WATER FUNDS PROJECT CYCLE
Generalization of financial resources needed
The financial resources required to develop a Water Fund increase significantly from the initial conception of the idea in the Feasibility Phase through to the implementation of projects on the ground in the Operation Phase. The text below each phase specifies one key factor that will affect the overall associated costs, such as how much information and data are readily available versus how much information would need to be collected and analyzed.
The total duration of the phases of the Project Cycle will vary depending on local conditions and context, the availability of resources and data, and a number of other critical factors. As noted, some water funds will take much less time, others may take longer. In all cases, new innovative tools and experiences are continuously helping to shorten this duration by gaining efficiencies across the Project Cycle.
What types of funding sources are typically used to support the Feasibility and Design Phase?
Listen to Silvia Benitez from TNC describe typical funding sources for early development of a WF
The financing model of a Water Fund has similarities with models of start-up finance companies. They are based on "seed capital" to create a case that attract large investors. Big investors in this case are public resources. Once stable source has been secured, it is possible to access sophisticated financial sources (e.g. Impact capital or credits). As illustrated in the graphic, funding for the first three phases of the Project Cycle are typically covered through seed capital, while more sophisticated financial instruments are typically required to support the long-term operations of a Water Fund.