Upper Tana-Nairobi Water Fund Trust

Kenya, Africa

Primary Implementer

Upper Tana-Nairobi Water Fund Trust

Nairobi

Africa

Website

https://nairobiwaterfund.org/

Contact Email

conservation@nairobiwaterfund.org

Phase

Execution

Nature-based Solutions

Agricultural best management practices

Riparian Restoration

Forest Protection

Water Security Challenge

Water Quality & Water Quantity

The Upper Tana-Nairobi Water Fund (UTNWF), now the UTNWF Trust, is the first water fund in Africa created to solve water quality and quantity issues using nature-based solutions. Kenya’s Tana River provides 95% of Nairobi’s water, but, in recent decades, high turbidity from upstream erosion has limited the amount of water available in the lower watershed. Farmers removed forests and wetlands to make room for agriculture which eroded steep slopes and increased sediments in the river. Further downstream, these sediments often clogged water treatment plants and hydro-power dams, disrupting water and electricity services. Without the capacity to provide to all residents, power & water access was unreliable. The connection between growing agriculture upstream and water insecurity downstream was undeniable, and Nairobi needed a solution. By investing in agricultural best management practices (agroforestry, terracing, and water harvesting), revegetation, and riparian buffers, the Upper Tana-Nairobi Water Fund Trust has decreased suspended sediments by 21.3% below the average turbidity, thereby decreasing chemical use in filtration by 8% (as of December 2023). The water fund has planted 5 million new trees, rehabilitated 180,016 Ha of forest, excavated 791 kilometers of terraces and an overall 357,556 Ha of land under improved management in key watersheds to reduce sedimentation while simultaneously improving farmer productivity and livelihoods. Over the ten years that the Water Fund has been in operation, it has grown from a steering committee of volunteers to an independent trust supporting over 80,000 households in the watershed.

The current Board of Trustees sits with an equal ratio of public to private members, with representation from regional and national governments, The Nature Conservancy, and large private companies such as Frigoken and Pentair. Additional partners of the water fund include the National Museums of Kenya, Jomo Kenyatta University, and the Water Resource Authority. Biodiversity tracking throughout the watershed is ongoing and will serve as a marker for future ecosystem health.

Pre-Feasibility

Work on the water fund began in 2012. To survey the watershed and understand how NbS could address water security challenges in spurring from the Upper Tana, TNC and local partners looked for local NGOs who were already doing this type of work on the ground. To ensure early success, water fund organizers prioritized working with local NGOs with a previous relationship to TNC, who had strong reputations and a proven track record of implementing the types of interventions organizers were exploring. They initially partnered with the Green Belt Movement – an NGO focused on planting trees and restoring degraded land – who was already working in the Sagana-Gura sub-watershed. TNC provided funding to the Green Belt Movement who quickly mobilized local communities to action while TNC was still learning the way residents used and protected water in the region.

Several interventions seemed promising for the Upper Tana. Agricultural cultivation on steep slopes was increasing erosion and degrading soil health, so organizers explored terracing and planting grass strips, reforesting degraded lands, agroforestry, and collecting rainwater and runoff in water storage areas. They hypothesized a combination of these interventions would increase soil moisture and decrease erosion , including from storm events, while providing irrigation water to farmers .

Despite promising outcomes, local public sector leaders and private executives were not convinced that these types of interventions would work well in Kenya. To help change their minds, Fred Kihara (who was the Outreach Manager, but is now TNC’s Africa Water Funds Director) led a site visit to Mexico to see two water funds in action. In the Mexican cities of Monterrey and Tuxtla, Kenyan officials spoke with local farmers participating in the water fund and saw how investments in nature were benefitting the entire watershed. After their trip, leaders from Coca-Cola, East Africa Breweries Limited, Nairobi Water Company, and the Water Resource Authority better understood how a water fund could provide similar benefits in their home watershed. The companies and organizations present went on to provide input to the steering committee and fund the water fund’s early pilot projects – a crucial change of heart that allowed the water fund to become successful in Kenya.

The early governance model of the UTNWF was a Hosted Program, with TNC providing staff and leading the initial push to create the water fund. In 2013, TNC partnered with various organizations to create a steering committee who advised on the scope and objectives of the future water fund. Some of the organizations present at the early steering committee meetings included KENFAP (water-efficient farming extension services), KENGEN (energy utility), the Water Resource Management Authority (WRMA, now WRA, a state-owned corporation focused on providing clean water), East African Breweries, SACDEP (agriculture NGO), Future Water (Netherlands-based consultancy), CIAT (global research organization), Nairobi Water Company (water utility), and TARDA (public development agency interested in water).
Several of these organizations played major roles in the steering committee: TNC hosted and acted as the Secretariat, and Nairobi Water Company chaired the committee, working closely with WRMA’s technical manager and KENGEN’s catchment conservation officer.

The organizations founded the water fund based on the principle that more work can get done if everyone works together rather than separately, i.e., collective action. Each part of the community—the public sector, private sector, the government, NGOs, and communities— could make change when aligned around a common vision and set of objectives regarding water quality and quantity in their watershed. By using this governance model and a science-based approach, the steering committee was able to fundraise more money and have a larger impact than if each organization worked alone.

To implement, the water fund steering committee partnered individually with each implementing organization who, at the time, were not coordinating with each other. For each NGO, TNC signed a sub-grant agreement that would allocate funding from a larger grant TNC had raised; funding enabled each organization to implement their own work in the water fund’s priority basins on behalf of the steering committee. At the same time, government departments signed an MOU with The Nature Conservancy to deploy extension officers on their own bill. Each of the four county governments in the Upper Tana provided an extension officer to the water fund. These officers would make initial outreach to farmers, train them on agricultural best management practices, track demand in their county, and assist with implementation in the watershed, e.g., installing water pans, delivering grasses and trees, etc.

Feasibility

In 2014, the water fund steering committee began fundraising for a series of larger pilot projects within the watersheds. These projects were funded by a number of donors including a U.S-based private foundation, the GEF Small Grants Program of UNDP in Kenya, Coca-Cola, and Frigoken. Each of the projects were implemented for at least two years to provide enough time to demonstrate proof-of-concept and assess scalability. The projects were undertaken in Thika-Chania sub-watershed (terracing, water pans, drip irrigation, and agroforestry led by SACDEP), the Maragua sub-watershed (water harvesting structures, drip irrigation led by KENFAP and Frigoken), and the Sagana-Gura sub-watershed (Rainforest Alliance certification, reforestation led by Green Belt Movement). The success of these projects provided evidence that a water fund could work well in Kenya and convinced more farmers and funders to invest in the idea. The projects also demonstrated the idea that residents were not just investing in a TNC-led water fund – an outside organization – but rather their own watershed and their own community.

In March 2015, with financial and technical support from TNC, the steering committee published a business case highlighting the results of the pilot projects and outlining the strategies to improve water quality and quantity in the region. To create a compelling case, TNC and the Steering Committee partnered with the Natural Capital Project and Future Water to complete a cost-benefit analysis. These consultants used the RIOS and SWAT models to understand the basins where NbS could have the greatest potential improvement on water security outcomes, specifically water quality (sedimentation) and quantity (dry season availability). Critically, WRMA, KENGEN, and the Nairobi Water Company provided water use and turbidity data to add validity to the case. The committee used the results of this analysis to determine priority areas for investment – and how much the proposed program would cost - before scaling up work in the watershed.

Analysis showed that investing in the water fund would lead to a major reduction in soil loss and suspended sediments while increasing water flow during the dry season. For every one dollar invested in the Upper Tana, NbS would generate two dollars of benefits over 10 years – a significant financial return. Stakeholders were intimately involved before and during the creation of the business case to ensure they understood, agreed with, and endorsed the results. This buy-in was important to mobilize future funding and continued in-kind support to ramp up implementation for the water fund. The Steering Committee also published a press article about the project to test how the idea would be received by the public.

Early quantitative goals included planting 100,000 trees within the watershed, decreasing sediment intake at the Ngethu treatment plant by 15,000 tons per year, and adding 800,000 more kWh of power per year due to continuous power service. The water fund would serve 21,000 smallholder farmers, 50% of which would be women, and Sustainable Land Management Practices would be implemented on 337,000 hectares of land. The improvements would be monitored by 26 stations and data would be shared between stakeholders.

Initially, the focus was on solutions that had the highest probability of success, such as river riparian buffer restoration, runoff water management and harvesting, and terracing farmlands with steep slopes. Once the water fund was established and the community was on board, the focus shifted to more involved strategies like establishing agroforestry systems, rehabilitating degraded forests, and managing runoff from dirt and gravel roads crisscrossing the catchment.

After an ROI analysis, the steering committee continued to adaptively manage and develop more specific goals for how much money they needed to raise, how many households they wanted to reach, and how many acres they could impact based on initial data from the pilots.

Design

In November of 2016, after the business case was developed and published, the steering committee decided that the water fund was established enough to merit a change in the governance model. The water fund was starting to receive large grants from the government, but money transfer was difficult as the steering committee was not a legal entity. The steering committee chose to change the governance model to have more autonomy over the financial decisions of the water fund.

The team hired a legal expert, which outlined three options for moving forward: become an NGO, a private company, or a charitable trust. Each option had pros and cons. An NGO was tax-exempt, however, the regulations around NGOs in Kenya are relaxed, and, therefore, can lead to these organizations not following through on their initial mission. If the water fund became a private company, it would have to pay returns to stakeholders and the focus could shift towards making a profit instead of using money to help farmers. Additionally, businesses in Kenya are required to pay a 30% tax on profits. Large donations to the water fund would be considered profits and would therefore be highly taxed, decreasing the amount of money that could go to the watershed. The perpetual aspect of a charitable trust appealed to the team, as trustees could join and leave the board, but the mission of the trust remains intact in perpetuity.

After considering these options, the water fund decided to become a charitable trust, and was officially registered in 2017. Despite changing the governance model, the charitable trust was still managed by TNC. Making the switch to a charitable trust was primarily for legal purposes and to provide flexibility to accept & manage funds. However, the new structure did not change how the water fund operated on the ground. TNC still provided staffing, sat on the Board, and provided key technical and fundraising support to the water fund.

The governance arrangement for the charitable trust included several levels, with a board of trustees, a board of management, an executive director, and several officers and coordinators doing work in the field. To measure impact, a monitoring and evaluation (M&E) coordinator position was created within the governance model. This individual worked within the project management unit, which also included a project manager, a field conservation coordinator, and four field extension assistants. Their role included creating an M&E plan, managing the data framework, and tracking output and outcome indicators. A key component of the water fund remained – the board of trustees was still an equal collaboration between the public and private sectors, with five trustees from each sitting on the board. Key institutions from the steering committee, such as the Nairobi City Water and Sewerage Company and Frigoken, remain on the board to this day.

Community engagement was a high priority for the Trust and was especially important at this time as they were beginning to scale interventions. The business case helped to define the areas that were the highest priority, but the catchments were still vast areas with many unique communities with unique needs. The Trust was able to modify projects at the site to better implement solutions according to stakeholder needs by leveraging community officers and NGOs that both had deep existing relationships with local communities in the basin. After several years of communication, the water fund received a grant from the Global Environment Facility (GEF), managed by the International Fund for Agriculture and Development (IFAD), to pursue further work in the Upper Tana. This funding helped bring the idea out of the theoretical business case and into reality – the ability to scale the implementation was now being tested on the ground.

The long-term funding strategy for the water fund included strategic partnerships, financial planning, and forward thinking. In an interview with Fred Kihara, long-time TNC leader for the water fund and Secretary of the Board of Management, he describes the funding strategy as a group effort. “When it comes to raising money, the theme here is family,” he said. The water fund continues to be supported by a partnership of public and private organizations, and Kihara says this collaboration is key to increasing funding from both sides. The water fund received such funding recently in 2024, with nearly half a million dollars of support from Diageo, a major brewing company.

Donations are not the only way the water fund receives revenue. In March of 2020, the water fund, led by TNC, set up an endowment fund which is currently being invested with a 17% interest rate. This allows the water fund to receive USD 850,000 a year, which covers 90% of the trust’s budget and provides a long-term funding option for the water fund. A new aspect of the revenue plan is to generate income by selling their own carbon credits. Farmers planting trees as a part of their conservation strategy can have their efforts certified by Plan Vivo, which determines the size of the carbon sink and the amount of carbon credits the area produces. Diversifying farmer income through agroforestry can also add revenue to the region. The 1.33 million fruit trees planted from 2017-2019 generates 67 million USD in the region each year from sales.

Execution

From 2020 to 2021, the water fund transitioned to the UTNWF Trust, an independent trust. The water fund no longer needed TNC to provide as much fundraising nor staff support, so the Board decided to transition from a Hosted Program within TNC to an Independent Entity. Making the transition to an independent trust was an important step for the water fund’s long-term sustainability, but separating from TNC proved complex and the organization remained a crucial resource during this time.

The transition process took two years. With consensus from the Board of Trustees, TNC, and Trust Leadership, the water fund began moving resources from TNC to independent control in three phases. An oversight committee, with two members from TNC and two from the charitable trust, was formed to help with the transition.

The first phase, lasting ten months, focused on transferring project management to the UTNWF Trust. To facilitate the transition, the water fund hired an interim executive director and a facilitation consultant. They developed a 5-year strategic plan which outlined the Theory of Change, the operational plan, and the budget to which they would manage.

For the second phase, lasting three months, the UTNWF Trust focused on operational details. They found an office space, hired staff, established an HR team, set up an Information and Communications Technology (ICT) system, bought computers and printers, developed Standard Operating Procedures (SOPs), and transfered ownership of finances and banking accounts.

The third phase stretched over eight months. In the first three, the UTNWF Trust hired a new Executive Director. The remaining five months included the “consolidation of the independent trust entity” -- an adjustment period for the staff and director to get to know each other and their new roles. At this point, the UTNWF Trust had fully equipped offices and hired staff.

Although the mission of the water fund stayed the same throughout the transition, the water fund had a difficult time retaining staff. Staff that had been hired under TNC, a well-known global organization, were reluctant to move to a small start-up. The UTNWF Trust promised them equal pay and benefits to what they had received with TNC, but it was difficult to convince staff that the Trust would be successful, independently. Exchanging physical assets was also difficult as TNC had purchased many assets for the water fund, including vehicles. The UTNWF Trust had to negotiate with TNC as to which resources would be transferred to the independent entity, and which would remain within TNC. However, despite a challenging transition, the UTNWF Trust was fully established by the end of 2021 and has functioned successfully since. As an independent trust, the water fund still prioritizes working on the ground with farmers, collecting accurate data in the watershed, and establishing a sustainable funding model to ensure the continued success of the project.

Attention to monitoring and evaluation remains a core focus of the water fund, and partnerships with external organizations are critical to maintaining the program. The UTNWF Trust tracks socioeconomic, hydrological, and biodiversity indicators, and work with implementing partners to gather data needed for adaptive management. County Extension Officers collect data on the farmers enrolled in the program and develop spatially explicit farm plans outlining the conservation actions – and associated materials (e.g., water pans, grasses, trees, etc.) – needed for each farmer. The data are added to a centralized database monthly. Hydrological indicators are monitored at 33 river stations, testing water quality and quantity every 30 minutes. Data are collated every 3 months and analyzed each wet and dry season. Jomo Kenyatta University of Agriculture and Technology provides external assistance with data collection and analysis. Biodiversity – which lags behind improvements in habitat restoration and water quality – is tracked at 36 monitoring sites every 5 years. To bolster this data, the National Museums of Kenya score watershed health from year to year based on macroinvertebrate analysis using biological control gradients; macroinvertebrates are often indicators species for biodiversity. The water fund also partners with 96 local high schools to provide environmental education programs and spread conservation knowledge to the younger generation.

As the Trust has grown, the need for external assistance has also increased. The Trust partners with Bowman’s firm for legal advice, and this is provided to the trust pro bono. They also partner with Gen Africa Asset Managers for investment services, which provides services with fixed price accounting. There are five government officers working specifically for the water fund, providing extension services and river monitoring, with more officers available to support larger events such as restoration & tree plantings. Local NGOs are still hired to work on specific projects, when necessary.

Communication with participating farmers is a challenge for the water fund, as the watershed is large, and participation has grown immensely. To keep their constituents informed, the water fund created an SMS messaging system that provides timely communications to 142,000 farmers in the system. Before conservation officers bring supplies to a region for distribution, farmers receive a text message notifying them of when and where the supplies will be available for pick-up. This technology has allowed the water fund to scale efficiently and will continue to support communications as the program grows.

Important Learnings

Kihara believes the Upper Tana–Nairobi Water Fund Trust is successful because of the direct engagement with farmers, the credibility of the idea, and the spirit of volunteerism from the water fund’s leaders. The commitment to farmer education and willingness to work with farmers on the ground led to a greater acceptance of the program in the watershed. Farmers were wary of a legally enforced system where organizations gave farmers money to implement NbS strategies themselves but held farmers accountable for using the money correctly. Farmers were more comfortable participating when the water fund provided all necessary materials and training, and there was no exchange of currency.

Local organizations and companies were not always confident that the concept of the water fund was viable. Tracking data and working with reputable local organizations, such as the National Museums of Kenya, the Water Resource Authority, and the Kenya Forest Service was crucial to generating a positive public opinion of the water fund, increasing farmer participation, and raising financial support. Government support of the water fund also increased throughout project implementation. During the Steering Committee phase, the government was minimally involved in planning, but when the UTNWF Trust became independent, five officers were assigned full-time positions with the water fund. The original organizers of the water fund believed in the mission and were willing to put in time to bring their idea into reality. The same mindset still applies, as Trustees on the Board remain volunteers. They pay their own way to attend meetings and conferences where they promote the water fund and search for funding opportunities.

Media was an important tool to gain local and international support for the water fund concept. After the official launch in 2015, media coverage took off. More than one hundred newspapers and media outlets published articles about the trust, including Reuters, the Daily Nation, CNBC Africa, Africa Global Funds, and Bloomberg. These articles focused on the ROI detailed in the business case, and the potential for this type of model to increase water access in arid places.

Recently, the water fund has received more press in different formats. In 2021, a scientific article about the water fund was published in the Palgrave Handbook of Climate Resilient Societies. This article goes into depth on the background and strategies used in the water fund and provides a comprehensive case study for anyone looking to fully understand the theory and data behind the model. In 2022, the UTNWF Trust was featured as a case study in a non-fiction book by award-winning author Erica Gies, Water Always Wins. The case study highlights the UTNWF as an example of promoting “slow water,” where natural water flow is prioritized, and water is allowed to sink into soils. Gies interviews several farmers in the region and showcases the improvements they’ve seen on their farms after implementing solutions such as terracing and building water pans. Gies portrays the UTNWF as forward-thinking, focused on supporting the community and protecting biodiversity in the region. A positive reflection from newspapers, articles, and books has benefitted the water fund and played an important role in convincing more partners to donate time and money to the cause.

The UTNWF Trust is a leading example of a successful water fund. Its journey from a steering committee to an independent trust provides evidence that there is interest and need for this type of watershed-wide collaboration around the globe. It serves as a learning and training laboratory for water funds across Africa and has ignited a movement that has spurred the development of 10 new water funds across the continent.

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