Scaling-up green food-water innovations hinges on financial ecosystems that de-risk adoption, incentivize R&D and align stakeholders. Government funding remains foundational – often addressing 20-30%45 of total investment needs for green food-water systems. Finding the remaining balance demands proactive participation from financial institutions, philanthropy and the private sector. Examples from China and the Middle East illustrate how strategic financing can accelerate the shift towards more resilient systems. Forge a robust financial ecosystemEnabling action #2 China develops blended finance tools from government-led funding to risk-mitigation measures China’s approach to advancing water-efficient agricultural practices integrates government-led funding mechanisms, institutional financial tools and risk-mitigation frameworks. Public initiatives have prioritized R&D investments in water-saving technologies, with the Ministry of Agriculture and Rural Affairs allocating $700 million46 in 2023 for innovations including smart irrigation equipment and drought-resilient crops. State-guided funds, such as the Seed Fund, facilitated broader adoption by channelling $470 million into 41 firms in 2023, which subsequently attracted $2.7 billion in private- sector capital.47 To support on-farm implementation, subsidies covering 30-40% of equipment costs48 and preferential loans were extended to farmers adopting smart irrigation. Chinese financial institutions have introduced tech-driven solutions to address rural financing challenges. The Agricultural Development Bank’s $370 billion of green loans (as of 2024) have helped save 500 million tonnes of water.49 Satellite- based risk assessment tools have improved credit accessibility for smallholders, while partnerships with agribusinesses – such as Wens Foodstuff’s contract farming model – have provided income stability for over 43,00050 households through guaranteed pricing and technical support.China’s Ministry of Agriculture and Rural Affairs allocated $700 million in 2023 for innovations such as smart irrigation equipment and drought-resilient crops. Middle East integrates sovereign wealth funds and private capital The Middle East offers parallel lessons in forging a robust financial ecosystem. For example, Saudi Arabia’s NEOM project integrates sovereign wealth funds and private capital to drive innovation across sectors, including sustainable food and water systems. Beyond this flagship project, broader agricultural development initiatives led by the Kingdom’s Agricultural Development Fund provide interest-free loans to support farmers in adopting modern and water-efficient practices. In UAE, agri-tech incentive programmes blend financial and non-financial support with company partnerships and philanthropic investment to develop next generation agriculture solutions in arid and desert climates. Keys to success The approach of China and the Middle East to mobilizing capital for water-efficient agriculture reflects how coordinated financial mechanisms can drive technology adoption. Central to this model is the integration of three principles: –Blended capital: by combining public grants with catalytic philanthropic and longer-term private investment, stakeholders can scale-up high-impact technologies. –Technology-powered finance: embedding AI, IoT and remote sensing into financial tools reduces risks for lenders while expanding access to underserved smallholders. –Risk-sharing partnerships: aligning incentives through partnerships has proved critical in stabilizing incomes and accelerating adoption. –Managing volatility: addressing volatility in agricultural markets requires shared approaches to risk management. A comprehensive insurance system is essential for agricultural commodities, as it enables stakeholders to hedge against water scarcity and price volatility. Other regions can adapt these elements to mobilize capital more effectively and mainstream sustainable practices in green food and water systems. From Scarcity to Solutions: Food-Water Innovation in Asia and the Middle East 36

From Scarcity to Solutions 2025