WINZ | Investing in water for resilient mitigation

Introduction

Global climate finance is estimated to have reached 1.5 trillion USD in 2023, which is roughly 1% of the global economy. But this falls far short of what experts claim is needed. Annual investment of 7–10 trillion USD over the next 25 years can fund actions to limit planetary warming to 1.5°C and build resilience to climate impacts. Failure to invest will lead to five times greater costs in economic losses from climate events alone this century. Investment in water is a critical accelerator for climate mitigation and resilience. Despite accounting for at least 10% of emissions (Kerres et al., 2020), investment in water accounts for less than 2% of currently tracked climate finance (Buchner et al., 2023). Recent research has estimated that a potential 160 billion USD could be leveraged through carbon credit markets for actions that reduce emissions and enhance water security (Thomas et al., 2024). Most of these areas offer win-wins for more productive, climate resilient ecological, water, food, and energy systems (UN Water, 2024). To date, overall investment in climate mitigation has accelerated fastest in the energy, buildings, and transport sectors but lags on agriculture, land use, nature-based solutions, and water. Some major financial institutions are beginning to respond. The European Investment Bank Water Sector Orientation (EIB, 2023a) highlights how “water remains largely absent from net-zero strategies; it is the invisible enabler for the transition to a green economy.” The Asian Development Bank (ADB) is promoting action on water sector decarbonization (ADB, 2023) and the Green Climate Fund (GCF, 2024) has produced guidance to enable and encourage water and sanitation projects to qualify for their climate funds. So how and where should investments be made? Here, we outline four key areas to reduce emissions through water and ensure mitigation investments across sectors are water resilient.