The Water Foundation

San Francisco, CA
Round
Spring-Summer 2016
Project Location
San Francisco, CA
Project Type
Fast track
Project Focus
Finance
Organization Type
Environment

Organization

The Water Foundation, housed within the Resources Legacy Fund, was founded in 2011 by a group of visionary philanthropists to assist state leaders and interest groups to develop new approaches, technologies, and policies to meet the needs of California’s farms, cities, and environment. Facing growing populations, aging infrastructure, degraded ecosystems, fragmented management systems, and uncertainty due to climate challenge, the reality is that no region in California can claim to be sustainable. With an annual budget of about $8,000,000-$10,000,000 supported by grants from the Pisces Foundation, Bechtel Foundation, Packard Foundation, and others, the Water Foundation deploys a multitude of approaches to bring about significant changes in water policies and management to result in sustainable twenty-first century water use in California. 

Situation

As a major investment to achieve its mission, the Water Foundation has developed the Sustainable Water Management Profile (SWM Profile). The SWM Profile is a scorecard tool for advancing long-term water supply resilience and water resource stewardship, recognizing the need to carefully assess regional factors. It provides standards for assessing water supply vulnerability and management responses to key risks and threats to water supply. The standardized tool evaluates ten key stressors on water management and the steps agencies need to be taking to be sustainable. The SWM Profile differs from other sustainability assessment tools because it accounts for region-specific information, existing management responses to water challenges, and regional coordination activities. The Water Foundation will complete its second pilot of the SWM Profile in Spring 2016 with Inland Empire Utilities Agency in Southern California. 

Project Objectives

The ACT team was asked to investigate whether the financial sector might find value in the SWM profile in evaluating potential investments, and, if so, whether it would be willing to pay for that information. The team was also asked to consider how and when to launch the SWM profile for maximum effectiveness with this market.

Project Overview

The team determined that there were four relevant segments of the financial sector: underwriters, rating agencies, secondary market investors, and research firms. The team then conducted interviews with representatives from each sector around the following questions:

  • Might the SWM profile be valuable to your business?
  • What changes or conditions would have to be made/met for the profile to have maximum value?
  • What dollar value might your firm be willing to pay for it, assuming the desired changes were made?

Key Conclusions

SWM Profile appears to have a strong value proposition, as financial institutions seek more detailed information about sustainability metrics. Of the four segments of the financial industry, the secondary market investment firms found the most value in the SWM profile.

Product-level adjustments needed by investment firms varied from firm to firm, but all agreed that data would need to:

  • be comparable across jurisdictions or agencies;
  • overcome self-selection bias, wherein agencies that might perform poorly would not seek to undergo the process;
  • and be consistently updated (every three to five years).

Different firms had varying preferences for geographic scope and for which data was most valuable.

Final Report Outline

  • Project overview
  • Key takeaways
  • Follow-up since midterm presentation
  • Strategic partnerships