The value of the Zambezi: putting together the puzzle pieces for sustainable investment

By Nachilala Nkombo WWF-Zambia Country Director, Kathleen Dominique, OECD Programme Lead Financing Water, and Andre Fourie, Global Director Water Sustainability, AB InBev.

Last month, the theme of World Water Day — “valuing water” — encouraged everyone to take a moment to consider what water means to each of us. The result was revealing – a kaleidoscope of diverse responses reflecting how the value of water manifests differently for different people and different communities from home and family life to cultural practices, businesses, health and well-being. These are incredibly important facets of the value of water. But it also raises the question about whether all these individual reflections are sufficient to illuminate a broader collective understanding of the centrality of river and water systems to economies, communities and ecosystems.

Water presents a paradox of the essential. It is a critical resource for societies and economies – even a life sustaining one for people and nature. This is true for the Zambezi river and the 32 million people in six Southern African economies that depend on it. Nevertheless, water continues to be chronically under-valued. Water usually only garners attention and investment when it is running out or has caused a disaster. Fortunately, we are starting to see a shift in how water is appreciated. Companies are starting to move beyond a focus on water efficiency behind their own fence lines to addressing watershed-level water risks, investors are beginning to channel capital towards water-related investments and understanding how water risks can impact their portfolios, and governments are working to improve water policies, infrastructure and management to drive sustainable growth and ecosystem health .

However, these efforts remain too piecemeal and fragmented to guarantee long-term water security. Long-term, sustainable impact at scale remains elusive. Governments struggle with constrained budgets (in part due to the under-valuing and under-pricing of water) and may lack of capacity to manage water resources adequately. Financiers typically have a narrow focus on a pipeline of bankable projects. And businesses are often focused on short-term water risks, rather than contributing to collective efforts to secure long-term water security. Again, the kaleidoscope of perspectives and interests does not easily translate into the broader collective action needed to secure this shared resource.

Building truly resilient watersheds — and resilient communities, economies and ecosystems — over the long-term requires that we seize the opportunity of rising awareness of the value of water, and growing interest from investors and corporate action on water stewardship in a strategic way. In short, we need a framework to distill these fragmented perspectives into a coherent vision and drive collection action. Creating a global framework would likely add minimal value, as it would lack the context-based nuance needed to adequately address water challenges that are hyperlocal in nature. Instead, what would bring value is to bring an analytical perspective to individual basins and develop action frameworks that could serve as models and inspiration for businesses and governments to take the steps necessary to tackle shared water risks.

Zambia presents a unique and valuable local case study for appreciating the full value of water and the importance of addressing the emergent threats to water security. One of the fastest growing economies in Sub-Saharan Africa and blessed as a relatively water-abundant country, many of the activities driving Zambia’s and regional economic growth are crucially dependent on the Zambezi River Basin. Nearly all of the country’s electricity already comes from hydropower. Other other key sectors such as agriculture, mining, fisheries, tourism and manufacturing are highly dependent on the health of natural freshwater systems that are part of the Zambezi basin.

Like many nations, Zambia is facing increasing water demand in line with a rapidly growing population and economy. As in many parts of the world, climate change has already begun to impact rainfall patterns as well as the frequency and intensity of extreme events such as droughts and floods, contributing to energy challenges and food insecurity. Finally, agricultural practices and insufficient wastewater treatment capacity are further limiting options for the long term availability of good quality water.

For a number of years WWF and AB InBev have been partnering to address critical water related risks in Zambia by developing blended finance approaches to encourage sustainable private sector-led investments that can transform landscapes. Specifically, Zambian Breweries Ltd, the local subsidiary of AB InBev, is working with WWF and the Kafue Flats Joint Action Group to deliver projects that address the current pressures on the Kafue landscape, a sub basin of the Zambezi river.

Through this partnership, WWF and AB InBev provided support to OECD to develop the just-published study “Strategic Investment Pathways: The Zambezi Basin case study” examining the critical nature of water resources and the enabling environment for investment to drive sustainable development in the Zambezi Basin. Considering the importance of the Zambezi basin to Zambia and the regional economy, the study outlines some of the key steps the Zambian government can take to catalyse the scaling up of private sector investment in the Zambezi Basin in a way that contributes to water security, and long term resilient and sustainable growth in a country that has been hard hit by Covid19, climate change and environmental degradation.

Promisingly, the study found that strong legal and policy frameworks for water management exist in Zambia; however, implementation remains a challenge. This situation is not unique to Zambia, so the study’s recommendations can easily translate across borders:
• First, governments need to improve coordination of roles and responsibilities and enhance enforcement of existing legal and policy frameworks for water management, so as to provide incentives for the sustainable management of the resource.
• Governments and public agencies can capture opportunities to strategically disperse existing funds to crowd in additional investments, ,enabling impact even in the face of limited budgets.
• The private sector can support governments in scaling up investment, but bankable projects must be sequenced in a strategic investment pathway ton ensure that investments are both bankable – and beneficial – to communities, the environment and the economy. A strengthened enabling environment is a prerequisite to delivering benefits and financial returns over time.
• Finally, these strategic investment pathways and associated efforts should be expressly linked and coordinated with the broader national development plans.

Ultimately, what’s clear is that in the water puzzle, all actors — public, private, NGO — have a piece to contribute and a role to play. This case study from the OECD provides a framework for the Zambian government, WWF and local corporate citizens such as Zambian Breweries to lead the way to leverage water in the Zambezi as an enabler for sustainable, inclusive economic growth. AB InBev and WWF are committed to supporting Zambia-led efforts towards a sustainable future in the Zambezi. We will build on the global momentum on water stewardship to help create a world in which communities, businesses and nature thrive together. The OECD continues work on strategic investment pathways as well as leading a dedicated platform for engagement on financing water – the Roundtable on Financing Water. We all have a golden collective opportunity to scale our impact and give longevity to the water projects we are investing in, but it starts with changing the way we think about—and act on- the value of water.