Are we measuring the impact of investment in water?

Over the past decade, impact investing has evolved from an aspirational concept into a more structured and disciplined approach to capital allocation.  Increasingly, investors are seeking not only financial returns, but demonstrable social and environmental outcomes.  Few sectors capture both the promise and the complexity of this shift as clearly as water.

On paper, the case for investment is compelling.

Water lies at the center of economic productivity, public health, and environmental sustainability.  Evidence shows that investments in water and sanitation can deliver benefit-to-cost ratios of between 3:1 and 7:1, driven by gains such as reduced disease, improved school attendance, and lower healthcare costs.  And yet, despite this strong value proposition, the sector remains systematically underfunded.  According to OECD and World Bank estimates, global water infrastructure needs will reach US$ 6.7 trillion by 2030 and could rise to US$ 22 trillion by 2050, far exceeding current public funding commitments[1].

This investment gap is not due to a lack of opportunity, but to the perceived complexity of the sector. Water sits at the intersection of climate adaptation, food security, energy transition, and urban resilience.  It involves multiple regulatory regimes, fragmented ownership structures, and long-lived infrastructure assets.  At the same time, many of its most important benefits, such as resilience, environmental sustainability, and human well-being, are difficult to quantify using traditional financial frameworks.

The result is a persistent paradox: water is indispensable in the real economy yet often undervalued in financial markets.

Carlos Cosín, CEO of ALMAR Water Solutions (part of Jameel Environmental Services), believes that resolving this disconnect requires a shift in mindset from focusing on broad intentions to prioritizing measurable, verified outcomes.  By linking financial returns directly to impact, Carlos believes water can move from being seen as complex and underinvested to being recognized as a resilient and essential asset class.

ALMAR Water Solutions was established in 2016, with the mission of improving the world’s water security, particularly for the most vulnerable global communities.  A decade later it manages a portfolio of desalination, wastewater treatment, reuse and recycling programs.  With a growing portfolio of projects across Europe, the Middle East, Latin America, Africa, and Asia-Pacific., ALMAR designs, structures financing and operates systems across the full water cycle – from desalination and purification to wastewater treatment, reuse, distribution networks, and long-term operation and maintenance.

We spoke to Carlos about the investment case for the water sector and how the private sector can help drive a new era of growth and innovation.

What makes water a particularly resilient and attractive asset class?

Water’s resilience lies in its fundamental nature. It is a basic necessity, demand is highly inelastic, supply is finite, and substitution is impossible.

In economic terms, this translates into stable cash flows, low default risk, and strong correlation with essential-service infrastructure.  At the same time, water carries enormous social value: every cubic meter treated or reused contributes directly to human well-being and environmental stability.

As the global transition towards resilience accelerates, this logic becomes even stronger.  Water infrastructure must now be designed for uncertainty: climate variability, shifting demand, and interconnected risks.  Innovations in modular systems, advanced metering, and reuse technologies have become essential components of resilient infrastructure.

How do you distinguish between impact investing and outcome-oriented investment in water?

Impact investment, in its broadest sense, refers to intentionally deploying capital to achieve positive social or environmental effects alongside a financial return. The key word is intentionally: the investor explicitly seeks impact, not merely accepts it as a by-product. Within this field, return expectations can range from concessional to market-rate, depending on the mandate.

Outcome-oriented investment takes that logic a step further.  Instead of targeting broad intentions, it structures transactions around measurable results.  Returns are linked to verified outcomes, such as reductions in non-revenue water, improved service continuity, or cubic meters of wastewater safely treated.  In this model, what matters is not the activity, but achieved and verified performance.  This shifts the focus from inputs to outcomes, creating greater accountability and making impact investable at scale.

Can these two approaches work together?

They are not only compatible, but complementary. Impact investors often focus on aligning mission and capital and are well placed to support early-stage initiatives where innovation is still being proven. Outcome-oriented investors, by contrast, focus on accountability between intervention and evidence, ensuring that returns are linked to measurable results.

In practice, the two approaches can reinforce each other.  Impact investors fund the first wave of innovation, while outcome-oriented models refine and scale those solutions once metrics are established.  The combination creates a pipeline from purpose to proof, helping to unlock capital in a sector that represents an estimated US$ 58 trillion in global economic value according to the World Economic Forum[2], yet continues to receive only a fraction of the investment it requires.

What are the main barriers investors face, and how can they be overcome?

Many of the challenges often cited are real, but they are also the levers through which innovation and collaboration emerge.

First, water infrastructure is capital intensive.  Facilities such as treatment plants, desalination systems, and smart distribution networks require significant upfront investment and long amortization periods.  Structured blended-finance models, where public or philanthropic funds absorb early risk, can make projects bankable and attract institutional capital once assets stabilize.

Second, regulatory complexity and tariff risk are inherent to the sector.  Water utilities operate within tightly controlled public frameworks, often with political sensitivity.  Yet this can also create predictable, concession-based cash flows for investors who understand local regulatory dynamics and engage constructively with policymakers.

Third, measurement has traditionally been difficult.  Proving the social and environmental outcomes of water investments is not straightforward.  However, outcome-based models are shifting this dynamic.  By linking financial returns to verified indicators, liters of water saved, households connected, or service hours improved, measurement ceases to be a constraint and becomes a value driver.

Fourth, liquidity and exit risk have historically limited investor participation.  But the emergence of infrastructure funds, yield vehicles, and securitization is gradually improving market liquidity.

Finally, persistent data gaps remain.  Many utilities lack standardized performance and financial information.  Yet this too is an opportunity.  Digital platforms, remote sensing, and AI-driven analytics now allow continuous monitoring of flows, energy use, and system losses, improving operational efficiency and strengthening investor confidence.

From an investor’s perspective, what is the real opportunity in water?

From an investor’s standpoint, the appeal of water lies not in speculation, but in the structural logic of scarcity and necessity.

Water utilities and infrastructure projects often provide long-duration, inflation-linked returns, particularly in regulated markets.  In emerging economies, where access gaps remain, the growth potential is significant.  In developed markets, ageing infrastructure and the need for climate adaptation are creating substantial investment opportunities across engineering, technology, and digital solutions.

At the same time, water is not a homogeneous asset class.  It encompasses regulated utilities with predictable dividends, performance-based contracts with variable payouts, and innovative technologies with higher risk-return profiles.  In this sense, water offers a spectrum of opportunities comparable to energy, if properly structured.

How are governments and institutions supporting this shift?

Governments are increasingly recognizing water as a central pillar of climate adaptation and economic resilience.

Policy frameworks are evolving accordingly.  Initiatives such as the EU’s Water Resilience strategy and global financing roadmaps emphasize the need to scale investment and mobilize private capital.  Instruments including green bonds, sustainability-linked loans, performance contracts, and blended-finance vehicles are expanding the toolkit available to investors.  As these frameworks mature, they create new pathways for capital to flow into water, bridging the gap between public priorities and private investment.

What role do outcome metrics play in unlocking investment?

Outcome-oriented investors insist on credible metrics. Measuring ‘impact’ in water requires evidence that lives have improved, services are sustainable, and environmental outcomes endure. This is why rigorous monitoring, verification, and transparency are non-negotiable.  When outcomes are clearly defined and independently verified, investors gain confidence that capital is delivering real and lasting value.

What role do private companies play in advancing water investment?

Private companies have a decisive role to play in bridging the divide between capital and impact. They can translate social outcomes into bankable metrics, transform engineering projects into investable platforms, and ensure that technological innovation aligns with measurable environmental gains. By working alongside governments and investors, they can structure projects where financial returns correspond directly to improvements in access, efficiency, and resilience.

In practice, the most successful water investments combine three essential ingredients: patient capital, rigorous design, and strong partnerships.  No single actor, public or private, can solve water challenges alone.  When these elements converge, the boundaries between philanthropy, public service, and profit begin to dissolve.

By shifting the focus from intention to measurable outcomes, and embedding accountability, verification, and transparency into investment models, water can move from chronic underinvestment to a central role in sustainable finance.

How do we get from good intentions to measurable outcomes?

Ultimately, the challenge facing the water sector is one of recognition.  As Carlos emphasizes, water underpins our whole society – economic activity, public health, and environmental stability, but it continues to sit outside the core frameworks through which capital is typically allocated.  The issue is less about identifying need and more about structuring investment in ways that reflect the full value of water, in both financial and societal terms.

The growing emphasis on outcome-oriented models is a positive move in this direction.  By linking capital directly to performance, it provides a clearer line of sight between investment and impact, addressing long-standing concerns around measurement, accountability, and risk. This helps to reposition water from a complex and fragmented sector into one that can be understood, evaluated, and scaled within modern investment frameworks.

As pressures on water systems continue to intensify, driven by climate change, population growth, and resource constraints, the need for resilient, adaptable infrastructure will only increase.  Meeting this challenge will require coordinated action across public institutions, private capital, and technical expertise.  If we achieve this, water has the potential to move from persistent underinvestment to a more defined and integrated role within global infrastructure and sustainable finance.

[1] https://www.oecd.org/content/dam/oecd/en/publications/reports/2018/03/financing-water_2be68120/bf67ec4e-en.pdf

[2] https://www.weforum.org/stories/2025/10/what-is-water-worth-financing-innovation-resilience