UK government launches prize to finance solutions on water loss

Twenty-seven billion cubic metres of water are lost annually in urban areas of developing countries © Neville Nel

The UK government’s Department For International Development (DFID) has unveiled a new innovation prize with the aim of mobilising funds to reduce the vast amounts of non-revenue water (NRW)–the difference between water entering the system and the amount customers are billed for–in developing countries.

A World Bank study, The Challenge of Reducing Non-Revenue Water in Developing Countries, estimates that there are 27 billion cubic metres of water lost annually in the urban areas of developing countries. Just halving these losses could generate US$2.9 billion each year and provide water for an additional 90 million people, without having to utilise new resources.

“What has lagged behind are widely applicable solutions for financing-related investments,” said Chris Shugart, a consultant working with IMC, the organisation which is managing the competition for DFID. “This prize will stimulate thinking on how to increase the provision of needed financing. In principle, these deals will be financeable. By cutting costs and raising revenue, well-planned investments to reduce NRW can pay for themselves over seven to ten years.”

The Dreampipe challenge is open to applicants globally and is designed to encourage financial specialists, transaction advisors, and water utility experts to work together on devising finance mechanisms that will reduce non-revenue water

“It is normal for them to say that, and I’m sure it is true for some of the companies,” said Shugart. “Experience, however, suggests that many companies need to take action in many other areas before they can make the best use of external financing for NRW reduction. What we hope is that progress made by the first group of companies can put the spotlight on the laggards and provide ‘competition by example’ so that the second group will feel more pressure to undertake these needed preliminary reforms.”