Proven water technologies often stall after a successful pilot. See the procurement and finance reforms needed to scale innovation in the water sector.
Quarterly trends in technology piloting
Dr Jo Burgess, CEO, Tech Ascend Foundation
The Proof-to-Procurement Gap
Despite water’s critical role in the resilience of our industrial supply chains, the global water sector has become trapped in a perpetual cycle of technological piloting that rarely scales to business-as-usual implementation. The past few years have brutally revealed the fragility of human society and the vulnerabilities globalisation has created in supply chains. Over the past 25 years, I have observed a persistent illusion in how we respond to these vulnerabilities: the belief that a successful pilot equates to successful innovation. It does not.
By 2050, current agricultural water practices will leave 4 in 10 people globally without a sustainable food supply. Yet, the cost of global sustainable water management already exceeds $1 trillion annually. As an industry, we continue to treat innovation as a discrete, isolated project funded by operational expenditures (OpEx), rather than a fundamental shift in capital expenditure (CapEx) strategy. If we are to navigate the intertwined crises of climate change and water scarcity, we must radically shift our focus towards the global financial structures that enable technology at scale.
This was precisely the focus of this year’s Global Water Summit, held in Madrid, Spain last month. This edition of our quarterly trends update draws on insights ¹ from the Summit, one of the sector’s most significant annual gatherings.
The Solution Provider’s Dilemma
Recent surveys ² of solution providers engaging with the UN Water agenda highlight a deep-seated frustration with the structural mechanisms of the water sector. Accelerating innovation is viewed as a critical priority, with nearly 80% of innovators signalling this as a top area for engagement. Yet, a striking 48% of these providers report having no prior engagement with UN entities, indicating a vast disconnect between global policy ambitions and the innovators actively working on the ground. The appetite for innovation exists, but the system has yet to effectively link ambition with delivery.
Diagnostic feedback from these market participants points to a clear consensus about the structural problems they face: the “piloting valley of death”. Pilots, trials and demonstrations are frequently funded – but without a pre-committed adoption pathway, a dedicated budget line, or a contracting vehicle designed for scale. Technology accelerators are frequently bridges to nowhere.
The core problem is the gap between pilot funding and adoption pathways.
Pilot funding, often sourced from discrete OpEx R&D budgets, plays an important role in demonstrating technical viability. However, proving that a technology works is only the first step. What it rarely provides is a structured, pre-committed route to full-scale commercial procurement, which is the mechanism that transitions a successful trial into a utility’s CapEx strategy.
For many asset owners, the barriers are practical rather than technical. Limited technical staff, procurement processes that are not designed to evaluate the whole life cycle, and constrained funding for implementation can all prevent successful trials from progressing into capital investment programs. At the same time, fragmented standards and regulatory requirements across regions force innovators to repeatedly adapt solutions for different markets, increasing costs and slowing adoption. Even technologies that perform well under pilot conditions can struggle to scale when regulatory frameworks remain unchanged.
The result is a recurring industry challenge: critical technologies successfully complete trials but fail to progress beyond them.
That means for the best chance of success, innovators and end-users must collaboratively create a clear process for replicating and scaling the technology right from the outset, establishing Key Performance Indicators (KPIs) and Critical Success Factors (CSFs) before a trial even begins.
The Trial Reservoirs Initiative embeds this approach by tying trial funding explicitly to an agreement that guarantees a path to post-trial procurement, providing those metrics are met.
The Impatience of Capital: What Private Finance Wants
Private finance is losing patience with the existing approach, and reasonably so. Investors are increasingly aware that freshwater dependency is an absolute economic risk, not a future one. Yet the mechanisms to deploy capital effectively remain elusive.
The survey data are stark: 94% of finance respondents rated blended and transition finance for water infrastructure in the categories of top priority or important. But, capital cannot flow without a destination. 88% of financial sector respondents identified building a pipeline of bankable projects – projects where the technology is proven, the technical and commercial risks have been allocated, the vendor has robust governance in place and operates under a clear, enforceable legal and regulatory framework, their cash flows are predictable, and therefore the project is likely to attract other lenders and/or other investors – as the single most critical contribution global institutions could make. In fact, access to that pipeline is cited as the highest-rated condition for sustained private-sector engagement.
The barriers are well understood, and include regulatory uncertainty, inconsistent standards across markets, perceived or real corruption, and procurement processes too unpredictable to price. In lower- and middle-income countries, this unpredictability renders margins unattractive, regardless of underlying demand. Private capital is not asking for theoretical discussions around water pricing inelasticity. It wants defined regulatory environments, uniform rules, and the right incentive structures: conditions under which it can actually compete.
The challenge isn’t the lack of capital or investors. It is a lack of investment-ready opportunities operating with predictable market conditions.
The IFI Perspective and the 2% Problem
The shortage of bankable water projects reflects a broader macroeconomic reality. Global investment needs for sustainable water infrastructure run into the trillions, yet private spending currently contributes a fraction of what is required. With governments fiscally constrained, attracting private investment has moved from an aspirational goal to a critical necessity.
International Financial Institutions (IFIs) are increasingly focused on creating the conditions needed to unlock that investment. One example is the World Bank’s Country Water Compacts: country-owned, target-oriented action plans linking policy reform to investment planning. Their aim is to use public funding strategically to attract larger pools of private and commercial capital.
By aligning governments, investors, utilities and development partners around shared priorities and measurable commitments, , these frameworks seek to create the regulatory certainty, financial sustainability and investment confidence needed for successful pilot projects to move beyond demonstration and achieve scale.
Rethinking Procurement and Fostering Digital Maturity
If IFIs are creating the enabling environments and private capital is demanding bankable pipelines, the operational gap remains: how do we ensure trial funding consistently leads to full-scale adoption? The answer lies in reforming how public and private entities interact.
The most significant obstacle to innovation, cited by 65% of surveyed solution providers, is that governments focus on low capital-cost bids rather than lifecycle costs. Technology providers and financiers are united in their call for a transparent, dialogue-based procurement approach that assesses total lifecycle value. Without that shift, the pilot-to-procurement gap will persist regardless of how much trial funding is available.
This transition is already visible in evolving public-private partnerships (PPPs). Over half of surveyed businesses stated they are ready to help develop new PPPs for water security. Practical examples of this transition are visible in major metropolitan platforms, such as the AySA concession in Buenos Aires, which demonstrates the complex but necessary transition from public ownership to a regulated private operator with clear, verifiable service obligations, and forward-looking predictable tariff paths. Enforceable commitments of this kind are what make large-scale adoption pathways viable rather than theoretical.
To de-risk these investments and provide the operational transparency required by private capital, utilities must also advance their digital maturity. The sector needs to evolve from siloed specialist expertise to enterprise-wide stewardship of data, integrating isolated tools into connected ecosystems and, where appropriate, digital twins. The shift from manual and disconnected workflows toward adaptive environments that use AI-assisted analytics and continuous operational learning transforms data from a byproduct into a strategic asset. This operational predictability builds stakeholder trust and the financing conditions needed to turn a fragile, OpEx-funded trial into a well structured, scalable adoption pathway.
The Structural Case for Change
The barriers to scaling technology trials in the water sector are not technical. They are structural, financial, and cultural. Treating innovation as an isolated experiment will continue to produce trials that fail to cross the valley of death into widespread commercial adoption. Trial funding must be inextricably linked to a pre-committed clear adoption pathway from day one.
Breaking this vicious cycle is a team effort. It requires active involvement from the private sector, public utilities, IFIs, and governments in parallel. It requires procurement models that reward long-term value rather than upfront cost. It requires multilateral development banks to create the regulatory and financial conditions that attract private investments.. And it requires bold policy instruments – trade pacts, tax incentives, and regulatory alignment – that make innovation adoption faster, easier, and less risky than maintaining the status quo..
The water sector has no shortage of proven technologies or willing capital. What it lacks is the structural scaffolding to connect them. That scaffolding – adoption-linked finance, procurement reform, digital maturity, and adoption-linked finance – is not a distant ambition. The frameworks, the models, and the appetite are present. What remains is the will to demand they work together. Leaders that are prepared to redesign the systems that prevent scaling will not simply accelerate technology adoption, they will define the future of water.
Notes
1. The survey data and market perspectives referenced throughout point to the need for a set of structural shifts that are reshaping how the water sector thinks about innovation and investment.
2. Results from the GWI Reader Survey conducted in May 2026, exploring private financial involvement within the United Nations water initiatives.