The Dreampipe Prize: Financial Innovation to Reduce Water Losses

Posted: Thursday 11th February 2016

New £1.25mn, 2-stage DFID-backed prize aims to increase financing to reduce water losses in developing countries.

Dreampipe, a major British government-funded, multi-year innovation prize, was launched today, aiming to stem the amount of water lost in developing countries through leakage, meter inaccuracies and unauthorized use.

The initiative will spur improved ways of mobilising funding to reduce the vast amounts of 'non-revenue water' (NRW) – the difference between water entering the system and water billed to customers – in developing countries. The total purse for prize winners is £1.25mn ($1.8mn) to be distributed in several tranches over two stages (up to five in stage I and three in stage II) over the next 22 months. The competition will appeal to financial specialists and water utility experts – most likely working together. It is expected that successful solutions will mobilise multiple times the prize purse in funding.

Reducing NRW lowers costs, increases revenue, brings about a more equitable distribution of water and helps to conserve precious – and increasingly scarce – water resources. The emphasis to date in water-loss reduction has been on the technical aspects.

“What has lagged behind are widely applicable solutions for financing related investments. The resources of international financial institutions are limited. This prize will stimulate thinking on how to increase the provision of needed financing,” said the prize’s manager, Chris Shugart. “In principle, these deals will be financeable: by cutting costs and raising revenue, well-planned investments to reduce NRW can pay for themselves over 7–10 years.”

One study estimates water losses at 27bn cubic metres annually in the urban areas of developing countries. Halving NRW losses in developing countries could generate $2.9bn in cash annually and service an additional 90mn people, without using new water resources1.

Entries will be judged by a panel of experts seeking improved financing solutions that can be standardised, replicated and scaled up to serve the needs of many water utility companies.

“Financing for water infrastructure investment in developing economies has been hard to mobilise owing to lack of borrower creditworthiness and high risk,” said Tom Williams, Programmes Director at the International Water Association (IWA). "This prize should help incentivise and drive improvements and move utilities towards more efficient service delivery.”

The prize is part of the UK Department for International Development’s (DFID) “Ideas to Impact” innovation inducement programme, which aims to resolve challenges in water and sanitation, climate change and energy access. Dreampipe is managed by a consortium led by the British-based consultancy IMC Worldwide. The launch is supported by the IWA.

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