Accelerating water investments requires more than strong policy; it also demands financial innovation. Finance enablers encompass a mix of actions across public and private institutions to stimulate demand for water financing. Governments can play a catalytic role by promoting public-private models for large-scale water infrastructure, tailoring the approach to project characteristics. For assets with well-defined outputs and shorter construction periods (e.g. wastewater treatment plants), PPPs are effective. Policy- makers should facilitate PPPs through transparent legal frameworks, competitive tenders, project preparation support and fair risk-sharing tools such as guarantees or subsidies. For capital-intensive projects with long lead times and higher construction risk (e.g. mega-projects and large networks), regulated asset base (RAB) models – which enable a project developer to earn revenue during the construction phase, while a government regulator oversees the project – offer advantages by allowing revenue recovery during construction, lowering the cost of capital and attracting long-term institutional investors. Governments should therefore empower independent regulators to set stable tariffs, establish centres of excellence for regulatory design and provide targeted backstops to strengthen investor confidence. PPP and RAB models3.2 Finance CASE STUDY 17 London’s Thames tideway tunnel The Thames Tideway Tunnel, London’s £4.2 billion “super-sewer”, illustrates how the RAB model can unlock investment in complex infrastructure. Traditional PPPs typically defer investor returns until after commissioning, forcing reliance on expensive debt during long build phases and inflating costs. By contrast, the Tideway licence, overseen by Ofwat (UK’s water regulator), allowed revenue recovery during construction, financed through a modest surcharge on consumer bills of about £20 per year, against an initial estimation of £70-80. This model helped lower the cost of capital, reducing reliance on short-term project finance and delivering regulated, stable and inflation-linked returns, thus attracting long-term institutional investors such as pension funds that would possibly be deterred under PPP models.44 Bridging the €6.5 Trillion Water Infrastructure Gap: A Playbook 31 Bridging the €6.5 Trillion Water Infrastructure Gap: A Playbook 31

Bridging the %E2%82%AC6.5 Trillion Water Infrastructure Gap A Playbook 2025