Making the Business Case for Water Projects
This research builds off of the 2016 Financial Innovations Lab report by the Milken Innovation Center entitled, Financial Models for Water Sustainability. The research focuses on innovative financial mechanisms to support the export of Israeli water technologies to California municipalities, and its central aim is to test the financial feasibility of water saving projects, or in other words, to make the business case for water. Furthermore, this research looks for a systemic solution to the California water crisis, as a means to tackling the global water problem.
The research begins with an overview of the unsustainable global water situation and the water situation in California, specifically as it pertains to barriers to attaining sustainability. It then describes the Israeli water sector and lessons that can be learned from and applied in California. The research then moves to a description of Environmental Impact Financing (EIF) and its potential contribution to solving the water problem in California. A financial model for the implementation of water saving technologies in municipalities, using EIF principals, is constructed, and its outcomes are presented and discussed. Finally, general conclusions and recommendations are given.
The modelling outcomes demonstrate that the business case for water-saving technologies can be made; significant water savings can be achieved while generating worthwhile returns to all stakeholders. The model’s outcomes also provide a framework for general recommendations for policy-makers and stakeholders, focusing mainly on the advantages of Public-Private Partnerships (PPPs), the fact that water prices must increase to reflect water’s value, the importance of government support, and the value of a long-term view. These recommendations are applicable to water policy in other regions around the world, as they tackle global barriers to attaining water sustainability.