Building water resilience: infrastructure, finance, governance, and the case for cooperation

In Part 1 of this series, we explored what water resilience means and argued that measuring it demands a more sophisticated approach than conventional indicator frameworks provide. Measurement, we argued, is only the beginning, not the end. This article turns to the harder questions that follow: What needs to change in infrastructure planning and design? How should the required investments be funded and financed? And what kinds of governance and institutions are needed to make all of this work?

Building adaptive Infrastructure with climate risk integration

The infrastructure dimension of water resilience is the easiest to grasp. Societies have long built hard infrastructure for water — the physical assets and networks that abstract, store, convey, treat, and dispose of water and wastewater. Equally essential, though less visible, is soft infrastructure: the institutions, governance arrangements, policies, regulations, economic instruments, and information systems that make the physical assets work as a system.

To be climate-resilient, physical infrastructure — reservoirs, irrigation networks, urban drainage systems, desalination plants — needs to be climate-proofed, or designed to account for a wider range of hydrological variability. This calls for climate considerations to be built into design standards and asset lifecycles from the outset. Information systems are the connective tissue that makes this possible: early warning systems, real-time basin monitoring, and water accounting platforms are what allow a resilient system to function well under different conditions.

A specific category, nature-based solutions (NbS), has moved into the mainstream of water resilience planning. NbS refers to actions that protect, sustainably manage, and restore natural or modified ecosystems to deliver both societal wellbeing and biodiversity benefits.

In most cases, the real question is not which type of infrastructure to build, but how to combine hard, soft, and nature-based approaches into hybrid solutions calibrated to local hydrological and ecological conditions — and to plausible climate scenarios.

Public finance remains the backbone of water investment

Water resilience cannot be built without money. The widely used estimate of global financing needs for water infrastructure stands at USD 6.7 trillion by 2030 and USD 22.6 trillion by 2050. These figures exclude the development of water resources for irrigation or energy, and do not fully capture the additional investment needed to climate-proof existing systems.

There has long been a call to mobilise private finance to close this gap, and considerable effort has gone into financial innovation. Instruments now in use include green and sustainable bonds with proceeds linked to water outcomes; debt-for-nature/climate swaps, where a portion of sovereign debt is cancelled in exchange for freshwater ecosystem investment commitments; parametric insurance products that pay out against pre-defined hydrological triggers such as rainfall; and blended finance that uses catalytic public or philanthropic capital to de-risk projects for private investors. Water has become a meaningful theme across these instruments: water-related projects account for roughly 10% of proceeds raised from green bonds, and water and sanitation infrastructure made up 16% of blended finance deal value between 2022 and 2024.

Even so, public finance remains the backbone of water investment in most developing countries, particularly for services that don't generate revenue. According to the World Bank, annual water spending in developing countries totals approximately USD 164.6 billion — around 0.5% of their GDP — with roughly 91% funded by governments and state-owned entities and less than 2% by private investors. This is unsurprising given that water assets are typically publicly owned and managed at the municipal or national level.

The socio-economic case for investment is strong. The World Economic Forum estimates that every euro invested in water infrastructure can generate €1.30 in gross value added, and that every million euros invested can support roughly 31.8 jobs. Yet as a recent NRDC analysis points out, the central barrier to funding climate adaptation — particularly for private investors — isn't a shortage of available capital, but a shortage of reliable cash flows. The open question is whether these socio-economic benefits can be converted into investable cash-flow cases.

Strengthening governance for shared water security

Building a resilient water sector takes more than infrastructure and capital. It requires a commitment to reforming the sector through progressive policy, institutions, and regulation, alongside better planning and management of existing resources. Without strong governance, infrastructure investment is unlikely to translate into reliable, sustainable service delivery.

The starting point is lifting water risk from a social or environmental concern to a systemic one. In practice, this means operationalising the Integrated Water Resources Management (IWRM) standard through functional River Basin Organisations (RBOs) capable of mediating upstream–downstream trade-offs, and aligning national water policy with climate commitments through frameworks such as the Belém Adaptation Indicators. Governance structures must also be inclusive and equitable if resilience gains are to hold over time.

However, water resilience cannot stop at national borders. Around 60% of the world's freshwater flows across international borders, with 286 transboundary river and lake basins worldwide. Managing these shared basins requires cooperation that transcends individual national interest.

The Belt and Road Initiative has channelled significant infrastructure investment into water-stressed regions across Central Asia, South Asia, Southeast Asia, and sub-Saharan Africa. This creates a dual relationship with water resilience: investment directed at the water sector itself can build resilience directly, while investment in energy, transport, or heavy industry can exacerbate water stress if poorly sited or managed. Since many of these areas, such as Central Asia, share their water resources, it is thus critical to prioritise water resilience in BRI investments.

Closing the resilience gap

Looking back at the ancient Silk Road, water has always shaped where people settled, how they traded, and when civilisations thrived or faltered. Today's challenge is both familiar and categorically different: the populations at risk are larger, climate pressures more rapid, and infrastructure systems more complex and interdependent than anything the ancient world knew. Yet the underlying logic hasn't changed — where water is managed well, shared equitably, and invested in consistently, societies flourish; where it is mismanaged, contested, or neglected, they do not.

Water resilience is not a technical problem awaiting a technical fix. It is a governance challenge, a finance challenge, and a cooperation challenge — all at once. The adoption of nine water indicators under the Belém Adaptation Indicators at COP30 is a meaningful step, and recent WMO climate data underscore, with growing urgency, why that ambition cannot wait. Meeting this challenge will require senior leaders in both policy and finance to treat water not as a utility-sector concern, but as the systemic foundation it has always been.

For policymakers, the priority is to close the gap between climate ambition and water implementation by, for instance, using the Belém Adaptation Indicators as a concrete reference to align national water policy with Global Goal on Adaptation (GGA) commitments. For investors and financial institutions, the priority is to internalise water risk as systemic financial risk, from portfolio screening, credit assessment, to stress-testing. For the international community, the essential contribution is to build the governance architecture — data-sharing agreements, joint monitoring systems, transboundary river basin institutions, and multilateral financing platforms — through which transboundary waters can be managed and protected for shared benefit.

silkroad.earth is an advisory practice accelerating sustainability transitions through the exchange of ideas, technology, and finance. This article is the second in a two-part series on water resilience. [Read Part 1 here.]

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