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Exploring Incentive-based Solutions for Freshwater Management

There’s no doubt that water scarcity represents one of the greatest threats to the well-being of people, and the ecosys-tems they depend on. Water is central to nearly every aspect of economic and social development. As a resource, it’s both vitally important and susceptible to overuse from competing demands. From river basins in California and China, to the cities of São Paulo and Bangkok, competition for fresh-water is on the rise and people around the globe already face water crises each and every day.

Overuse of water is just one example of the myriad ways that humans have used, benefited from, and shaped the natural environment for the whole of human history. But what we have not done – especially in the course of industrialization and modernization – is find effective ways to integrate natural ecosystems into our economic and social systems. Freshwater ecosystem crises are representative of the kind of misaligned incentives we seek to correct.

In 2015, The Rockefeller Foundation collaborated with several partners to begin developing incentive-based mechanisms to address competition for freshwater, and to bring human water use back in balance with the water needs of freshwater ecosystems in order to build long-term resilience. The early solutions that emerged, and the wider lessons from the group’s work, are captured in this report.