Incentive-based Instruments


For Freshwater Management

General Explanation

Freshwater is one of our most precious and valuable resources. And yet, we already see clear signs of its overexploitation across the globe.

One approach to reducing pressure on water resources has been the use of incentive-based instruments, which use financial means to motivate parties towards better managing both the quantity and quality of freshwater. This synthesis aims to understand their full potential, and limitations.

Economic
Outcomes
Key lessons
Environmental
Outcomes
Key lessons

What can we expect from incentive-based instruments? The evidence to date suggests mixed results, with success being largely dependent on the conditions under which an instrument is being used. But existing cases offer valuable insights into how we might amplify positive outcomes, mitigate risks, and recognize unintended consequences.

Largely Positive
Neutral
Largely Negative
Significant Variance
Needs More Data