Water Credits

Water Credits

Subject: Environment

Concept: 

• Water credits are one of the financing mechanisms to drive collective action toward common climate adaptation goals.
• Water credits represent a fixed quantum of water that is conserved or generated and can be transacted between water deficit and water surplus entities within a sub-basin.
• Water credit is an initiative of Water.org. Water.org is a global non-profit organization working to bring water and sanitation to the world.
• The Water Credit Initiative has been funded by social entrepreneur Gary White and Hollywood Actor Matt Damon through their organization Water.org which has invested US$ 2.2 million in Water Credit programs.
• Water credit applies the principles of microfinance to the water and sanitation sector in developing countries. By making small loans to individuals and communities who do not have access to credit, Water-Credit empowers people to address their own water and sanitation needs instead of depending on government funds and charity.
• The concept of water credits is similar to carbon credits; however, unlike the atmosphere, the spatial limit for transaction should remain within the same hydrological unit — that is, a river basin or watershed.
• For example, multiple industries can offset their impact by buying water credits from municipalities that are fund-crunched to finance large-scale floodwater harvesting or wastewater treatment projects that conserve freshwater resources at a city level and promote wastewater reuse.
• This also means that the adoption of water credits would require a multiplayer approach.
• Its implementation would need some pre-requisites such as,
  • a systemic-level intervention (regulatory players and local governance institutions)
  • innovation in adaptation finance to achieve water resilience.