Over the course of the last few years, corporations and governments have joined the ranks of non-governmental organizations and the public at large interested in the sustainable use and development of natural resources. As resources have become scarcer, it has become obvious that taking care of nature is in everyone’s best interests. This realization is transforming in the water sector, in part because of the importance of access to clean water to everyone. For example, public water supplies serve over half of the world’s population and a significant portion of this water comes from forests and grassland areas that are under threat of conversion. To protect the supply of clean water for people, investing in watershed protection and compatible land use practices makes strong financial sense.

But who pays for these efforts or the costs of enticing people to forego specific activities for the betterment of nature? Expecting local governments to step in to cover these costs is not always realistic, and philanthropic sources are increasingly dubious of supporting efforts that may not have strong local capacity and support. However, innovative financial and policy solutions that result in a solid revenue stream that can support ongoing conservation efforts hold tremendous promise. These may be purely public schemes or privately financed, or some combination of the two. These tools are referred to by a variety of terms including conservation finance, market-based solutions and payment for ecosystem services among others.  

As the world struggles to improve conditions for those who do not have access to water or enough energy for homes and businesses, more water infrastructure in the form of dams and diversions is inevitable. This will place added pressure on the waters that flow through rivers and lakes. Luckily, financial solutions can be embedded in this development, allowing us to be smarter about taking care of these resources so necessary for people and nature.