Water scarcity and flooding are among the most immediate and disruptive consequences of climate change – threatening lives, livelihoods, and the stability of entire economies. As these risks intensify, water is no longer viewed solely as an environmental issue. It has become an important economic and financial concern.
From utilities and agriculture to pharmaceuticals, real estate, and insurance, water-related disruptions are reshaping risk profiles across sectors. At the same time, they are opening new avenues for investment. Water resilience is emerging as a strategic opportunity – one that can deliver both climate impact and long-term value.
At BNP Paribas’ Sustainability Expert Forum 2025, a panel of experts explored how innovative water solutions and investment strategies are advancing adaptation. Their discussion spanned localised risk assessments, infrastructure design, blended finance, and the integration of water into institutional investment frameworks. Together, they made the case for scaling finance toward water resilience – to protect communities, support economic stability, and unlock sustainable growth.
Water: An Economic and Financial Imperative
Water-related risks – particularly floods, droughts, and pollution – are already impacting global GDP and disrupting key sectors. According to Aude Farnault, Water Policy Analyst at the OECD, recent studies show that these shocks can affect up to 9% of global GDP. “Water is not only a risk but a strategic opportunity,” she said. “Every dollar invested in drought prevention can yield USD2 to USD3 in benefits, with returns on resilience investments potentially up to ten times the initial costs.”
Leading institutions are beginning to integrate water adaptation into their strategies. Tools and frameworks are emerging – from local vulnerability assessments to global financial instruments – signaling a shift toward mainstreaming water into economic planning. Yet despite this momentum, actual investment remains limited. “Water” and “blue”-related bonds still account for just 1-4% of the green, social and sustainable bond market, and blended finance for adaptation continues to lag.
“Resilience is no longer a future goal – it’s a present imperative,” Farnault emphasised.
❝ Adaptation is not a choice. It’s a necessity and an opportunity to rethink how we invest, manage risk, and collaborate. ❞
Local Adaptation, Global Scale
While climate change is global, its impacts are deeply local. For companies like Veolia, operating across diverse geographies, adaptation must be tailored to the specific vulnerabilities of each site. “We already have 50% of the technology we need,” said Pierre-Yves Pouliquen, Vice-president of Multifaceted Performance & Sustainable Development at Veolia. “The challenge now is process, culture, and organisational transformation.”
Veolia embeds climate risk assessments into operations, site layouts, and tenders. “It’s about understanding local climate exposure and asset vulnerability,” Pouliquen explained. “Only then can we build an action plan – whether it’s about technology, CapEx, or organisational change.”
This approach is already influencing how Veolia schedules maintenance and designs infrastructure. For example, CapEx programmes are now planned around seasonal heat risks to protect workers.
❝ Adaptation is not just about infrastructure, it’s about people. Putting your team in charge of the change is more important than any finance question. ❞
Veolia’s internal learning culture also plays a role. A recent study run by the company revealed how frontline teams in the Global South – accustomed to water scarcity and extreme heat – are now teaching their counterparts in the North. “It’s South-to-North learning,” Pouliquen said. “And it’s changing how we plan, invest, and protect.”
Mobilising Capital for Water Resilience
Water is not only a frontline vector of climate impacts – it’s also a strategic lever for resilience. Juan Bofill, Lead Engineer, Projects Directorate, Water Division, at the European Investment Bank (EIB), emphasised the need to embed water resilience into infrastructure planning. “For the EIB, the water sector not only water supply,” he said. “It includes also sanitation, flood protection, and coastal protection. We finance about to EUR4 billion in water projects annually, and we’re trying to increase that with the recently launched Water Resilience Programme.”
This Programme intends to invest EUR15 billion over the next three years in projects that deliver access to clean and safe water, increase water resilience of communities and the economy, and support the competitiveness of the EU water sector. This Programme aligns with the European Commission’s Water Resilience Strategy, which promotes “water efficiency first”, prioritises access to water and sanitation and protects the water cycle.
Water sector is key for climate adaptation. The EIB’s Adaptation Plan commits at least 15% of its climate finance to adaptation, with a significant share directed toward water projects.
Also, efficiency is key. Reducing non-revenue water and improving infrastructure in high-risk areas strengthens resilience.
❝ Water efficiency is a clear driver for adaptation, it’s about reducing vulnerabilities and making systems more robust. ❞
One example is a EUR450 million results-based loan to Jordan, designed to reduce leakages in the country’s water sector. “It’s new approach to financing such challenges,” Bofill explained. “We’re linking disbursements to measurable outcomes – like reduced water loss – which directly supports adaptation.”
The EIB’s approach also aims to elevate the European water industry. “We want to support the EU water sector,” he added. “The capacity of European companies in this space is something we can really flag.”
Unlocking Value Through Adaptation
Water-related climate risks are increasingly visible – from commodity price shocks to infrastructure damage – yet remain largely unpriced in financial markets. Christopher Kaminker, Head of Sustainable Investment Research & Analytics and Chief Investment Officer at BSI Intel, BlackRock, sees this as both a risk and an opportunity.
❝ Adaptation is not just about infrastructure, it’s about people. Putting your team in charge of the change is more important than any finance question. ❞
BlackRock uses climate modelling and geospatial tools to monitor acute events and link them to asset-level data. These insights feed into capital markets assumptions and long-term asset allocation. “Physical climate damage isn’t priced in,” Kaminker said. “But it’s already affecting returns.”
The firm has identified over 500 companies – many in emerging markets – offering solutions in water efficiency, circular economy, and AI-powered monitoring. “They may not call themselves ‘impactful,’” he said, “but they deliver real solutions and returns.”
Fixed income markets also offer untapped potential. While USD600 billion in green bonds list water and adaptation as eligible use-of-proceeds categories, actual investments remain limited.
Private markets and in particular infrastructure offer further potential, particularly where AI and water efficiency intersect. Meanwhile, blended finance is emerging as a powerful tool to de-risk investments in emerging market infrastructure. BlackRock, in partnership with the Insurance Development Forum, has launched a blueprint for blended finance debt strategies that combine public and private capital to scale climate-resilient infrastructure.
From Awareness to Action
The speakers converged on a shared message: the tools and strategies for water adaptation are emerging – but the pace of capital deployment must accelerate.
Pierre-Yves Pouliquen stressed the importance of science-based decision-making. “Before allocating CapEx, you must understand the risks. It’s not just about models – it’s about protecting people and assets.”
Juan Bofill called for deeper engagement with the private sector. “We need to listen, understand the challenges, and create de-risking tools that make adaptation projects viable.”
Christopher Kaminker highlighted the economic case: “Adaptation projects can deliver benefit-to-cost ratios of 10 to 1. They create jobs, protect biodiversity, and offer triple-bottom-line returns.”
For Aude Farnault, the path forward lies in collaboration. “We must break the silos between policy, practice, and finance. Today’s dialogue lays the groundwork for more integrated, bold, and solution-driven partnerships.”
