking ahead, the success of this initiative could catalyze further investments in nature-based solutions, urban wetland restoration, and digital water governance. With increasing climate variability and urban demand, such integrated water projects are likely to become central to India's sustainable development strategy.
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Scaling Up Global Water Finance: Current Progress and Future Directions
Water security remains one of the most pressing global challenges, especially as climate change, population growth, and urbanization increase pressure on already strained water resources. Recognizing this urgency, the World Bank Group has developed a comprehensive Strategic Framework for Scaling Up Finance for Water, leveraging its broad range of instruments and partnerships to mobilize investment at scale. This framework integrates efforts across multiple World Bank arms—including the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), the Global Water Security & Sanitation Partnership (GWSP), and the 2030 Water Resources Group (2030 WRG)—to address key barriers and unlock financing in sustainable and innovative ways.
At its core, the framework focuses on creating enabling conditions such as policy reform, regulatory clarity, institutional capacity building, and transparent governance to attract private sector participation and diversify financing sources. The approach emphasizes climate alignment, ensuring that investments not only improve water infrastructure but also enhance resilience to climate shocks and contribute to sustainable development goals.
The World Bank’s commitment is reflected in its FY 2023 portfolio, which included over US$13.5 billion dedicated to water-related projects worldwide. This figure underscores the scale and urgency of investment needed to tackle water challenges, spanning drinking water, sanitation, irrigation, flood management, and wastewater treatment. Moreover, when combined with other multilateral development banks (MDBs), total global approvals in water sector projects reached approximately US$19.6 billion in the same fiscal year, with US$14.4 billion of this financing directed toward low- and middle-income countries where water insecurity is often most acute.
This concerted effort highlights a shift from traditional public-sector financing to more diversified and innovative financial models. For example, the World Bank and its partners are increasingly deploying blended finance instruments that combine concessional funding with private investment to reduce risk and leverage additional capital. Entities like IFC and MIGA play a critical role by providing equity investments, loans, and political risk guarantees that make water projects bankable in challenging markets. Meanwhile, platforms such as the 2030 WRG facilitate multi-stakeholder collaboration to design practical solutions that meet the unique needs of each country.
Looking forward, the World Bank plans to scale up these efforts by deepening country-level engagement, promoting digital and data-driven water management technologies, and fostering climate-smart infrastructure investments. There is also an emphasis on integrating nature-based solutions, such as watershed restoration and sustainable groundwater management, which offer cost-effective ways to enhance water security while preserving ecosystems.
The framework also recognizes the importance of equity and inclusion, ensuring that investments reach vulnerable populations and address social dimensions of water access and sanitation. By aligning finance with the priorities of the Sustainable Development Goals (SDGs) and the Paris Agreement, the World Bank aims to build resilient water systems that support economic growth, public health, and environmental sustainability.
In conclusion, the World Bank’s Strategic Framework and its comprehensive use of financial instruments mark a pivotal step toward closing the global water investment gap. By mobilizing billions in funding, fostering innovative partnerships, and embedding climate resilience, these efforts provide a roadmap for delivering safe, reliable, and equitable water services to communities worldwide.
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Path Forward: Unlocking the Full Potential of Water Infrastructure Investment
- Deepen Institutional and Financial Reforms: Sustained progress requires reinforcing the financial sustainability of water utilities through improved cost recovery mechanisms, tariff reforms, and efficient subsidy targeting. Strengthening sector governance by enhancing transparency, regulatory clarity, and accountability will build investor confidence. Additionally, boosting institutional capacity across ministries and service providers is essential to manage complex water systems effectively and ensure long-term operational excellence.
- Develop Robust Project Pipelines: Scaling up bankable water infrastructure projects is critical to attracting diverse financing sources. This involves rigorous project preparation, feasibility studies, and robust environmental and social safeguards. Leveraging innovative risk-sharing mechanisms—such as guarantees, first-loss capital, and blended finance structures—can mitigate investment risks and unlock greater private sector participation, particularly in markets perceived as high-risk.
- Empower Local Execution and Decision-Making: Strengthening local utilities and government agencies through enhanced access to reliable data, advanced digital tools, and strategic planning capabilities will improve operational efficiency and service delivery. Decentralizing decision-making allows for context-specific solutions that better address local water needs and enable adaptive management in the face of changing environmental conditions.
- Accelerate Climate-Resilient and Sustainable Financing: Prioritizing investments in nature-based solutions—such as watershed restoration, urban wetlands, and green infrastructure—can enhance ecosystem services while reducing vulnerability to climate shocks. Promoting decentralized wastewater treatment systems, energy-efficient technologies, and renewable energy integration will reduce operational costs and environmental footprints, making water projects more sustainable and attractive to investors focused on climate alignment.
- Replicate and Scale Proven Models Globally: Successful public-private partnership (PPP) frameworks and financing models demonstrated in countries like Jordan (As-Samra wastewater plant), India (Ganga basin wastewater treatment), and Uganda (Gulu water supply) offer valuable blueprints. Platforms such as the Global Water Security & Sanitation Partnership (GWSP) and the 2030 Water Resources Group (2030 WRG) provide avenues to share knowledge, facilitate multi-stakeholder collaboration, and scale these models across diverse regions. Expanding these proven approaches can accelerate water infrastructure development and improve access in underserved areas worldwide.
The Learning
Unlocking water investment is essential for resilience, equity, and sustainability. With strong governance, innovative finance, and scalable models, the path forward offers a clear opportunity to secure water for all and drive inclusive development across regions.
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