A crew member with The Greater Cape Town Water Fund looks out over the landscape where the team is working to remove invasive alien plants for improved water security. Credit: Roshni Lodhia/ The Nature Conservancy
By Louise Stafford
CAPE TOWN, South Africa, Apr 16 2026 – In 2018, Cape Town came perilously close to becoming the first major city in the world to run out of water. Known as “Day Zero”, it was more than just a crisis, it marked a pivotal moment. It made clear that water insecurity is not a distant threat, but an immediate reality.
It also revealed something equally important, water security depends not only on built infrastructure, such as dams, desalination plants and groundwater extraction, but on the health of the natural systems that sustain them. Ecological infrastructure – our catchments, rivers and wetlands – is as essential as the roads we travel and the grids that power our homes.
South Africa is in a period of structural water scarcity. According to the National Water and Sanitation Master Plan, the country could face a water deficit of up to 17% by 2030. Much of the focus has rightly been on failing built infrastructure, such as non-revenue water, ageing infrastructure, and wastewater discharge into rivers. But an equally critical, and often overlooked, part of the problem lies upstream.
Degraded catchments, driven by poor land management, erosion, invasive alien plants, river diversion, and the loss of wetlands and riparian areas, are undermining the very systems that produce and regulate water.
The Hidden Drain on South Africa’s Water
The impact of alien tree invasions on our water resources is not unknown in South Africa. Multiple scientific studies emphasized the scale of the problem. The invasion of catchment areas by alien tree species, such as pine and Australian acacias, has a significant effect on streamflow. They reduce South Africa’s water availability by an estimated 1.4 billion cubic metres every year, enough to irrigate between 140,000 and 280,000 hectares of farmland according to WWF-SA, drawing on research by the CSIR and partners.
That is water that could otherwise sustain crops, support rural economies, households and strengthen national food security. In the greater Cape Town region, these species consume around 55 million cubic metres annually, roughly equivalent to two months of the City of Cape Town’s water supply.
South Africa has taken important steps to address alien plant invasions through programmes like Working for Water and through the efforts of landowners. However, these initiatives face persistent challenges such as limited funding, uneven prioritisation, and interruptions in implementation that reduce long-term effectiveness.
Restoring catchments requires continuity and scale. Traditional public budgets cannot keep up. Short-term grants and project‑based funding cycles are mismatched with the long‑term reality of managing and restoring South Africa’s catchments. Catchments do not operate on three-year budget cycles. They require decades of commitment. To secure our water future, we must rethink how we value and finance the ecological infrastructure that underpins our economy.
Science Meets Implementation: A Proven Model
The Water Fund model has added a valuable new option to address catchment restoration. South Africa’s first, the Greater Cape Town Water Fund (GCTWF), provides compelling proof that investing in ecological infrastructure and prioritizing headwaters deliver measurable results. Over the past seven years, with support of the private sector and City of Cape Town, over 40,000 hectares have been cleared of invasive alien plants priority catchments. Importantly, the cleared areas have been followed up multiple times to prevent regrowth.
This work increases water flows into dams of the Western Cape Water Supply System by 36 million cubic meters per year. The benefits extend far beyond water. The programme creates job opportunities, reduces wildfire risk, and supports the recovery of native fynbos and freshwater ecosystems — while building resilience to climate change.
The Greater Cape Town Water Fund demonstrates that ecological infrastructure can deliver reliable, measurable returns. Yet scaling this model has been constrained by one persistent challenge namely predictable funding to plan and reach the set target of clearing 54,300 hectares to replenish the water losses.
Rethinking How We Fund Water Security
What about a new funding approach? One that can crowd in private capital while ensuring accountability for results and bridging the gap between short term and sustainable funding. This is the foundation of the FRB Cape water performance-based bond, developed through a partnership between Rand Merchant Bank and The Nature Conservancy.
The Cape Water Performance-based Bond, a first of its kind financial instrument designed to unlock non‑traditional funding sources and secure a consistent five‑year funding stream to accelerate invasive plant control in priority catchments of the Greater Cape Town region. This marks an important milestone not only for Cape Town but for South Africa as a whole, a shift toward mobilizing capital markets to invest in nature at scale.
Accountability is built in. Rigorous monitoring and data collection tracks delivery and ensures a positive return on investment. “Clearly demonstrating what an investment has achieved is the backbone of impact finance. Investment returns in the FRB Cape water performance-based bond rely on performance and so we require systems to independently verify results. This independence and transparency are critical to ensure trust in these results, and to scale nature-based impact finance products.” Chris Barichievy, Director of Science, Conservation Alpha
Taking Impact To Scale
Water security underpins economic stability. From farms to factories, every sector depends on a reliable flow of water. When systems fail, the costs are staggering. When they succeed, they quietly power equity and prosperity.
The Cape Water Performance-based Bond matters because it can be replicated. Cities across Africa face similar challenges, degraded landscapes, limited public funds, rising demand. This model offers a science-based, practical path forward that can be adapted to different contexts.
From Vision to Delivery
This is where vision meets action. Governments and other roleplayers need to recognize that healthy catchments are as essential as pipes, treatment plants and pumps. Healthy catchments enable water to reach our dams, which is the first step in securing our water supply.
The capital markets are the world’s largest funding pools. Yet the opportunity for capital markets to play a role in the water supply system has been limited – until now. Martin Potgieter from RMB said: “This Cape Water Performance-based Bond gives financial institutions and investors the opportunity to participate in the security of the water supply system. It gives investors a low-risk entry to the funding of a water catchment, while at the same time enabling a project that delivers lasting, systemic impact.”
Large and critical interventions need long-term planning and commitment, with the Cape Water Performance-based Bond providing five years of predictable funding.
Without this change, the risks to our water security will only grow. In 2018, Cape Town has shown the world what it means to be pushed to the edge. Now, it is showing the world what it means to lead. By building financing systems that match the scale of the challenge, we can secure a future where both nature and people thrive.
Louise Stafford is the South Africa Country Director at The Nature Conservancy