Is the world running out of water? Opening the investment tapfor capital marketsEIB, Luxembourg18 October 2018

Our Anthropocene

Global population CO2 Reduction tropical forest

Fertilizer usage Freshwater use Species decline

Our Anthropocene

FORESTS SPECIESOCEANS CLIMATEWATER FOOD

MARKETS

FINANCE

POLICY

World Wide Fund for Nature (WWF)

Worlds largest conservation organization

Active in 120 countries

>5 million supporters globally

Science Based, convening, solution oriented

WWF - World Wide Fund for Nature

What keeps you up at night?

80% freshwater species populations lost since 197050% global wetlands destroyed in 20th century

Terrestrial Species

36%

Marine Species

58% 81%

Freshwater Species

60% of the worlds rivers not free-flowing anymore3700 big dams in planning or construction

Increase of global water consumption by 55% until 20501.8 billion people affected by water scarcity in 2025

Top 5 Global Risks in Terms of Impact

Water is one of the biggest risks for the global economy

Fiscal Crisis Water crisis Weapons of mass desctruction

Failure of climate change mitigation and adaptation

Weapons of mass desctruction

Climate Change

Unemployment

Water crisis

Information infrastructure break down

Rapid spread of infectious diseases

Interstate conflict with regional consequences

Weapons of mass desctruction

Failure of climate change mitigation and adaptation

Weapons of mass desctruction

Large-scale involuntary migration

Water crisis

Severe energy price shock

Extreme weather events

Natural disasters

Water crisis

Failure of climate change mitigation and adaptation

Extreme weather events

Failure of climate change mitigation and adaptation

Natural disasters

Water crises

2014 2015 2016 20182017

Top risk for the global economy

H2O, the new CO2 ?

Yes, but no.

Merrill Lynch‘Water scarcity a bigger problem than assumed’

Credit Suisse‘Water: The Paramount Megatrend of our Time’

HSBC‘GDP will be 'severely hampered' by water scarcity’

Morgan Stanley‘Water: The Perfect Storm’

Standard Chartered‘Water – The Real Liquidity Crisis’

Citi‘Water Worries: Climatic Consequences’

That‘s already being said by FI‘s…That’s already being said by Financial Institutions…That’s already being said by FI’s…

Wassereinzugsgebiete verstehen

The Rhine(Alzette)

Water – unevenly used and distributed

Wassereinzugsgebiete verstehen

The Rhine(Alzette)

Water – unevenly used and distributed

Water Risk

Who is impacted?

Physical Water Risk - QUANTITY

2016, Drought, Brazil>50% drop of net income of Sabseb

2015, Drought California 2,7bn US$ losses and 21.000 Jobs

Physical Water Risk - QUALITY

2015, Leather, IndiaClosure of 98 tannaries – Chrome VI salts

2015/16, Fracking, globalBans in France, Scotland, NY State

Regulatory Water Risks

2018, Mining, South AfricaAMD regulation - higher operating cost

2013, Mining, PeruNewmont Mining loses SLO – community protests over access to water

Repuational Water Risk

2015, Beverages, India„Killer Coke“ – ban in various states –groundwater conflicts

2013, Textile, AsiaGreenpeace campaign on toxic laundry

Water RiskTools

Water Risk Filter (WWF)

Aqueduct Water Risk Atlas (WRI)

Water Risk Valuation Tool (Bloomberg)

Global Water Tool (wbcsd)

Water Risk Monetizer (Ecolab & Trucost)

ReportingInitiatives

CDP Water Disclosure (CDP)

Dow Jones Sustainability Index (Robecosam)

Ceres Aqua Gauge (Ceres)

How can I measure water risk?

WWF & Freshwater

How to reduce risk on the ground?

WWF’s strategic approach to water…

Finance

Thought leadership on risk, value and finance

FreshwaterRisk and Opportunityfor capital markets

EIB, LuxembourgOctober 2018

Philipp WagnitzWWF Germanyphilipp.wagnitz@wwf.de

BANKABLE WATER SOLUTIONSLuxembourg

18 October 2018

$1t

REQUIREDINVESTMENT

~$1T~$0.3t

CURRENT INVESTMENT

WATER FINANCE GAP

Conservation Funding Gap

Major Global Investor Pools

Global ODA

US Foundation Philanthropy

< $0.2T

< $1T

Major Global Investor Pools

Global ODA < $0,2T

Sovereign Wealth Funds

$42TGlobal Public Debt

$76TGlobal Equity Market

$91TPrivate Sector Debt

$4.2TPrivate Capital

< $1TUS Foundation Philanthropy $6,6T

Financiers

We want to invest in sustainable projects, but we have difficulties identifying sufficient bankable projects

A Bankable Project is any project that:

1. In many cases uses blended finance

2. Has a positive environmental impact

3. Generates a positive return for certain stakeholders.

REDUCE FINANCIAL FLOW TO NON-SUSTAINABLE PROJECTS

INCREASE FINANCIAL FLOW TO SUSTAINABLE PROJECTS

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

GRANT BASED PROJECTS• WWF• Grants• Donors• Corporates• Development Banks

Leveraging Capital

1x

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

SEED FUNDING• WWF• Grants• Donors• Corporates• Development Banks

Leveraging Capital

1x

TO FUND:• Pilot projects• Feasibility studies

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

SEED FUNDING• WWF• Grants• Donors• Corporates• Development Banks

INVESTMENT• Banks• Development Banks• Investors• HNWIs

Leveraging Capital

1x

~20x

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

SEED FUNDING• WWF• Grants• Donors• Corporates• Development Banks

INVESTMENT• Banks• Development Banks• Investors• HNWIs

REPLICATE AND SCALE• Retail Investors• Institutional Banks• HNWIs

Leveraging Capital

1x

~20x

~50-100x

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

SEED FUNDING• WWF• Grants• Donors• Corporates• Development Banks

INVESTMENT• Banks• Development Banks• Investors• HNWIs

REPLICATE AND SCALE• Retail Investors• Institutional Banks• HNWIs

1x

~20x

~50-100x

Leveraging Capital

DRIVEIMPLEMENTATION

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

SEED FUNDING• WWF• Grants• Donors• Corporates• Development Banks

INVESTMENT• Banks• Development Banks• Investors• HNWIs

REPLICATE AND SCALE• Retail Investors• Institutional Banks• HNWIs

Leveraging Capital

DRIVEIMPLEMENTATION1x

~20x

~50-100xIMPACT

1x

~20x

~50-100x

Fund

s

Year 1

Year 0

Year 3

Year 2

Year 5

Year 4

SEED FUNDING• WWF• Grants• Donors• Corporates• Development Banks

INVESTMENT• Banks• Development Banks• Investors• HNWIs

REPLICATE AND SCALE• Retail Investors• Institutional Banks• HNWIs

Leveraging Capital

DRIVEIMPLEMENTATION

WWF INVOLVEME

IMPACT

Landscape Approach: Kafue Flats(Zambi

Local populations

Lusaka (Capital)Population

2.5m

KafuePopulation

200kMazabuka

Population

200kNamwalaPopulation

80k

Itezhi-tezhiPopulation

45k

Foundation created by WWF with DGIS

Constellation of different projects

Restore National parkRestore area to allow for more biodiversity and expand tourism facilities to generate revenues

$5m

Irrigation improvementImprove irrigation system and regulate water allocation and farm expansion

$10m

Water treatment systemReduce water pollution and treat water from cities

$50m

Fish processing plantReduce harvesting of juvenile bream to maintain sustainable fish population.Provide local fisheries with the opportunity to increase their price point

$2mManage Cattle

FarmingReduce pressure of cattle farming and

use smart grazing management to allow vegetation of Flats to grow

$12m

Bankable

Grants/Subsidies

HARINGVLIET

HARINGVLIET

LAND PURCHASE€2.5m• Area: 27 hectare• Price: ±€100.000/hectare• Land was agricultural land

FUN

DS

HARINGVLIET

NATURE DEVELOPMENT €0.3m• Including area adaptation

costs and visitor facilities (walking path, information, fences, etc.)

FUN

DS

HARINGVLIET

LAND PREPARATION €1.7m• Including costs for

research, permits, preparatory works, height increase, connecting infrastructure

• Some other costs to be covered by local water authority

FUN

DS

HARINGVLIET

SALE OF LOTS€5m• Number: 26 houses• Note: this figure strongly

depends on market conditions and the type of houses built

FUN

DS

HARINGVLIET

SALE OF HOUSES€1m to €1.6m• Houses could be

developed and sold• Currently three private

parties preparing a bid to develop area

• Developers can choose to develop 25-40 houses or 'build-ready' lots

FUN

DS

HARINGVLIET

Profit Potential€0.4m to €2m• With a €5m investment

this deal can make up to €2m profit

FUN

DS

Illustrative

SCALE AND REPLICATE

Seems possible to replicate approach in over 20 riverside locations*• Current farming lands• Potential to be part of river protection system• Close to urban center

Total ticket size of at least €100M viable• To be funded in one vehicle or per project• To be determined which party takes on development role

Supportive government funding could be available• As part of the 'high water protection program'• National plan currently being developed

* Rough estimate of most suitable locations; vastly more locations available which would require relocation of existing inhabitants, possibly as part of 'high water protection program' of the Dutch government Source: Bureau Stroming

SMEs

BWS Process

DISCOVER STRUCTURE DEVELOP FUND

Create Bankable Project Ideas

One Page Document

Assess viability and create high level business case

Investor Proposal

Finalise solution design

Business Plan

Secure blended finance and investor support

Contracts signed

Actions

Documents

Support

ADDED TO INCUBATOR

DRAGONSDEN

Enabling Team

External Consultants

Snapshot of the Pipeline

Büyük MenderesTurkey$5-12M

KanpurIndia

$2-20M

Kafue FlatsZambia$100M

BistretRomania

$70 -133M

Great BarrierReefAustralia$140M

LahorePakistan$10MHaringvliet

Netherlands$100M

Taihu BasinChina$23M

YangonMyanmar$10M+

Great Sea ReefFiji$10M+

PantanalBrazil

$2-20M

© Victor Daggberg

IN-HOUSE WATER RISK AND KNOWLEDGE EXPERTS

OFFICES IN OVER 100 COUNTRIES FIRST-HAND KNOWLEDGE

OF KEY LANDSCAPES

PARTNERSHIPS WITH GLOBAL BRANDS

EXISTING RELATIONSHIPS WITH REGULATORS AND GOVERNMENTS

COMMITMENT TO BANKABLE PROJECTS

PROVEN SCIENCE AND CONSERVATION TRACK RECORD

Bankable Water SolutionsFor more information, please contact:

Aaron Vermeulen // Freshwater Finance LeadDean Muruven // Freshwater Policy ManagerKeiron Brand // Bankable Initiatives Advisor

together possible.