Working paper: Walking a Narrow Path

Nature is the foundation of healthy, well-regulated water systems and, therefore, the foundation of resilient societies and economies. Despite this, protection and restoration of watersheds remains critically underfunded. 

Building a ‘business case’ for investing in healthy watersheds is easy enough; the economic value they generate and support is undeniable. The real challenge is translating that value into financial returns that can attract much-needed investment. Many watershed investments struggle to produce direct cashflows, and the benefits they provide are delayed over longer time periods, while up-front costs are real and significant. 

The complexity of these challenges means that there is no simple answer. This new working paper, Walking a Narrow Path, produced in collaboration with Tipping Point, recognises this complexity and aims to chart the way forward. It focuses on what approaches to watershed finance have worked in practice by analysing real-world cases of watershed-oriented deals, detailing the elements of repayable finance for nature and the way different lenders and borrowers understand it. 

This working paper aims to provoke discussion about how repayable finance can become a tool used to strengthen watershed resilience, and to highlight the many constraints needing to be overcome. Please read it and get in touch with us to share your thoughts.