A Q&A with the authors of our latest report, Cora Snyder, Senior Researcher at the Pacific Institute, and David Pilz, Managing Partner at AMP Insights. Interview conducted by Dr. Amanda Bielawski, Director of Communications and Outreach at the Pacific Institute.
- Co-funding for water stewardship means pairing corporate dollars with dollars from other sources like federal infrastructure funds or private impact investing. It has the potential to multiply impact rather than simply be additive.
- The immense magnitude of the water challenges facing the Colorado River basin demands a commensurate response, requiring a new level of strategic investment.
- There is a time-sensitive opportunity for corporations to co-fund alongside the massive $15 billion infusion of federal funds from the Bipartisan Infrastructure Law and Inflation Reduction Act.
The Pacific Institute and AMP Insights recently published a new report, ‘Joining Forces: Innovative Co-Funding to Enhance Corporate Water Stewardship Impact in the Colorado River Basin.’ The report explores how leveraging corporate water stewardship spending with existing and emerging funding streams, referred to as co-funding, can increase positive water impact in the Colorado River Basin and beyond. It outlines innovative co-funding approaches, the challenges and limitations of specific approaches, and high-level recommendations that corporations can act on immediately.
The Pacific Institute’s Dr. Amanda Bielawski spoke with two of the report’s authors, Cora Snyder from the Pacific Institute and Davíd Pilz from AMP Insights, about the opportunities for creative co-funding for water stewardship projects in the Colorado River Basin.
Amanda Bielawski: The Colorado River Basin faces immense water challenges. What is unique about this scenario and why is now such a critical time to act?
The Colorado River is the workhorse river of the American West. It provides water for over 40 million people and powers a multi-billion-dollar economy. But the river is over-allocated and over-used. For the last two decades, it has been in decline due to drought and unsustainable water withdrawals. From 1999 to 2022, the Colorado River system lost two-thirds of its storage capacity. Although the federal government and the seven US states that share the river have adopted a series of rules and agreements since 2007 to reduce use and protect the system, storage continued to fall precipitously in 2022. The two largest reservoirs on the river – Lake Powell and Lake Mead – both hit record low levels.
Despite a good amount of snow this winter, the system still faces a significant water deficit. The federal government is calling for 2-5 million acre-feet of cuts to water withdrawals to help close that gap. The scale and urgency of action and investment needed to make these cuts cannot be understated.
The scale and urgency of action and investment needed to make these cuts cannot be understated.
Amanda Bielawski: Co-funding can be a multiplier for solutions. Could you unpack the concept of co-funding, specifically how it can work for water stewardship? Why do you suggest now is a pivotal time to implement this strategy in the Colorado River Basin?
Co-funding for water stewardship means pairing corporate dollars with dollars from other sources like federal infrastructure funds or private impact investing. When done right, it has the potential for one plus one to equal more than two; in other words, it has the potential for the sum of the different funding streams to multiply impact rather than simply be additive. We need it in the Colorado River Basin because this is a place where the old ways of doing things just won’t cut it. This includes the traditional ways of funding water projects, for example through complex, time-consuming government grant programs. Companies have more flexibility than most funders in deploying stewardship funds and can use that to help meet the scale and urgency of need in the Colorado Basin.
We need it in the Colorado River Basin because this is a place where the old ways of doing things just won’t cut it.
Amanda Bielawski: The report provides four “blueprints” for co-funding between corporate water stewardship and other funding sources. Can you briefly describe those blueprints?
We wanted to make this report as practical as possible, so we mapped out how different funding arrangements would work with existing and emerging non-corporate funding sources and developed four blueprints:
- Co-funding with government and philanthropic grants;
- Co-funding with Program Related Investments (PRI), a special type of foundation investment;
- Co-funding with revolving loan funds; and
- Co-funding with impact investing.
Each blueprint has a unique angle tied to the type of funding. For government and philanthropic grants, the blueprint focuses on two things: using corporate dollars to unlock grants by providing seed funding and providing match funding. For PRIs and revolving loans, two variations of low-interest financing for beneficial projects, the blueprints focus on how corporate funding could be used alongside financing to increase overall project funding and to support loan repayment by borrowers (project implementers). Many water project implementers shy away from loans because of repayment obligations; corporate co-funding could help make these investments feel safer and more accessible.
The final blueprint focuses on impact investing. The field of impact investing is rapidly developing and there are new ideas every day. Our blueprint focuses on deploying corporate funding alongside other investors to increase overall investment and on providing corporate funding to project implementers so that they can uphold their financial commitments to investors.
Amanda Bielawski: What are some of the specific challenges with co-funding for water stewardship?
There are three general challenges that we discuss in the report, which are mostly broad challenges that the corporate water stewardship space is contending with more generally. Those are:
- The lack of a consistent link and engagement between corporations and project implementers at the early phases of project development.
- Limited opportunities, or known pathways, to link corporations directly with potential co-funders such as federal agencies.
- Technical and accounting hurdles, particularly around quantifying and attributing water or other benefits that corporations seek to claim towards sustainability goals.
None of these challenges are insurmountable. By calling them out in the report, we are signaling to practitioners that these are issues that need to be worked on to help facilitate greater co-funding opportunities for water projects.
By calling them out in the report, we are signaling to practitioners that these are issues that need to be worked on to help facilitate greater co-funding opportunities for water projects.
Amanda Bielawski: Can you provide an example of where this co-funding approach has worked successfully already, either in the Colorado River Basin or in other basins around the world?
A large group of companies with diverse business interests, ranging from microchips to beverages, came together recently to provide $4 million to a $38 million-dollar project that worked with the Colorado River Indian Tribes to conserve 150,000 acre-feet of water to support reservoir levels in Lake Mead in the Lower Colorado River Basin. This example stands out for several reasons.
First is the massive scale of funding require to meet the challenges in the Colorado River Basin and the response of corporations to shoulder a meaningful amount of the cost of this project.
Second, corporate funding was used alongside government and philanthropic funding to make this project happen, meaning this project is a clear template for future co-funding arrangements.
Finally, I like this example because it involved over a dozen companies; it really emphasizes the “co” in co-funding!
Amanda Bielawski: The report closes with three actions that corporations can start taking now to increase their water stewardship impact in the Colorado River Basin. Could you explain these?
First, we advise corporations to seize opportunities to co-fund with the substantial federal dollars allocated by the Bipartisan Infrastructure Law and Inflation Reduction Act. Together, these acts have freed up a historic $15 billion for water projects in the western US. There’s a catch, though – the funding comes with eligibility conditions, matching requirements, and geographic specifics, which can make it tough to channel the money to projects that need it. This is where corporate funding comes in, filling those gaps and catalyzing large-scale, meaningful projects.
Second, we encourage corporations to build and strengthen their water stewardship networks – from project proponents and potential co-funders to NGOs and local communities. This could mean sending staff to conferences, reaching out to foundations and NGOs directly, or even soliciting projects directly through requests for proposals. It’s all about fostering relationships that open project opportunities and lead to lasting, mutually beneficial partnerships.
Finally, we urge corporations to get in on the ground floor of promising water stewardship projects and initiatives. Instead of just purchasing water benefits from ready-to-go projects, why not engage with project implementers, funders, and other partners to help shape the project and funding mechanisms from the outset? When a corporation is committed to a project or watershed, it can provide the confidence for an investor to take a chance on a new venture or inspire a foundation to expand their investment with innovative financing tools.
We advise corporations to seize opportunities to co-fund with the substantial federal dollars allocated by the Bipartisan Infrastructure Law and Inflation Reduction Act
Amanda Bielawski: Why is co-funding particularly timely for the moment we are in right now?
We are facing a crisis on the Colorado River, but we have been given just a little bit of breathing room by this wet winter. And we have an incredible opportunity with the $15 billion of federal funding available for water in the region. We need to use this moment not to sit back, but to move forward with new momentum in making the connections, plans, and investments needed to bring the river into balance and improve the basin’s water resilience.
Additionally, the Colorado River Basin is not the only region facing extreme water challenges. Many other areas in the arid southwestern United States, and other water-stressed regions around the world, can benefit from the co-funding approaches we describe in our report.
Hard to say it better than that Cora! The magnitude of the water challenges facing the Colorado River basin demand a commensurate response but mounting that response will require a new level of strategic investment. It’s not enough to simply add more funding to the picture; we have to add funding in a way that amplifies impact, and we hope that co-funding can do just that.
For more information, and to download the full report, click here.