The Water Crisis: Time to Turn the Tide

Current State of the Crisis:

• 2.6 billion people globally lack access to clean water and sanitation.
• Over 4,000 children die daily from water-related causes, totaling over 1 million deaths annually.
• By 2030, 3 billion people are projected to face water or clean water scarcity.
• 750 million people currently face acute water insecurity, either lacking access to water sources or facing contaminated supply.

Water.org's "Water Credit" Model:

• The model adapts microfinance principles to provide loans for water connections and toilets, treating the poor as customers rather than aid recipients.
• Pilot programs in 17 countries have facilitated over 300,000 loans, reaching more than 1.5 million people.
• Loan repayment rates consistently exceed 98%, with some mature programs exceeding 99%.
• The cost to provide life-long clean water access drops from an average of $25 per person (traditional wells) to $6–$7 per person (scaled Water Credit model).
• Philanthropic capital of approximately $9 million has leveraged $60 million in commercial capital to fund loan portfolios.
• The strategy avoids "income-generating" loans in the traditional sense but creates "income-enhancing" value by freeing up time previously spent collecting water for productive labor.
• Water.org targets reaching 6 million people with water access within the next two to three years.

Corporate Involvement and Business Case:

• PepsiCo is a major investor, with the Water.org water credit program being the single largest recipient of the PepsiCo Foundation's funds.
• Mahmoud Khan (PepsiCo) states that between 2006 and 2011, water and energy reduction initiatives lowered operational costs by $45 million annually.
• PepsiCo emphasizes "economic scarcity" over physical scarcity, noting that 75% of global water use is agricultural, specifically for irrigation and aquifer preservation.
• Corporations identify three primary risks regarding water: social license to operate, supply chain continuity, and financial planning regarding resource availability.
• The World Economic Forum ranks water access and scarcity as the third-greatest threat to global CEOs.
• PepsiCo aims to reduce water use in production plants by 16 billion liters annually through systematic efficiency improvements.

Barriers to Scale and Infrastructure:

• Usha Rao-Monari (Global Water Development Partners/Blackstone) identifies three critical hurdles for scaling: finance (micro vs. macro), innovation (business models/technology), and governance (tariffs/regulations).
• Current infrastructure often bypasses slums to serve profitable entities like five-star hotels due to inverted subsidy structures.
• The primary bottleneck for microfinance institutions is access to affordable capital; they currently borrow at 15% and lend at 22–24% to the poor.
• Water pricing is frequently distorted; for example, in some regions, water is sold for five cents per cubic meter, failing to cover operational costs.
• Decentralized, point-of-use delivery models are increasingly favored over traditional large-scale capital-intensive infrastructure for slum areas.

Future Initiatives and Call to Action:

• Water.org is launching a debt fund in Q3 to provide social impact investors with a targeted 2% financial return while lowering capital costs for local partners.
• The organization has already secured $3 million in commitments for the debt fund, including a $1 million contribution from Stephen Klebeck.
• The panel advocates for "Advanced Market Commitments" to guarantee markets for utilities connecting slum residents, encouraging infrastructure investment in low-income areas.
• The "Toilet Strike" campaign encourages public commitment to stop using toilets until universal access to sanitation is achieved.
• The panel stresses that solving hunger requires simultaneous solutions for water, as intestinal infections from poor water drain nutrients from food.
• Participants are encouraged to invest in social impact capital or support organizations like Water.org, Water for People, and the Safe Water Network.