Two fundamental questions—Who is in charge? And who will pay?—have stalled past attempts by local authorities, NGOs, and international development agencies that were unable to align trans-boundary interests because of ambiguous or undefined governance. Few direct multilateral approaches have been attempted because of the generally understandable reluctance to relinquish sovereignty over natural resources.

This report will explain how appropriate and fair contributions to a similar fund from the three different governments can leverage donor aid and other revenues under the management and oversight of an independent authority created by these same governments. The result would be a transparent, accountable, and risk-averse financial vehicle that develops sustainable trans-boundary water projects for the environmental and public health, and economic benefit, of their citizens.

To examine the SRF model and its potential applications in the Middle East, the Milken Institute held a Financial Innovations Lab in November 2008 in Jerusalem. More than forty industry professionals, scientists, ministry officials, capital market investors, water engineers, and environmental experts attended from Israel, the Palestinian Authority, Jordan, and the United States. The session examined possible incentives and regulatory mechanisms that could offset the longstanding problems of refuse, sewage, and environmental neglect affecting the region’s trans-boundary river basins