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The Water Benefit StandardA Results-Based Finance Approach To Address The Global Water Crisis
The Gold Standard Foundation Brendan Smith Avenue Louis Casai 79 CH-1216 Geneva, SwitzerlandPhone: +41 22 788 7080Mob: +41 78 648 [email protected]/water
Our world is facing a mounting global water crisis. Through increased industrial activities, con-tamination and over use, we are increasingly depleting our most valuable resource. In addition, lack of access to safe, clean water resources represents an enormous risk across the globe, and has developmental implications with regards to resource inequality, hygiene, and health. Without water there is no human life.
There are many worthwhile and necessary water projects being implemented in the areas that most desperately need it. However, these projects often have insufficient governance and limited access to financing, and as such are often limited in scale and scope.
To date, the existing governance and financing frameworks to address the crisis have fallen woefully short.
Solving thiS problem requireS big ideaS!
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“You never know the worth of water until the well is dry!“
- Thomas Fuller -
the Context - the global Water CriSiS
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the WbS is a powerful solution, for a complex global problem
The Gold Standard`s Water Benefit Standard (WBS) is a results-based finance mechanism. It defines best practice governance for projects that supply, purify or conserve water and certifies their out-comes. Above and beyond water, these projects help poor communities develop sustainably. The Standard provides a transparent, low-risk and high-impact investment framework that increases the certainty that water projects will achieve the results that are anticipated at project start. This happens through rigorous methodologies and an annual verification of quantified environmental and other sustainability outcomes by independent auditors.
Multilaterals, governments, funding agencies and NGOs can use the Water Benefit Standard to ensure that every Dollar goes as far as possible towards reaching project objectives and meeting UN Sustainable Development Goals.
Corporates will use the Water Benefit Standard to make the most of their investments in water management and stewardship. They can either certify their own efforts, or purchase third party verified Water Benefit Certificates (WBCs) — certified project outcomes — that are generated through the annual project verification process of the Water Benefit Standard. This way, additional finance can be channelled to urgently needed water projects to expand their impact.
The WBS is built on a decade of experience at The Gold Standard Foundation with market-based approaches channelling billions of dollars into more than 1,200 projects that have delivered significant returns on investment in environmental and social outcomes – both globally and locally. The WBS is based on the simple premise of paying for proven outcomes, rather than intentions.
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the Water benefit Standard iS a big idea!
The Gold Standard is an award winning certification standard for results-based project finance and is recognised internationally as the benchmark for quality and rigour in certifying environmental and socio-economic project outputs. Established in 2003 by the World Wide Fund For Nature (WWF), The Gold Standard is the only certification standard trusted and endorsed by more than 85 NGOs worldwide. It is also the standard of choice for multiple governments and multinationals including United Nations agencies that use The Gold Standard for the development of their own carbon mitigation and sustainable development projects.
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hoW the Water benefit Standard WorkS
Under the Water Benefit Standard, environmental and socio-economic outcomes of eligbile projects must be quantified and independently audited annually for between 10 and 21 years and listed in a public registry in which all relevant project details and documents are publicly available.
The Water Benefit Standard features two different tracks:
The Water Benefit Standard
Track 1
Track 2
annual project certification for water projects to improve project performance and ensure investment certainty.
annual project certification for projects beyond business-as-usual (incl. financial needs assessment) and subsequent issuance of Water benefit Certificates as additional project financing stream.
Project Certification
Water Benefit Certificate Issuance
Track 1. Project Certification: For corporates, multilaterals, and funding agencies that already plan to finance new water initiatives, the Water Benefit Standard improves performance and ensures certainty in their investment through rigorous methodologies and annual verification of project results:
Track 2. Issuance of Water Benefit Certificates: For ‘beyond business-as-usual’ water projects, espe-cially in water-stressed regions where financing is urgently needed but not otherwise available, the Water Benefit Standard acts as a crediting mechanism that will drive funding through the issuance and sale of Water Benefit Certificates which represent the certified outcomes from a specific water project. Using the Water Benefit Stan-dard, companies can support water projects globally in a credible and transparent manner, providing much needed finance to those local communities suffering the most.
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the Water benefit Standard CertifiCation proCeSS
Water Benefit Certificates (WBCs) enable corporate, NGO and government players to finance projects of their choosing. WBCs guarantee that projects have undergone a rigorous initial certification and annual independent verification process that delivers real, verifiable and quantifiable water and socio-economic benefits according to the principles of The Gold Standard and the Millennium Development Goals of the Untied Nations. Hence, WBCs ensure the long-term sustainability of projects through an additional cash flow based upon annually verified results.
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4.5.
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9. Methodology Development (Project Developer)
Pre-feasibility Assessment (Gold Standard)
Project Design Document (Project Developer)
Project Implementation (Project Developer)
Initial Certification (Gold Standard)
Continuous Monitoring (Project Developer)
Annual Performance Certification (External Auditor)
Annual Water Benefit Certificate Issuance (Gold Standard)
Sale of Water Benefit Certificates (Project Developer)
Annual Monitoring & Verification Cycle
1-7: track 1 1-9: track 2
For WBC project developers, WBC sales agreements with buyers can translate into credit enhancements or can be used as collateral for loans from local banks. At the same time, WBC buyers can communicate their actions, e.g. as part of a water impact financing programme or a corporate water strategy.
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the Water benefit Standard - Core prinCipleS
• a holistic approach that addresses the nexus of climate, energy, food, and water security.
• project development aaccording to rigorous certification, monitoring and reporting requirements including a strong emphasis on sustainable development principles and requirements that projects meet defined minimum criteria.
• rigorous and regular measuring, reporting and verification (mrv) of projects, both in-house at the Gold Standard Foundation and by independent , trained auditors to ensure long-term project performance.
• transparency and sharing of project information including all project documentation on an open public registry.
• accountability and capacity building in local communities on a long-term basis.
• long-term project engagement ensuring that both environmental and socio-economic sustainability as well as market viability are addressed.
• focus on social benefits including women’s empowerment, improving health and access to basic human needs, and providing employment opportunities.
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WhY purChaSe Water benefit CertifiCateS?
benefits for WbC buyers (e.g. corporates, public institutions, ngos):
• Credibility: WBCs provide a certified investment in environmentally, socially, and economically beneficial projects with a focus on water that address key human health and welfare issues.
• transparency: WBCs provide a transparent way to embed responsible results-based water impact financing into a WBC buyer‘s overall water strategy.
• accessibility: WBCs provide a way to address water issues in corporate supply chains where direct influence is often not viable.
• leadership: WBCs guarantee reputational and communication benefits by demonstrating industry leadership.
benefits for WbC project developers and local communities:
• Sustainability: WBCs provide long-term and scalable financing to address water scarcity, access and supply issues.
• technology transfer: WBCs support the dissemination of new technologies and techniques for water management.
• local ownership and capacity building: WBCs contribute to local community development and access to clean drinking water.
• annual independent audits: WBCs ensure certainty through annual third party verification.
the gold Standard foundation, first Climate markets ag and more than twenty Water benefit partners have developed the Water Benefit Standard as an innovative financing mechanism to support water projects in regions particularly affected by water-related problems. The scheme has demonstrated proof of concept by meeting several key milestones:
• Governance framework including independent Water Technical Advisory Committee (TAC)
• Certification infrastructure including independent auditors and electronic WBC registry
• Implementation of various pilot projects•
members of the gold Standard‘s technical advisory Committee who oversee the Water benefit Standard include representatives from:
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• Agricultural Services Private Ltd. (AgSri) • First Climate Markets AG • Environmental Financial Group Inc.• International Union for Conservation of Nature (IUCN)• Nestlé• Nexus - Carbon for Development• Stockholm International Water Institute (SIWI)• The Australian National University (ANU)• Whave Solutions Ltd.• World Resources Institute• World Vision
Who iS behind the Water benefit Standard
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Water benefit partners (WBP) is a Public Private Partnership (PPP) that was formed in 2011 to develop the Water Benefit Certificate Standard. The partnership was initiated by First Climate Markets AG and the Gold Standard Foundation and is co-funded by the Swiss Development Cooperation (SDC).
With various partners and stakeholders on board, the PPP developed the WBC mechanism as a public good to help raise additional finance for water projects through a market for Water Benefit Certificates.
Observers
• ANZ Bank New Zealand Ltd• European Investment Bank
PPP Initiator & Manager
• First Climate Markets AG• Gold Standard Foundation• Swiss Development Cooperation (SDC)
Corporate Partners
• Bayer AG• Nestlé• Munich RE AG• Borealis AG• Coop Group• Olam International Ltd.• Carlsberg Group
Expert Advisors
• SGS Group• Markit Group Ltd.• World Vision• The International Federation of Red Cross
and Red Crescent Societies (IFRC)• Climate Care• LimnoTech• Quantis• Bonneville Environmental Foundation (BEF)
Sounding Board
• Swiss Development Cooperation (SDC)
• Global Water Challenge (GWC)• Gold Standard Foundation• International Union for
Conservation of Nature (IUCN)
about Water benefit partnerS
WbC projeCt example: implementation of Sustainable Sugarcane initiative (SSi) practices among Smallholders in rural india
agricultural Services private limited (agSri) is a company with an ambition to innovate and scale farm-based technologies that are inherently farmer friendly and ecologically sus-tainable. One of these innovations is a set of methods named the Sustainable Sugarcane Initiative (SSI).
using traditional sugarcane planting practices, farmers must retain between 10-20% of the sugarcane harvest as seed cane for the next planting season. The retained seed cane is then chopped into 20-30cm pieces and planted directly into the fields, which are then flooded to effect germination. This wastes a great deal of water and seed cane, since not all the seeds sprout. using agSri‘s new SSi planting techniques, famers can access seedlings raised in a nursery off-site. These seedlings can be planted directly into the smallholders’ fields. Since the nursing process is highly specialized and standardized, it is far more effici-ent in its use of water. It can save up to 90% of the water compared to traditional practice while also saving a great deal of seed cane that would otherwise be wasted.
through revenue from selling WbCs, AgSri anticipates expanding from the existing 1.500 farmers currently using the technique to 20.000 in five years time. The extra WBC revenue shall subsidize edu-cational campaigns as well as the cost of seedlings to farmers to encourage wider application of these water-saving practices.
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Location:Andhra Pradesh, India
Project type:Sustainable Sugarcane Initiative (SSI)
Number of Water Benefit Certificates: 130.000 / a
Project start date:July 2012
Project auditor:SGS
PrOjECT KEy FACTS
indiaAndhra Pradesh
Total water volume conserved: 940.000 m3/a
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WbC projeCt example: providing and maintaining Safe Water access in rural uganda
almost fifty per cent of the developing world’s population – 2.5 billion people – lack im-proved sanitation facilities, and almost 1 billion people use unsafe drinking water sources. Similar issues can also be observed in rural Uganda, home to 85% of Ugandans.
it is often assumed that providing more access to clean water in rural Uganda addresses the problem. In reality this is only one aspect – there are the equally challenging tasks of ensuring that the systems operate reliably over time, and that the water is regularly tested and treated if necessary. Even when a source is tested, clean and operates reliably, a consu-mer may be unaware that their own unhygienic practices can re-contaminate safe water. In sum, the issues of a consistent water supply, its quality, and the hygienic practices of users are all equally important , and each one poses a challenge.
Whave Solutions ltd. was registered in Uganda. Whave works closely with local entrepre-neurs and local government offices to provide new clean water systems in locations where access to safe water is sorely needed. The Whave Safe Water Programme prioritises reliability of clean water, and uses revenue from WBCs to incentivise preventive maintenance and ensure consis-tent supply. At the same time, it helps to build capacity within the Ugandan communities to manage their water resources and improve hygiene conditions by involving public and private sector actors as part of a long-run strategy. In all, WBC revenue is an essential tool for sustainability.
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Location:Rural Uganda
Project type:Water Access Sanitation, and Hygiene (WASH)
Number of Water Benefit Certificates: 60.000/a
Project start date:July 2013
Project auditor:SGS
PrOjECT KEy FACTS
Total water volume provided: 60.000 m3/a
africa
Uganda
Contact
First Climate Markets AGSascha Lafeld & Jacob BourgeoisIndustriestraße 1061118 Bad Vilbel / Frankfurt, GermanyPhone: +41 (0) 6101 5565 [email protected]@firstclimate.com
For more information please visit: www.waterbenefitpartners.org
© 2014, First Climate Markets AG
The Gold Standard Foundation Brendan Smith Avenue Louis Casai 79 CH-1216 Geneva, SwitzerlandPhone: +41 22 788 7080Mob: +41 78 648 [email protected]/water