A new CDKN Working Paper on water funds in Latin America, written by Karen Hildahl, Niskar Peña, and Olga Galindo of Fundación Futuro Latinoamericano (FFLA), examines how ecosystem-based adaptation (EbA) and gender, equity and social inclusion (GESI) can be embedded in water fund operations to better protect water sources, improve water governance and ensure equitable access to water, while also uncovering synergies and co-benefits that support livelihoods and community well-being.

"Water funds are financial and multi-stakeholder governance mechanisms that bring together a diverse group of actors with the common goal of protecting water sources through integrated water resource management." 

The study finds that water funds are effectively applying many principles of EbA, even if not explicitly labelled as such. Activities such as reforestation, sustainable agriculture, wetland restoration and conservation agreements are reducing climate risks and supporting water security for people and nature alike. 

However, the research also highlights opportunities to strengthen the social dimensions of resilience. While many funds promote participation and local ownership, few systematically integrate GESI considerations or use climate science to guide decision-making. 

Key findings 

The assessment of eight water funds across the Andean region reveals that: 

• Water funds are already advancing EbA principles through ecosystem restoration and inclusive governance, but their social impact can be expanded. 

• Local and Indigenous knowledge are central to design and implementation, though climate science and vulnerability assessments remain underused. 

• Gender and social equity are unevenly addressed; inclusion must be intentional and sustained. 

• Stronger institutional linkages are needed between water fund actions and national or regional adaptation strategies. 

Five recommendations for action 

To strengthen the contribution of water funds to climate adaptation and equity, the authors recommend: 

1. Integrating gender, social and climate vulnerability analyses into project design. 

2. Co-designing context-specific EbA measures with communities. 

3. Establishing robust systems for adaptive monitoring, evaluation and learning (MEL). 

4. Linking local EbA initiatives to national and regional policy frameworks. 

5. Mobilising sustainable finance to scale up and sustain impact. 

Building resilience with nature and people 

The research reinforces that ecosystem-based solutions are most effective when they are participatory, inclusive and informed by both science and local knowledge.  

By orienting the actions of the water funds through the lens of EbA and embedding GESI principles, long-term climate data, and policy linkages, water funds can evolve from conservation finance mechanisms into powerful engines of resilience and social justice. 

Read the full working paper here: 'Fostering local resilience and enhancing equity through ecosystem-based adaptation (EbA): Learning from eight water funds in Colombia, Ecuador and Peru'.