Andean Water Funds Platform – Plataforma Fondos de Agua

Andean Water Funds Platform

More than 20 years learning from Water Funds

Fundación Futuro Latinoamericano, in collaboration with Environmental Incentives and the Andean Water Funds Platform, held a public webinar on October 25, 2022, entitled “Sustainable Impact: More than 20 years learning from Water Funds”. Water Funds bring together local actors to protect water resources using an integrated watershed management approach.

Durante el evento, los panelistas expertos compartieron sus diferentes perspectivas para discutir las mejores prácticas relacionadas con la gestión de Fondos de Agua. Los panelistas incluyeron:

Pablo Lloret, Director Ejecutivo, Fundación Futuro Latinoamericano (pablo.lloret@ffla.net)
Douglas Mason, Director, Environmental and Social Performance, Millennium Challenge Corporation (masondj@mcc.gov)
Paola Zavala, Coordinadora de Programa, Fundación Futuro Latinoamericano (paola.zavala@ffla.net)
Bert De Bièvre, Secretario Técnico, Fondo de Agua de Quito (FONAG) (bert.debievre@fonag.org.ec)

Los panelistas compartieron información sobre los desafíos y oportunidades del modelo de Fondos de Agua. Como enfatizó Pablo Lloret, un Fondo de Agua no es una solución integral para todos los problemas de las cuencas hidrográficas, debe considerarse en el contexto de la “localización” o un esfuerzo dirigido localmente basado en las necesidades de su comunidad.

Five key success factors

During the webinar, the case was made for Water Funds as a tool to address the climate crisis and achieve sustainability goals. Panelists focused their presentations on five key success factors.

1. Scope and goals

It is crucial to have clear objectives and real plans that consider the complex geography of a watershed. Pablo Lloret underscored this point, discussing the importance of understanding the true ability and capacity of a Water Fund in terms of what it can and cannot do. Water Fund leaders must set clear objectives and timelines from the outset. Douglas Mason highlighted this point, focusing on the complexity of a watershed and its management. Paola Zavala also contextualized the idea with the example of Peru’s Regional Water Fund, FORASAN, established to fulfill a management plan for the Chira-Piura watershed. FORASAN started with clear objectives and tangible timelines that ultimately contribute to its success.

2. Aliados y partes interesadas

Securing a diverse set of partners from the public and private sectors and involving local communities is one of the key characteristics of successful Water Funds. Paola Zavala explained how a successful Water Fund helps coordinate and support the development of strong relationships with stakeholders and builds trust with government entities, non-governmental organizations, and the private sector. The participation and leadership of local actors enable Water Funds to respond to climate change by fostering local resilience. This system also attracts local funding and allows local stakeholders to contribute to activities and take protective actions within the watershed. Paola Zavala also highlighted the importance of partners by sharing the experience of Vivo Cuenca in Chinchiná, Colombia.

Many public and private actors, through the initiative called “Pacts for the Chinchiná River Watershed,” coordinated efforts to form this Water Fund through a participatory process. As a result, the Water Fund secured partner support from the beginning, which has been key to its success. Additionally, Bert De Bièvre shared that the Water Fund he represents, FONAG, includes both public and private partners. These include public and private entities, such as Quito’s Water Utility, which consistently contributes a significantly high percentage of revenue to the trust fund. Moreover, the Water Fund partners with public and private donors who provide the remaining implementation funding. Finally, Douglas Mason described conservation as something that “happens at the speed of trust,” emphasizing how building trust among various stakeholders is a key approach to increasing sustainability and economic returns.

3. Accountability and results

Decision-making is supported through an accountability system that demonstrates results at all stages of a Water Fund. According to Paola Zavala, incorporating accountability at all stages of a Water Fund’s life is one of the reasons why the model has been so successful. The Water Funds use accountability tools, such as impact monitoring, as evidence for future decision making. Bert De Bièvre also highlighted this point, sharing that FONAG invests a substantial amount in impact monitoring, which allows it to generate a return on investment (ROI) for its constituents. These are tangible results that provide a sense of credibility and accountability and build trust. He highlighted the ROI of a FONAG participant, which generates $2.30 for every dollar invested. Such returns increase member support in a Fund.

4. Long-term investment

According to Douglas Mason, the establishment of a formal agreement to recognize the Water Fund as a potentially long-term generational investment provides the necessary time to align the funds with the substantial change needed to generate dividends. Bert De Bièvre pointed to FONAG’s consistent long-term commitment as a good example of this. Over more than 20 years, the financial value of the Water Fund grew from $20,000 in 2000 to almost $23 million in 2022, with steady growth after five years. The ROI of the Water Funds is long-term.

5. Liderazgo y apoyo político

Strong political backing and allies, as well as strong internal leadership, help support the success of Water Funds. Paola Zavala shared the experience of the Regional Water Fund FORASAN, a Peruvian Water Fund, with strong political support from the National Water Authority and the regional government of Piura. He emphasized that the fund’s participation in the Basin Water Resources Council contributed decisively to its continued success. Finally, Pablo Lloret referred to the fundamental need for strong internal leadership to support and promote the success of the Fund.

Key lessons

While there is no universal guide for establishing and maintaining a Water Fund, successful approaches share these common characteristics. Panelists highlighted the diversity among Water Funds and characterized the unique nature of each fund as a strength. While each is different, they all create an exceptional platform for sharing ideas and establishing a peer-to-peer learning environment-the main objective of the Andean Water Funds Platform.

El Proyecto Fondos de Agua 2.0 es ejecutado por la Fundación Futuro Latinoamericano gracias al financiamiento de la Fundación Tinker

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