Type
Blended finance
Impact focus
Water security, healthy ecosystems, jobs, climate resilience
Partners
While the City of Cape Town and other municipalities are beneficiaries, they play a dual role as co-investors. Under the fund’s ‘user pays’ principle, certain downstream water users contribute financially to restoring the ecosystems that supply water. This means the City of Cape Town, as both a major water user and funder, invests directly in cleaning upstream catchments to secure future water availability.
Partners include:
- Government: Local government (the City of Cape Town), Western Cape government, national departments such as the Department of Forestry, Fisheries and the Environment (DFFE) and the Department of Water and Sanitation (DWS), the South African National Biodiversity Institute (SANBI) and provincial entities like CapeNature.
- The private sector: Corporate and philanthropic supporters, which co-fund implementation.
- Nonprofit organisations: The World Wide Fund for Nature (WWF).
- Beneficiaries: The City of Cape Town, other municipalities within the Western Cape Water Supply System (WCWSS), the agricultural sector and local communities who benefit directly from increased water security, restored ecosystems and green job creation.
These partners co-designed and co-invested in nature-based solutions, primarily clearing invasive alien plants from catchment areas to restore water flows, improve biodiversity and build climate resilience in the Western Cape.
The challenge: Combat water scarcity in greater Cape Town
In 2018, Cape Town came perilously close to becoming the first major city in the world to run out of water – ‘Day Zero’. However, even before the dams ran low, invasive alien plants had been quietly reducing streamflow in the region’s key catchment areas. Rapid population growth, climate change and economic expansion added pressure to already-stressed systems, according to Louise Stafford, South Africa country director for The Nature Conservancy (TNC).
“A TNC study, the Urban Water Blueprint (2013), identified that one in five cities in sub-Saharan Africa, including Cape Town, could benefit substantially from nature-based solutions such as water funds,” Stafford explains. This insight, along with the urgency of Day Zero, catalysed the formation of the Greater Cape Town Water Fund (GCTWF) – a multisectoral partnership focused on securing water at its source.
An alternative financing model
At the heart of the GCTWF is a blended finance approach: pooling capital from public, private and philanthropic sources to fund upstream catchment restoration. With TNC as the convenor and fund administrator, the model shifted away from siloed project funding towards a shared platform for long-term investment and measurable outcomes.
It was necessary to develop a solid business case that identified who would benefit most – municipalities and farmers – and to quantify the benefits, such as the number of litres of water gained for each hectare cleared. “The outcomes-based structure ensured transparent, accountable and scalable impact,” Stafford notes, highlighting the fund’s commitment to measurable results.
Desired outcomes and measurement
The GCTWF focuses on quantifiable environmental and socioeconomic outcomes. These include:
- Volume of water reclaimed to the WCWSS
- Hectares of catchment cleared of invasive alien species
- Green jobs created, especially for women and youth
- The density and biomass of invasive alien trees, which increase fuel loads and fire intensity
- Improved outcomes in freshwater and terrestrial ecosystems, to track biodiversity.
These outcomes are tracked through a combination of fieldwork, hydrological modelling, satellite data and routine reporting by implementing partners. Dedicated working groups meet monthly to assess progress and adapt as needed.
Project lifespan and tracking
Established in 2017, the GCTWF has attracted R218 million in investment to date. TNC and Rand Merchant Bank (RMB) are now exploring a five-year ‘water bond’ to finance the next phase of work. This will scale the fund’s reach while deepening its impact.
As of July 2025, the fund has cleared over 40 000 hectares, restored up to 18 billion litres of water to the system annually and created 1 376 green job opportunities. The initiative continues to embed resilience and water governance capacity in the region’s water management frameworks.
Why the GCTWF stands out
The GCTWF is South Africa’s first water fund and a leading example of outcomes-based, nature-positive investment. It has successfully translated ecological restoration into measurable water gains, while creating jobs and reinforcing biodiversity.
By adopting a ‘user pays’ principle – where key beneficiaries such as the City of Cape Town reinvest in upstream ecosystem restoration – the fund demonstrates how shared responsibility can align public, private and community interests to address systemic water challenges. As climate change intensifies and water becomes increasingly scarce, the GCTWF provides a replicable model for cities facing similar pressures worldwide.
