The exact process for designing a Water Fund may vary depending on local enabling conditions, capacity, and context. Note: you can learn more about the project cycle from a financial perspective by accessing the link beside the video below.
TNC & Partners have standardized the Water Fund development process around 5-phased cycle: Feasibility, Design, Creation, Operation, and Maturity.
What is the Water Funds Project Cycle?
Silvia Benitez from The Nature Conservancy describes each phase of the Water Funds Project Cycle
The Feasibility Phase includes two 'checks' to test if a Water Fund is the right water security tool. First, a test of 'eligibility' is completed by quickly determining if there are water security challenges and a potential for a Water Fund to help. If yes, feasibility is then explored further by developing a deeper understanding of the situation and generally how a Water Fund could positively contribute to water security within the defined area.
The Design Phase is undertaken to develop the best solutions for the identified water security issues and to choose the appropriate water fund configuration which accounts for key technical issues, financial considerations, governance dimensions and strives for maximum impact.
The Operation Phase is undertaken to establish stability by developing and implementing a comprehensive work plan, which guides systematic execution of activities, measurement and evaluation, and communication of progress towards the goals of the water fund. These activities should be continuously improved through adaptive management, refinements, and innovation.