This impact story is from our 2020 annual report.

In Colombia and across Latin America, regulations have until now stood in the way of using revenue from ratepayers to provide a secure funding base for investments in green infrastructure for improving water supply. SEI worked with authorities in Colombia to develop a framework for regulatory reform that leads the way to a secure foundation for investment in green water infrastructure.

For many years, conservation organizations in Latin America, including The Nature Conservancy, have promoted the creation of water funds to serve as investment managers for green infrastructure projects. In some watersheds there has been success in attracting voluntary investments, largely from private sector actors that depend on water supplies or the philanthropic community, these donations are by definition insecure. And because of this, water fund managers have long sought to cover the costs of green infrastructure through water tariffs collected by drinking water utilities. But they face a fundamental problem in doing so: regulation of water tariffs is typically based on the principle that because water utilities are monopolies they require strict oversight.

In Colombia, this oversight role is carried out by the Potable Water and Basic Sanitation Regulation Commission (CRA), based on public utility laws that require Colombian drinking water utilities to demonstrate to the CRA that any increases in rates to cover the cost of capital improvements must be efficient. In other words, utilities must show that investments included in any capital improvement plan – including green infrastructure investments – represent the cheapest approach to achieving a target level of service.