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Making Blended Finance Work for Water and Sanitation

Unlocking Commercial Finance for SDG 6

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Investments in water and sanitation are a prerequisite to deliver on the Sustainable Development Goals (SDGs), in particular on SDG 6 ensuring availability and sustainable management of water and sanitation for all. Blended finance can play an important role in strategically investing development finance to mobilise additional commercial finance needed to fill the current investment gaps. Thus far, however, blended finance has not reached scale in the water and sanitation sector. A greater evidence base is needed to better understand the current applications as well as the potential of blended models in the water and sanitation sector. This publication takes a commercial investment perspective and provides insights into three subsectors: (1) water and sanitation utilities, (2) small-scale off-grid sanitation and (3) multi-purpose water infrastructure and landscape-based approaches. The publication draws out recommendations for policy makers and practitioners to apply and scale innovative blended finance approaches where most appropriate.

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Evidence on blended finance in multipurpose infrastructure and landscape-based approaches

This chapter presents the results of the in-depth review of multipurpose water infrastructure (MPWI) and landscape-based approaches, including: (i) an introduction into the subsector, (ii) a commercial investor perspective on the subsector, (iii) an overview of blended finance transactions, (iv) a typology of commercial investment ready to be mobilised, (v) an assessment of the impact on the poor, and (vi) subsector-specific insights. It finds that for MPWI blended finance models are an established financing instrument mobilising commercial finance at scale. For landscape-based approaches, blended finance can potentially operate as a fit-for-purpose financing instrument as it brings together different stakeholders responding to their individual investment preferences, but developments remain at a very early stage.

English

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