Governance and Legal Models

Water Funds are expected to evolve through a range of legal structures, beginning with simple agreements and then moving towards more sophisticated legal structures. A range of Governance and Legal Models should therefore be explored to identify the optimum governing structure of the Water Fund, while not limiting or unduly constraining the interaction it may have with relevant governing bodies.

A few governance models that are currently being applied around the world include:

  1. Multi-Stakeholder

    The water fund is governed by a board that consists of public and private organizations, usually those that have contributed financially.

  2. Government-operated

    decision-making power for the water fund remains solely within a public authority such as a municipality or public utility.

  3. Watershed Committee

    quasi-public river basin committees invest in bulk water user fees to sustain governance of the water fund. This approach is currently unique to Brazil. During this step, a range of potential governance and legal models should be explored and consideration should be given to legal aspects such as tax planning, intellectual property rights, compliance with government regulations, and legislation.

HR and Corporate Development Plan

The legal establishment of a Water Fund may occur through various legal mechanisms that usually increase its complexity (legal and administrative) according to the needs and development of each Water Fund. HR and Corporate development plans help WFs respond to projected needs of the business.

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Key Questions

  • What is the legal context? (e.g. environmental laws and regulations, legislation to establish water service rates, watershed protection measures, etc.)
  • What tax requirements exist for forming a new organization?
  • What is ‘the best’ governance model for the proposed Water Fund?

Key guidance for developing your Governance and Legal Model: