Latin America

Latin America: the birthplace of the Water Fund Model

Latin America: the birthplace of the Water Fund Model

The Water Fund model was born in Quito, Ecuador in 2000. The fund started with just $21,000 of capital, which has grown to more than $12 million today. Since this time, the model has rapidly replicated across Latin America. (Photo of Camboriu Water Fund, Brazil © Andre Cavassani/TNC)

26 Water Funds in Operation

11 Water Funds in Development

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  • Where did the Water Fund story begin?

    Alejandro Calvache from TNC describes how the first Water Fund began.

  • What is the Latin America Water Funds Partnership?

    Silvia Benitez from TNC describes the innovative work of the LAWFP. Learn more below.

Water Funds across Latin America are currently supported by a range of mechanisms, including:

  1. Endowments

    Water Funds have proliferated across the Andean Region through the development of funds that act like endowments: the largest water users in an area – including major brewers, municipal water authorities, a sugar cane growers association and others – make voluntary investments into a central fund. When the fund is fully capitalized, earnings are directed toward conservation activities upstream, such as reforestation, and to enabling rural people who live near key waterways to start small businesses and organic gardens that avoid damaging forests and grasslands.

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  2. Water Tariffs

    As one example, the Lima Water Fund (Aquafondo) – which provides water to the world’s second largest desert city - has been an influential actor in the establishment of Peruvian water tariffs that require service providers to earmark 1% of revenue to invest in natural infrastructure and, in the case of Lima, 3.5% for disaster mitigation and climate change adaptation.

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  3. Robust Partnerships

    As one example, the Monterrey Water Fund in Mexico has united over 60 members from private, government, non-profit, and academic sectors to protect drinking water sources for the over 4 million inhabitants of the city’s metropolitan area.

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  4. Multi-sector Coalitions

    As one example, the Green-Blue Water Coalition is an initiative of The Nature Conservancy with support from the private sector and the collaboration of civil society. Together, this coalition is working to implement nature-based solutions that promote water security in at-risk cities.

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  5. Establishment of PES schemes into law

    The Water Producer concept in Brazil has achieved considerable success, which is a concept that strongly embraces a principle that landowners should be compensated for the opportunity costs they incur for generating hydrologic services downstream users need. In Brazil, this has resulted in three general approaches: (1) watershed committees that gather and redirect investments from companies, water-dependent industries and government agencies to landowners in source watersheds, (2) the establishment of PES schemes in state and municipal laws, and (3) utility-driven projects similar to those elsewhere in Latin America.