Investment in nature-based solutions for water security is growing, but it remains uneven and still relies heavily on public tax dollars. Across Latin America and globally, most funding for watershed conservation and restoration continues to come from government programs and projects, rather than from the water users who directly depend on healthy ecosystems for reliable services. While public funding has been—and will remain—essential, this reliance raises a critical question for the future of the sector: how can investment in nature-based solutions (NbS) move beyond predominantly government-driven models toward more diversified, durable, and beneficiary-led approaches?
A new Memorandum of Understanding (MoU) between the Latin American association of water utility regulators (ADERASA), The Nature Conservancy, and our team at Forest Trends is grounded in a clear answer. At its core, the partnership seeks to strengthen the role of drinking water regulators in promoting nature-based solutions as a key approach to water security across Latin America, supporting the conditions under which utilities can responsibly and effectively invest in nature. In practical terms, this is about equipping ADERASA and its members with the tools, evidence, and shared learning needed to optimize the use of nature-based solutions to improve the reliability, sustainability, and resilience of drinking water and sanitation services across the region.
The urgency of this effort reflects a broader structural challenge. Diversifying funding sources for nature-based solutions is not just about closing short-term investment gaps; it is about building revenue models that can endure and grow over time. Long-term water security depends not only on upfront capital, but on sustained funding for operation, maintenance, and monitoring—areas where nature-based solutions often face the greatest shortfalls. At the same time, heavy reliance on centralized public budgets exposes nature-based solutions investment to political cycles, fiscal pressure, and competing national priorities, particularly in a context of economic uncertainty and rising demands on public resources. Outside of a few exceptional cases, continued growth—or even maintenance—of government-funded investment in NbS cannot be assumed.
Models anchored in direct beneficiaries help address these challenges by integrating nature-based solutions into the budgets of sectors not traditionally focused on environmental management. User-based revenue mechanisms, such as drinking water tariffs or fees contributed by water users from multiple sectors, have proven especially promising because they create predictable, long-term funding streams that function much like those supporting built infrastructure. By embedding NbS into these core revenue models, they are no longer treated as ancillary environmental projects, but as essential investments in service reliability, risk management, and long-term system performance.
From an operational perspective, it makes sense for drinking water utilities to invest in nature-based solutions. Healthy watersheds are the first link in the water supply chain. They underpin water availability and quality, and they reduce risks and costs associated with treatment, infrastructure damage, and supply disruptions. Evidence compiled in our 2025 Doubling Down on Nature report shows that a growing number of utilities are acting on this logic. Still, these investments remain an emerging practice.
When utilities do invest, their influence often extends well beyond the financial contribution itself. Utility-led investment demonstrates what beneficiary-driven finance can look like in practice. Unlike government agencies, most utilities operate under business-like disciplines, including cost recovery, performance requirements, and risk management, while also carrying out a public service mandate. They must remain accountable to consumers, regulators, and broader social objectives, including equity and long-term sustainability. This combination allows utilities to pilot and legitimize investment models that are neither purely private nor purely public.
As a result, utility investment can help anchor more credible and performance-based approaches to financing nature- based solutions. These approaches can then be taken up by other beneficiaries of watershed services, including agriculture, industry, energy, and technology companies. In this way, the potential for scaling nature-based solutions lies not only in expanding direct utility investment, but in using utilities as a strategic lever to broaden participation across all beneficiaries and diversify funding beyond government-driven programs.
Utility regulators, in turn, shape the enabling environment: they can unlock reliable, long-term revenue models (such as tariffs), they make the rules that guide when and how investments in nature make operational and financial sense for utilities, and they play a critical role in promoting innovation, accountability, and learning across the sector.
In this sense, the ADERASA partnership has a broader strategic value for closing the finance gap for nature. Water utilities and their regulators are uniquely positioned to play a catalytic role in scaling nature-based solutions for water security, not only through direct investment but through the system-wide signals they send to other water users.
ADERASA’s regional platform is a strategic hub in the extensive system of utilities and regulators in Latin America, by convening regulators and shaping shared norms, expectations, and regulatory practice across dozens of regulators, who in turn regulate hundreds of utilities. By working through regulators, who influence tariffs, incentives, and what counts as prudent, long-term investment, this partnership creates a powerful pathway to move NbS investment from discretionary, tax-funded programs toward durable, beneficiary-led models, while also lowering perceived risks and encouraging broader participation by other users of watershed services.
Viewpoints showcases expert analysis and commentary from the Forest Trends team.
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