Water-related investments are key for sustainable development and inclusive growth. Blended finance can play a critical role in mobilising commercial finance
and strengthening the financing systems on which water–related investments rely. The OECD defines blended finance as the strategic use of development finance
to mobilise additional finance towards sustainable development in developing countries (OECD, 2018). Blended finance can add value by shifting funds to sustainable development in countries and sectors that have significant investment needs. It can also act as a market building instrument to provide a bridge from
reliance on grant and other donor financing towards more self-sustaining financing approaches.
This Policy Highlights summarises key messages from the publication Making Blended Finance Work for Water and Sanitation (OECD, 2019a). The publication
draws on case studies, interviews, workshops and extensive desk research, in order to examine: (1) what has worked so far in terms of experience with blended finance for water-related investments; and (2) the potential to scale up blended finance approaches to apply to a broader range of investment types and contexts. It distils lessons learned and provides emerging guidance to scale up and exploit the full potential of blended finance to deliver on water-related SDGs.