Financial Innovations for Rural Water Supply in Low-Resource Settings

One of the challenges of providing rural water supply financing is that the populations are smaller, more dispersed, and poorer than their urban counterparts. This may reduce opportunities for economies of scale and complete cost recovery. To overcome these challenges, the REAL-Water program is focusing on identifying innovative and promising financing or funding mechanisms that can be used in small villages and dispersed settlements. This report outlines several innovative financing mechanisms that show potential for benefits exceeding the status quo. These mechanisms include: Village Savings for Water, Digital Financial Services, Water Quality Assurance Funds, Performance-Based Funding, Development Impact Bonds, Standardized Life-Cycle Costing, Blending Public/Private Finance.