2026/1 Evaluation of Finland’s Development Policy and Co-operation EVALUATION JOINT EFFORTS FOR A GREEN FUTURE: EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Volume 2b • Water as a Natural Resource © Ministry for Foreign Affairs of Finland 2026 This report can be downloaded through the home page of the Ministry for Foreign Affairs https://um.fi/development-cooperation-evaluation-reports-comprehensive-evaluations Contact: EVA-11@gov.fi ISBN 978-952-281-849-2 (PDF) ISSN 2342-8341 Layout: Grano Oy https://um.fi/development-cooperation-evaluation-reports-comprehensive-evaluations mailto:EVA-11%40gov.fi?subject= EVALUATION JOINT EFFORTS FOR A GREEN FUTURE: EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES WATER AS A NATURAL RESOURCE SUB-SECTOR EVALUATION REPORT Julian Caldecott Kristiina Mikkola Sari Laaksonen Paula Tommila Anu Nieminen 2026/1 This evaluation was commissioned by the Ministry for Foreign Affairs of Finland to Particip GmbH. This report is the product of the authors, and responsibility for the accuracy of the data included in this report rests with the authors. The findings, interpretations, and conclusions presented in this report do not necessarily reflect the views of the Ministry for Foreign Affairs of Finland. This report incorporates the use of Artificial Intelligence (AI) technologies to enhance and support the evaluation process. AI tools were employed to assist document review through the identification of relevant sources and to enable broader contextual research, including targeted searches. In addition, AI-based language tools were used to support proofreading and to improve clarity, coherence, and readability. The AI tools or techniques utilised in this report adhere to EVA-11’s requirements, ensuring ethical and responsible use, transparency, validation of results, and compliance with relevant internal regulations. For details on the specific AI methodologies and tools used and details regarding the validation of AI-generated results, refer to section/Annex 1 of this report. Contents ACRONYMS AND ABBREVIATIONS  �   VI 1 Summary  �   1 2 Introduction  �   7 2.1 Purpose, objectives and scope  �   7 2.2 Approach and methods  �   12 3 Context Analysis   �   17 3.1 Global policy context and trends   �   17 3.2 Finnish policy and institutional context   �   21 3.3 Portfolio review  �   25 3.4 Engagement with private sector to date   �   31 4 Findings  �   36 4.1 Results and impacts   �   36 4.2 Most effective approaches   �   53 4.3 Finland’s added value in the results   �   55 4.4 Markets, competition and demand for Finnish private sector  �   57 4.5 Foreseen gains and benefits for Finnish companies and development cooperation  �  63 4.6 The best approaches and measures to promote private sector engagement   �   65 5 Conclusions  �   67 6 Potential Action Points  �   72 References  �   75 ANNEX 1: METHODOLOGY AND ANALYTICAL PROCESS  �   92 ANNEX 2: COMPARABLE ACTIONS BY LIKE-MINDED PEER COUNTRIES  �   101 ANNEX 3: MARKET ANALYSIS   �   110 ANNEX 4: EU WATER EXPERTISE GROWTH AND EXPORT PROGRAMME CONTRIBUTIONS IN 2023 TO RESEARCH AND DEVELOPMENT PROJECTS BY FINNISH WATER SECTOR COMPANIES  �   116 ANNEX 5: LIST OF INSTITUTIONS CONSULTED   �   120 LIST OF FIGURES Figure 1 Theory of change for the water sector and Water as a Natural Resource sub-sector  �   14 Figure 2 Water withdrawals as a percentage of total available water, 1995–2025  �   17 Figure 3 Water as a Natural Resource portfolio share from Environment and Natural Resources portfolio (commitments, EUR million)  �   25 Figure 4 Water as a Natural Resource commitments in 2015–2022 (EUR million)  �   26 Figure 5 Water as a Natural Resource portfolio by country (%)  �   27 Figure 6 Water as a Natural Resource portfolio per instrument (%)  �   27 Figure 7 Use of instruments over time in Water as a Natural Resource (%)  �   28 Figure 8 Key stakeholders in overall Finnish water strategy  �   49 LIST OF TABLES Table 1 Moderate and intensive studies of MFA-supported projects in the Water as a Natural Resource sub-sector  �   9 Table 2 Priorities relevant to the Water as a Natural Resource sub-sector of the European Green Deal and Finnish development cooperation.  �   20 Table 3 The WaterFinns project portfolio during the evaluation period (2010–25)  �   24 Table 4 Themes and strategies of MFA support in the Water as a Natural Resource sub-sector.  �   28 Table 5 Most effective approaches, case examples and related findings  �   54 Table 6 Potential Finnish private sector opportunities in water sector interventions.  �   60 Table 7 Linking conditions of success and effective approaches  �   71 Table 8 Assumptions and logical steps in the theory of change for the Water as a Natural Resource sub-sector  �   93 Table 9 Structure of the proforma used to organise evidence in moderate studies  �   97 Table 10 Structure of the proforma used to organise evidence in intensive studies  �   97 Table 11 Overview of water sector arrangements per country  �   103 LIST OF BOXES Box 1 Nature-based solutions  �   41 Box 2 Payment for ecosystem services  �   41 Box 3 Community-based resource management  �   42 Acronyms and Abbreviations AI Artificial intelligence BLUE-ZAN Climate Resilience of Zanzibar with Integrated Marine Management and Sustainable Blue Economy CH4 Methane CO2 Carbon dioxide COWASH Community-Led Accelerated WASH (project, Ethiopia) EQ Evaluation Question EU European Union EUR Euro EVA-11 Development Evaluation Unit ICI Institutional Cooperation Instrument IUCN International Union for Conservation of Nature J6P Joint Six Programme LACC Local Adaptation to Climate Change project, Nepal Luke Natural Resources Institute Finland MFA Ministry of (Denmark, Netherlands) or Ministry for (Finland, Sweden) Foreign Affairs NRLAIS National Rural Land Administration Information System in Ethiopia ODA Official development assistance OECD Organisation for Economic Co-operation and Development OWNP One WASH National Programme (Ethiopia) PDR (Lao) People’s Democratic Republic PEACEPLUS EU-UK-Ireland-Northern Ireland funding body (for peace-building in the Island of Ireland) PIF Public Sector Investment Facility (Finland) REILA Responsible and Innovative Land Administration in Ethiopia RVWRMP Rural Village Water Resources Management Project (Nepal) RWSSP-WN Rural Water Supply and Sanitation Project in Western Nepal SAP Systems, Applications, and Products in Data Processing SDG Sustainable Development Goal sq. km Square kilometre SUSWA Sustainable WASH for All in Nepal Syke Finnish Environment Institute UN United Nations UNCCD United Nations Convention to Combat Desertification UNDP United Nations Development Programme UNECE United Nations Economic Commission for Europe UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNFCCC United Nations Framework Convention on Climate Change USD United States Dollar USSR Union of Soviet Socialist Republics (1922-1991) VTT Technical Research Centre of Finland WASH Water, sanitation and hygiene (sector) WSPST Water and Sanitation Programme for Small Towns in Vietnam Project WWF World Wide Fund for Nature ZAN-SDI National Spatial Data Infrastructure for Integrated Coastal & Marine Spatial Planning in Zanzibar VI EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES 1 Summary This document reports on an evaluation of work funded in 2010–24 by the Ministry for Foreign Affairs of Finland in the Water as a Natural Resource sub-sector of the Environment and Natural Resources policy priority area. It is part of a larger evaluation that also covers three other sub-sec- tors of the same policy priority area, these being: (i) Forests, Ecosystems and Biodiversity, (ii) Disaster Risk Reduction and Meteorology, and (iii) Clean Energy, Circular Economy and Critical Minerals. All four sub-sector studies aim to answer one summative question: “What results, includ- ing any realised or emerging impact, has Finland generated in this sub-sector during the period under evaluation?”, and one formative question: “What concrete and context-specific opportuni- ties, entry points and models are there for Finland for partnering with Finnish and local companies and economic actors within the sub-sector topic(s) in the next five years?”. All will support a later synthesis report. An updated theory of change in line with Finnish Water as a Natural Resource policy was prepared, based on MFA’s 2023 version and comprising logical steps from short- to medium- and long-range results. Other methods involved “moderate” desk studies, which used MFA evaluations and se- lected interviews, and “intensive” desk studies, which used all relevant documents and informants. Taken together, these examined a sample of 17 MFA-funded interventions chosen to cover all key aid instruments and respond to suggestions by the evaluation’s Reference Group. Evidence was compiled along with notes from interviews with expert knowledge-holders at public research institutions both Finnish (6) and non-Finnish (2), the Ministry for Foreign Affairs of Finland (14), Finnish consulting firms (5), international organisations (6), Finnish non-governmental organisa- tions (3), and private-sector actors both Finnish (3) and non-Finnish (2). All evidence was used to support the reporting of findings, conclusions and potential action points (see below). No major difficulties were encountered, and the only limitations are those inherent to sampling from a much larger portfolio of unique cases, such as the representativeness of the sample. 1EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES KEY RESULTS SUSTAINABLE DEVELOPMENT GOAL Answers to Evaluation Questions 1.1 (a, b, c) and 1.2 on results and impacts, induced changes and benefits/beneficiaries There is good evidence for five pathways within the theory of change being followed as a result of Finnish support, all with strong overall effectiveness. Enabling market-led waste plastic recovery and circular economy solutions. Finnish support contributed to preventing nearly 630,000 tonnes of waste plastic from entering tropical aquatic ecosystems in 2020–24 (RiverRecycle, Circulate Capital). The partners also built their capacity to prevent up to 13 million tonnes of plastic pollution by the early 2030s (SDG 14). This benefited local investment and public and ecosystem health, and demonstrated: (i) the creation of self-financing arrangements to reduce plastic pollution at scale; (ii) excellence in selecting business plans to address a key environmental problem; and (iii) the effective use of business development grants and catalytic blended finance (SDG 17). Promoting participatory spatial planning and tenure clarification. Finnish support enabled participatory planning of 342 sq. km of land and sea in Zanzibar (ZAN-SDI 2016–19, BLUE-ZAN 2023–27), and digital land registration in 106,538 sq. km of Ethiopia (REILA 2011–2028). This made it easier for local and national actors to plan, and to avoid potential conflict over natural resources (SDG 16), thus promoting sustainable land and water management and ecosystem protection (SDG 14, SDG 15). It was potentially transformative, since tenure security enables resource owners: (i) to invest long-term in their crops, waterways and ecosystems, with the option of using nature-based solutions to solve environmental problems; and (ii) to negotiate agreements with others, such as on payments for ecosystem services. Where ecosystems are owned or managed collectively, tenure security also allows for community-based resource management. owned or managed collectively, tenure security also allows for community-based resource management. Building capacity to deliver water, sanitation and hygiene services. Finnish support contributed to enhancing these services in some of the poorest regions of Ethiopia and Nepal (SDG 6, SDG 10). In Ethiopia, improved water supplies reached over 426,000 people while 150,000 school students as well as patients and staff at 138 rural health institutions gained new water and sanitation facilities (SDG 6) (COWASH 2011–25). In Nepal, well over a million people gained improved water and sanitation facilities, while more than 6.8 million lived in communities that achieved Open Defecation Free status (SDG 3), 14,000 gained access to arsenic-safe wells (SDG 3), livelihood gains reached 1.25 million (SDG 10), and health benefits included reduced waterborne disease, child mortality and improved nutrition from home gardens (SDG 3) (RWSSP-WN 2008–19, RVWRMP 2006–22, SUSWA 2021–27). Potentially transformative results included: (i) the embedding of Finnish-supported measures within Ethiopia’s One WASH National Programme and Nepal’s national water, sanitation and hygiene Management Information System; (ii) enduring institutional change at local government level, as policies, procedures and capacity for service delivery were increased at 104 woredas in Ethiopia and 157 municipalities in Nepal (SDG 6, SDG 16); and (iii) that local people and their institutions became better able to analyse climate change risks, and take action to protect themselves with locally-appropriate solutions (SDG 13, SDG 16, SDG 17). 2 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES KEY RESULTS SUSTAINABLE DEVELOPMENT GOAL Influencing policies, laws, practices and awareness. Finnish support: (i) allowed the Mekong River Commission (2010–15) to set up systems for managing knowledge, disputes and environmental impacts (SDG 14, SDG 15), and to recruit and train 111 junior professionals from its member countries; (ii) enabled the Nile Basin Initiative (1997–2010, and related projects to 2017) to build an effective regional institution, while Finland also financed many of its initial operations (SDG 17); and (iii) strengthened systems for policy development and knowledge sharing at the UN Desertification Convention (UNCCD 2001–17) and UNECE Water Convention (since 2012), including by mobilising incremental funding (e.g. USD 23.8 million for drylands) and supporting their institutional processes, strategic assessments and action plans (SDG 13, SDG 14, SDG 15, SDG 16, SDG 17). Potentially transformative results included: (i) greatly enhanced capacity at two regional institutions and two multilateral frameworks that are key parts of the global sustainable development architecture; and (ii) the growth of systemic Finnish influence in promoting water as a foundation for both environmental sustainability and peace. Encouraging, enabling, networking and incentivising Finnish private- sector actors. Finnish private-sector capacity expanded strongly after the Finnish Water Way in 2018, facilitated by clusters of expertise including the Finnish Water Forum which became a key platform for knowledge-sharing and consortium building. With MFA support of less than EUR 0.5 million annually, Forum members identified and acted upon EUR 777 million in viable commercial leads in 2020–24, with an active pipeline in 2025 (SDG 17). Potentially transformative results included: (i) that Finnish firms became better at identifying and acting on opportunities, often collaborating to secure projects in unfamiliar sub-sectors and locations (shown by their rapid response to the EU Water Expertise Growth and Export Programme in 2023–24); and (ii) that Finnish firms and consortia became more competitive in international cooperation and circular economy markets (SDG 12), aided by Finland’s strong reputation for water management expertise and by rising political priority for climate change adaptation at local, national and global levels. Cross-sectoral effects. The positive environmental results of Finnish interventions that protected ecosystems were likely amplified by cross-sectoral spillover effects. For example: (i) water interventions strengthened disaster risk reduction through water safety planning in Ethiopia and Nepal (COWASH, SUSWA) (SDG 13); and (ii) forestry interventions enhanced water security by protecting natural forests and improving forest cover in Lao PDR, Tanzania and Vietnam (see Forests, Ecosystems and Biodiversity report) (SDG 13). ‘Do no harm’. Negative or unintended effects were rare, and unexpected positive impacts included increased confidence and political participation among women in Nepal (RWSSP-WN, RVWRMP) (SDG 5). Beneficiaries of Finnish support. Rural households gained improved water and livelihood security (SDG 3, SDG 5, SDG 6), local and national governments and river-basin organisations gained capacity (SDG 16, SDG 17), and Finnish companies gained competitiveness and commercial opportunities (SDG 12). Contextual factors. Needs and opportunities in various contexts were shaped by factors such as Nepal’s federalisation process (from 2015), Ethiopia’s national water, sanitation and hygiene programme (from 2013), and rapid hydropower expansion in the Mekong Basin (from 2005). The ability of Finland’s cooperation professionals to adapt to these, and to combine technical expertise with diplomacy, contributed strongly to positive outcomes (SDG 13, SDG 15). 3EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES KEY RESULTS SUSTAINABLE DEVELOPMENT GOAL Answers to Evaluation Question 1.3 on most effective approaches The most effective approaches were those that embedded Finnish support within larger institutional, financial, and ecological systems. Seven such approaches are identified, based on their consistent effectiveness, impact, sustainability and likely cost-effectiveness in line with the theory of change. They variously cover the use of international partnerships for the two goals of leveraged financing and policy influence, national partnerships for policy influence, focused business development support, participatory spatial planning for avoiding conflict over renewable natural resources, incentivising cooperation among sub-sectoral actors, and targeting multiple policy goals through ecological design (SDG 14, SDG 15, SDG 17). Answers to Evaluation Question 1.4 on Finnish added value Finland brought four distinctive elements with practical results to the water resources sub-sector: (i) concern for universal inclusion and human rights that shaped water, sanitation and hygiene (SDG 5, SDG 6), spatial planning and policy development interventions; (ii) willingness to stay engaged in fragile and dynamic contexts to enable capacity and resilience building with institutional partners (SDG 16, SDG 17); (iii) strategic networking of actors to build collective knowledge and skills in detecting opportunities and forming consortia through which to exploit them (SDG 17); and (iv) integrating circular economy innovation (SDG 12), using dispersed but networked expertise and rights/gender equity, disabled and social inclusion-informed ecological approaches to link sustainability (SDG 13, SDG 14, SDG 15) with inclusion (SDG 5) and peacebuilding (SDG 16). These elements were deployed in various combinations, resulting in the strengths seen in the water resources portfolio. They complement other strengths (such as the normative effect of policy-development partnerships) that are important but not unique to Finnish development cooperation. Answer to Evaluation Question 2.1 on market conditions affecting Finnish private sector engagement There is a twofold message from the evidence assessed. The first part is that very few opportunities for Finnish private sector engagement were directly associated with traditional ODA interventions in the sub-sector, mainly because their rural locations in least-developed and lower-middle income countries deterred Finnish companies that were used to selling into more technology-responsive markets. The second part is forward-looking and more positive, since there was a decisive shift in enabling conditions from about 2018, including: (i) a more holistic approach to promoting all aspects of the water sector by government; (ii) strong signals and incentives by government for private companies to collaborate with each other and with non-commercial knowledge holders in exploring export possibilities; (iii) energetic promotion by government of trade and investment with former partner countries (and others) that had achieved middle-income country status or that had dynamic sectors matching Finnish technological offerings (e.g. in meteorology), and (iv) the development of increasingly well-organised knowledge and service networks in the water sector, in Finland, in other EU member states, and under EU auspices, that had become adept at competitive bidding for projects globally (SDG 9, SDG 11, SDG 12). Drivers of change from 2018-19 included a burst in public climate-change awareness across Europe, the European Green Deal, and the first round of Nationally Determined Contributions under the Paris Agreement. All pushed governments to pay more attention to climate change adaptation and water resource management, putting Finland in a strong position both diplomatically and from the strong capacity of Finnish companies to respond effectively. Competition is strong, however, as Finland is not alone in developing these capabilities. 4 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES KEY RESULTS SUSTAINABLE DEVELOPMENT GOAL Finland’s edge lies in niche technical expertise, resource-efficient and reliable solutions, and in an aptitude for partnerships and consortium-building. With these advantages Finnish interests may achieve considerable success in the expanding water resource markets of 2025–30. Meanwhile a number of specific prospects have been identified, including openings in EU-funded initiatives, circular economy projects in Vietnam, the Philippines and Indonesia (SDG 12), groundwater and forestry in Vietnam (SDG 6, SDG 13), and concessional financing under Public Sector Investment Facility agreements in Vietnam and Nepal (SDG 17). Answer to Evaluation Question 2.2 (a, b) on potential gains for Finnish businesses and development cooperation In the Finnish context, positive feedback between policies, networked institutional capacity, and the ability of companies to exploit opportunities is transforming the water resource sub-sector in ways that equally benefit business and development cooperation. Finnish companies experience both short- and long-term gains. In the short-term, platforms such as the Finnish Water Forum, targeted business support, and alignment with bilateral and multilateral programmes have yielded successes like Finnpartnership’s grants to RiverRecycle and the blended finance Circulate Capital case. In the longer term, Finland’s cooperative culture of consortium building and its post-2018 policies are positioning firms to compete in expanding global markets for water resource management, circular economic system investing and climate change adaptation (SDG 17). These partnerships add value for development cooperation by linking Finnish expertise to systemic challenges such as water pollution, unmet needs for water, sanitation and hygiene services (SDG 6), and inclusive water resource governance, thereby advancing ecological sustainability (SDG 13), inclusion (SDG 5), and other cooperation goals. Answer to Evaluation Question 2.3 on promising models for Finnish private sector engagement Finland has taken forward a comprehensive overall strategy in the water sector that included measures to encourage, enable and incentivise participation by private companies. This is achieving the desired results and may ultimately be the best way to promote private sector engagement. But within it there are three approaches that stand out in terms of delivering cost-effective impact: (i) leveraging international financial institutions to mobilise large-scale investment (SDG 17); (ii) building long-term partnerships with international organisations and national governments to shape policy (SDG 16); and (iii) providing targeted business development grants to scale up viable innovations (SDG 12). These approaches are all promising in view of their replicability, but certain conditions apply to their viability. Thus they must all be anchored in policy and institutional frameworks that make financing available, while well-established partnerships are needed for influence, and credible business models that target real needs are needed for commercial success. Adequate decision-making capacity is also needed to support wise choices on which proposals to support. Recent cuts to official development assistance budgets in several countries including Finland may compromise these conditions, but business development grants seem likely to remain attractive since they have a favourable ratio of cost/risk to potential impact. 5EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Conclusions 1. There were strong achievements in protecting environmental systems and improving social ones, with success stories in waste plastic recovery, water, sanitation and hygiene service delivery, and cooperative governance of spatial planning and resource tenure systems. 2. Support was most effective when deployed either in whole water systems within ecological and/or administrative boundaries, or by being influential within larger systems of national reforms, multilateral frameworks and market mechanisms. 3. The sustainability of results was uneven: while institutional reforms proved durable and cost-effective, ecological resilience measures remained fragmented and under-resourced, leaving achievements vulnerable to climate pressures. 4. After 2018 forum-based networking and whole-of-government coordination enabled Finnish private companies to identify, form consortia, and pursue international opportunities aligned with cooperation priorities. 5. Finnish added value lay in combining technical expertise, a cooperative governance culture, circular-economy innovation, and sustained engagement in fragile contexts to enhance inclusiveness, peacebuilding, and influence across sub-sectoral systems. 6. Finnish interventions generally ensured that benefits were realised as intended; unexpected negative effects were rare, while cross-sectoral spillovers – such as between forestry, water and disaster risk reduction – amplified overall influence. 7. Long-term bilateral partnerships yielded co-benefits of familiarity, trust, mutual learning and commercial opportunities, all of which can be lost if such engagements are reduced without putting in place alternative ways to sustain them. 8. Seven consistently effective and sustainable approaches were identified: leveraged finance, policy influence, national partnerships, targeted business support, participatory planning, institutional cooperation, and cross-sectoral ecological design. Potential action points 1. Identify measures to mitigate the loss of diplomatic and commercial co-benefits from reduced bilateral engagement, e.g. by twinning for accession to the UNECE Water Convention or through non-governmental organisation and university partnerships. 2. Strengthen water diplomacy capacity to identify and facilitate nature-based solutions and payment-for-ecosystem-service opportunities at national and subnational levels, drawing on existing Finnish and multilateral expertise. 3. Leverage Finland’s strong forum-based cooperation culture and particular technical strengths to participate more actively in dialogues on long-range ecological risks, including Arctic system tipping points. 4. Ensure that any significant opportunities identified for private sector engagement in the sub- sector are systematically tracked and disseminated across Team Finland actors. 5. Explore potential reform of MFA instruments to enhance flexibility, blended finance options, and inclusiveness of diverse actors, building on lessons from all instruments and actors in the sub-sectoral portfolio. 6 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES 2 Introduction 2.1 Purpose, objectives and scope This document reports the findings and conclusions of an evaluation of work funded by the Ministry for Foreign Affairs of Finland (MFA) in the Water as a Natural Resource sub-sector of the Envi- ronment and Natural Resources policy priority area. It is part of a larger Environment and Natural Resources evaluation that also encompasses three other sub-sectors: Forests, Ecosystems and Biodiversity, Disaster Risk Reduction and Meteorology, and Clean Energy, Circular Economy and Critical Minerals. This and the other sub-sector evaluations are to be used in support of a synthesis report which will present findings, conclusions and recommendations from the Environment and Natural Resources evaluation as a whole. The purpose of this evaluation is to provide the MFA and its stakeholders with information on the achievements, merits and worth of implementation of this policy priority area. The evaluation is to provide evidence-based recommendations on future directions for increased effectiveness for Finland to consider when it engages with this theme with a longer-term time perspective as well as inform MFA stakeholders about the achievements. The evaluation also aims to deepen under- standing of Finland’s contributions to the 2030 Agenda, particularly in relation to Sustainable De- velopment Goal (SDG) 13 (climate action), SDG 14 (life under water), and SDG 17 (partnerships for the goals). This sub-sector evaluation has both summative and formative dimensions. The specific objectives are: 1. To harvest and evaluate results (obtained and sustained), successes and challenges in achieving the objectives of the policy priority area and its sub-sectors (summative); 2. To present a synthesis of results and impacts, including early/emerging impacts (summative); 3. To identify and analyse opportunities, means and measures for engaging Finnish private sector actors into this work in the future (formative); 4. To provide realistic evidence-based policy and operational recommendations for the future, with due attention to the limitations in financial and human resources available (formative). This report focuses on results and impacts of MFA-supported interventions from 2010 to 2024 across the Water as a Natural Resource sub-sector, which overlaps extensively with the water, sanitation and hygiene (WASH) theme in development cooperation (see Section 2.2). It draws from a sample of MFA-funded projects and initiatives, and places particular emphasis on identifying lessons learned and good practices to promote private sector engagement. Otherwise the scope is as defined in the terms of reference, adapted and focused to the priority of understanding the achievements, impact and sustainability of MFA cooperation in the sub-sector. 7EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES In terms of the instruments used to support interventions in the sub-sector, the following were found to be most relevant and selected cases were examined: (i) bilateral support at the country level (mainly in Ethiopia and Nepal, but also in Kenya and Vietnam); (ii) civil society organisation support (directed to the Finnish Water Forum); (iii) multilateral support (with the UNECE Water Convention and a multi-bi investment through the Finland-International Finance Corporation Blended Finance for Climate Programme); (iv) regional cooperation (including with the UN Convention to Combat Desertification (UNCCD) in Western Asia and North Africa, the Mekong River Commission in the Mekong Basin of South-east Asia, and the Nile Basin Initiative); and (v) Institutional Cooperation Instrument (ICI) projects (for applied research and inclusive spatial planning in Zanzibar). Details of the specific cases are given in Table 1 below. The evaluation questions (EQ) addressed in the sub-sector evaluation are: EQ1: What results, including any realised or emerging impact, has Finland generated in this sub-sector during the period under evaluation? (summative) 1.1 What have been the most notable results and impacts? What relative change(s) resulted in the sub-sector through Finnish support during the period? Were there any unexpected and/or negative effects to the environment (do no harm)? 1.2 Who benefited, in what contexts, how and why (facilitating factors)? 1.3 What approaches have been particularly effective? 1.4 What has been Finland’s (context-specific) added value/comparative advantage in generating the results? EQ2: What concrete and context-specific opportunities, entry points and models are there for Finland for partnering with Finnish and local companies and economic actors within the sub-sector topic(s) in the next five years? (formative) 2.1 What type of markets, level of competition and local demand exists there for Finnish private sector funding, investments and/or solutions (products, services) in the sub- sector topic(s) in the locations assessed? 2.2 What are the foreseen gains to the Finnish companies in the short and long-term? What are foreseen benefits/results from such partnerships from the point of view of advancing of Finland’s development policy objectives? 2.3 What kind of concrete models/partnerships (e.g. clusters/consortia/coalitions/multi- actor partnerships) and instruments show best promise and viability, including possible funding sources for sustainable private sector business models, for accelerating private sector engagement for Finnish private sector actors? 8 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Table 1 Moderate and intensive studies of MFA-supported projects in the Water as a Natural Resource sub-sector INTERVENTION (ACRONYM, YEARS) INSTRUMENT (CATEGORIES FROM THE TERMS OF REFERENCE) IMPLEMENTING AGENCY AND MFA FINANCING GEOGRAPHY CONTEXT1 DEPTH OF STUDY Community-Led Accelerated Water Sanitation and Hygiene in Ethiopia Phases III & IV (COWASH, 2016–2024) Bilateral support Implementer: Ministry of Water and Energy (federal lead) and Water Resources Development Bureaus of Amhara, Benishangul-Gumuz, Oromia, Sidama, Southern Nations, Nationalities and Peoples’ Region, South West Ethiopia Peoples’ Region and Tigray National Regional States (regional leads). Finnish contribution: EUR 29.96 million (38% of the total in Phases III & IV; balance from the Government of Ethiopia and communities). Ethiopia Traditional Moderate Rural Water Supply and Sanitation Project in Western Nepal (RWSSP, 2008–2019) Bilateral support Implementer: District Development Committees of participating districts, Village Development Committees and communities through the Water and Sanitation Users’ Committees (pre-federalisation). Rural municipalities and municipalities (after federalisation). Finnish contribution: EUR 29.90 million (63% of the total in Phases I & II; balance from the Government of Nepal and local governments and communities). Nepal Traditional Moderate Rural Village Water Resources Management Project (RVWRMP, 2006–2022) Bilateral support Implementer: District Development Committees of participating districts, Village Development Committees and communities (pre-federalisation). Rural municipalities and municipalities (after federalisation). Finnish contribution: EUR 43.50 million (39% of the total in Phases I, II & III; balance from the Government of Nepal, local governments and communities, and EU in Phase III only). Nepal Traditional Moderate Support to Finnish Water Forum (2014–2024) Civil society organisation support Implementer: Finnish Water Forum. Finnish contribution: EUR 0.396 million (48% of the 2023–2025 programme; balance from membership fees, other ministries, Centres for Economic Development, Transport and the Environment and projects). Unspecified - Intensive 1 Context: Transitions from one context to another are not always clear and consistent. Thus the MFA definition of ‘transitional’ focuses on shifting from a development cooperation-based relationship to a private sector-based relationship, while the World Bank uses per-person Gross Domestic Product and the United Nations takes a wider basket of economic and human development indicators into account. Moreover, the dynamism of national economic systems does not always make for a simple progression, an example being Zambia which the World Bank demoted from the lower-middle to lower income category in 2022. Comparable ambiguity over economic status affects the status of Lao PDR. And the ‘conflictual’ context is also subject to radical change since, as seen since 2022 in Ukraine and elsewhere, it depends on military and peace-making initiatives by various stakeholders. 9EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Water and Sanitation Programme for Small Towns in Vietnam (WSPST, 2004–2017) Bilateral support Implementer: Ministry of Planning and Investment (Phase I), Ministry of Construction, Vietnam Development Bank, Provincial/Town People’s Committees. Finnish contribution: EUR 32.71 million (84% of the total; balance from the Government of Vietnam). Vietnam Transitional Moderate Support to the Convention on the Protection and Use of Transboundary Water Convention (UNECE Water Convention, 1992 onwards) Multilateral support Implementer: Water Convention Secretariat, United Nations Economic Commission for Europe, Geneva. Finnish contribution: EUR 0.2 million per year (core funding). Unspecified - Moderate Finland’s Support to the Mekong River Commission (MRC, 2005–2015) Regional cooperation Implementer: Mekong River Commission Secretariat, Vientiane. Finnish contribution: EUR 12.23 million (four programmes). Mekong, regional - Moderate Catalytic Support to the Convention to Combat Desertification (UN Convention to Combat Desertification) in W. Asia & N. Africa, Phase V (UNCCD, 2013–2017) Regional cooperation Implementer: UNDP Global Policy Centre on Resilient Ecosystems and Desertification, Nairobi. Finnish contribution: EUR 3.0 million. West Asia & North Africa, regional Includes conflictual Moderate Support to the Nile Basin Initiative (NBI, 1997–2021) Regional cooperation Implementer: Eastern Nile Technical Regional Office of the Eastern Nile Subsidiary Action Program, Addis Ababa. Finnish contribution: EUR 13.9 million (two programmes). East Nile, regional Includes conflictual Moderate Joint Six Programme (J6P, 2014–2021 and 6-month close- out phase) Bilateral support Implementer: Water Sector Trust Fund, Nairobi. Finnish contribution: EUR 16.875 million (42% of the total; balance from the Government of Kenya and Swedish International Development Agency). Kenya Transitional Moderate Sustainable WASH for all (SUSWA, 2021–2027) Bilateral support Implementer: Ministry of Water Supply and Municipal WASH Management Committees. Finnish contribution: EUR 9.0 million (29% of the total; balance from the Government of Nepal, local governments and communities, and EU). Nepal Traditional Intensive INTERVENTION (ACRONYM, YEARS) INSTRUMENT (CATEGORIES FROM THE TERMS OF REFERENCE) IMPLEMENTING AGENCY AND MFA FINANCING GEOGRAPHY CONTEXT1 DEPTH OF STUDY 10 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES River Cleaning as a Free Service (RiverRecycle, 2019 to date) Private sector instrument Implementer: RiverRecycle Oy. Finnish contribution: EUR 1.0 million (commercially sensitive; approximate total for two start-up grants). Indonesia, Philippines - Moderate Incr. Climate Resilience of Zanzibar with Integrated Marine Management and Sustainable Blue Economy (BLUE-ZAN, 2023–2027) ICI project Implementer: Syke. Finnish contribution: EUR 1.0 million. Tanzania Traditional Moderate National Spatial Data Infrastructure for Integrated Coastal & Marine Spatial Planning in Zanzibar (ZAN- SDI, 2016–2019) ICI project Implementer: Syke. Finnish contribution: EUR 0.7 million. Tanzania Traditional Limited Responsible and Innovative Land Administration (REILA, 2011–2024) Bilateral support Implementer: Rural Land Administration and Use Directorate of the Ministry of Agriculture. Finnish contribution: EUR 29.25 million (87% of the total in Phases I, II & III; balance from the Government of Ethiopia). Ethiopia Traditional Limited Local Adaptation to Climate Change (LACC, 2024–2029) Bilateral support Implementer: Ministry of Federal Affairs and General Administration, focal ministries of Karnali and Sudurpashchim Provincial Governments with Municipal User Groups or User Committees. Finnish contribution: EUR 13.0 million (26% of the total; balance from the Government of Nepal, local governments and communities, and EU). Nepal Traditional Limited Investment in Circulate Capital by the Finland-International Finance Corporation Blended Finance for Climate Programme (Circulate Capital, 2018 to date) Multilateral support Implementer: Circulate Capital. Finnish contribution: EUR 5.0 million (50% of investment; balance from the International Finance Corporation). Unspecified - Limited INTERVENTION (ACRONYM, YEARS) INSTRUMENT (CATEGORIES FROM THE TERMS OF REFERENCE) IMPLEMENTING AGENCY AND MFA FINANCING GEOGRAPHY CONTEXT1 DEPTH OF STUDY 11EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES 2.2 Approach and methods A theory-based, macro-level, realist evaluation The methodology is described in detail in Annex 1. It is focused on: (i) exploring beyond the pro- ject and programme level to shed light on aggregate and catalytic effects and synergies between actions, actors, instruments and policy-influencing activities within and across the sub-sector; and (ii) establishing how these encourage and enable wider changes at geographic, sectoral and/or institutional scales, including the role of private sector engagement and implications for the portfolio and policy level. It is therefore a ‘theory-based’, ‘macro-level’ and ‘realist’ evaluation: • theory-based, because it is built upon a theory of change for the sub-sector that indi- cates the logical connections between inputs and instruments, short-range, medi- um-range and long-range results, and impacts, and hence with an emphasis on the plausibility of assumptions and causal links between steps in the design logic; • macro-level, because it is focused on development cooperation across multiple inter- ventions, locations, and the 15 years 2010–2024; and • realist, because the whole study is embedded within a theory of change that is grounded in the large-scale, long-term development context that applies to those same multiple interventions, locations, and years. Macro-level effectiveness, impact and sustainability This focus on the macro level differentiates the approach from that of micro-level or interven- tion-specific evaluation. It rules out applying a detailed understanding of local context to help un- derstand patterns and themes, since local contexts cannot be aggregated but only generalised or used in examples. For the same reasons, the key Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee’s evaluation criteria of effectiveness, impact and sustainability have different meanings compared with their uses in intervention-specific evaluation.2 In the present macro-level context they are defined as follows: • effectiveness refers to the specific changes that occurred in a system during and as a result of particular kinds of MFA-supported interventions; • impact refers to the consequences of those specific changes for the system with which particular kinds of MFA-supported interventions were engaged; and • sustainability refers to the development of new outlooks, abilities, laws, budgets or administrative arrangements that are likely to promote the durability of those specific system changes after MFA’s eventual departure. 2 At the micro level, effectiveness refers to the delivery of results by an intervention, impact refers to the consequences of the results during the project, and sustainability refers to durable change induced by the project and likely to survive it. 12 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES The sub-sectoral theory of change The above makes clear that the sub-sectoral theory of change is of central importance to this eval- uation, since it allows performance to be judged in terms of changes that are in line with it and that contribute to the flow of results from short, medium and long-range to overall effects on achieving the SDGs and related objectives. An early step in the evaluation was therefore to develop an up- dated sub-sectoral theory of change (Figure 1). This is based on MFA’s existing theory of change and aggregate indicators for the Environment and Natural Resources policy area (2023a), and particularly its Outcome 5 Water: “All people have improved and equitable access to basic and sustainable drinking water, adequate sanitation services, and improved hygiene practices”. This was modified in light of relevant ecological principles and global good practice (such as those de- veloped to meet relevant SDG targets in this sub-sector, including SDGs 6.1–2, 6.5–6, 6.b; 12.2, 13.1, 13.3, 13.b; 14.1–2; 15.1–5, 15.9), and supported by assumptions listed in Annex 1. Successive Finnish development policies have been clear on the need for water resources man- agement to be integrated within countries and peaceful between them, for universal access to ef- fective WASH services, and for the wise use and protection of water catchment and water-bearing or aquatic ecosystems (see Section 3.2). This clarity of purpose has not been translated within MFA documents into an equally-clear theory of change for interventions in the water sector, or in the WASH or Water as a Natural Resource sub-sectors separately. The nearest available is in MFA (2023a, pages 14–15), which traces a wandering line from policy influences, including multilateral environmental agreements, SDG 6 commitments, and bilateral transboundary water agreements, to gender equity, disabled and social inclusion-compliant WASH services, household and community hygiene, climate-resilient WASH services and better drinking water supply. It then arrives at Outcome 5 as a contribution to climate change adaptation, climate change mitigation and sustainable use of natural resources. It also notes that the theory of change for forests and biodiversity promotes integrated water resources management, transboundary waters manage- ment and sustainable management of water catchments or ‘watersheds’, and that these are also inputs to the desired water sector outcome. The updated theory of change used here (see Figure 1) includes the delivery of safe drinking water as a key short-term result, but gender equity, disabled and social inclusion, sanitation, health and hygiene dimensions are excluded, being irrelevant to Water as a Natural Resource and implicit within WASH. The strategic impact sought by interventions in this theory of change is to achieve Water as a Natural Resource-related goals so that the vulnerability of all people to inadequate supplies of fresh, clean water is reduced, and the security of water supply for all uses is increased. Thus Figure 1 summarises the long-, medium- and short-range results to be anticipated from any intervention seeking to achieve this kind of strategic impact. 13EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Figure 1 Theory of change for the water sector and Water as a Natural Resource sub-sector Impact Figure 1 - Theory of Change: Water as a Natural Resource MFA instruments MFA inputs Achievement of WNR-related SDGs and MEA goals so that the vulnerability of all people to inadequate supplies of fresh, clean water is reduced and security of water supply for all uses is increased. Environmental: water bodies, wetland and catchment ecosystems managed and protected. Social: fair and secure access to regular, adequate and robust supplies of fresh, clean water. Cooperative: avoided or resolved transboundary issues that might compromise access to water. Economic: agricultural, industrial, urban, amenity and option values of water resources preserved. Strengthened institutions, policies, laws, practices and awareness. Water resources managed inclusively and sustainably to support economic systems. Fair and inclusive agreements on water use rights and catchment management responsibilities. Climate change effects anticipated and mitigated through management of water-bearing ecosystems. Knowledge on water-bearing ecosystems: catch- ments, waterways wetlands, aquifers. Knowledge on water governance: use rights and catchment manage- ment responsibilities and priorities. Knowledge on climate change effects: on water resources and on how to mitigate their impacts. Agreements to promote IWRM including PES and transboundary governance/management of water resources. Integrated management of water resources in WASH projects at adequate scale to maintain robust supplies. Improved community, public and private sector capacity to deliver basic and safely managed drinking water. (a) Bilateral support to partner countries (including regional cooperation); (b) Multilateral support (core funding and specific support to e.g. GCF, GEF, AfDB, IADB, NEFCO, multi-bi projects, loans, investments); (c) Private sector instruments (PSIs, including channels such as DevPlat, PIF, Finnfund, Finnpartnership); (d) Institutional Cooperation Instrument (ICI); (e) support to CSOs and international NGOs; and (f) EU development cooperation (including Global Gateway). Continued grant funding, investment capital, and policy and diplomatic engagement to promote Finland’s extensive water expertise in developing countries, drawing on close cooperation with companies, researchers and other administrative branches. Long-range results Medium- range results Short-range results Source: Evaluation team, based on the theory of change and aggregate indicators for water in the Environment and Natural Resources policy area in MFA (2023a) 14 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES A mixed-methods evaluation A mixed-methods design was adopted, tailored to each evaluation question (EQ). The core meth- ods used in every sub-sector evaluation, and adapted for use here, included: • Portfolio review. This involved mapping and screening MFA-funded interventions in the Water as a Natural Resource sub-sector (2015–2022), leading to the pre-selection of a wide sample of projects to be considered for assessment. • Desk studies. Moderate and intensive reviews were undertaken of project and pro- gramme documentation, including final and ex-post evaluations. Evidence was system- atically captured into searchable proformas (project results frameworks presented in Table 9 and Table 10) where it could be easily retrieved at any stage and by the entire evaluation team. A total of 17 interventions were reviewed in the sub-sector, of which four were the subjects of limited study, 11 of moderate study, and two were examined in greater depth through intensive studies (Table 1). • Interviews and survey. These were conducted with 15 policy-level, 20 interven- tion-level, and six private-sector knowledge-holders3 (Annex 5) to complement desk review findings, clarify gaps, and explore strategic and operational aspects, including private sector engagement. • Market analysis. Presented in Annex 3, this focuses on Nepal in line with the approach agreed during the inception phase of conducting one market analysis per sub-sector focused on a topic selected for intensive study. Here the focal topic was the ongoing (2021–27) Sustainable WASH for All (SUSWA) intervention, which provided an entry point for examining market conditions in Nepal. Additional evidence concerning the enabling environment for private sector engagement is presented where relevant in this report, drawing on interviews, desk studies, and additional data sources to assess private sector engagement trends, barriers, and opportunities within the sub-sector. • Like-minded peer country review. Presented in Annex 2, this examined strategies, instruments and delivery models used by various countries engaged in activities in the same sub-sector. The analysis aimed to identify lessons and contrasts with Finland’s approach, including areas of innovation and convergence. • Natural language processing. This was used to efficiently identify the most relevant sources of information for the sub-sector from a large volume of evaluation reports and documentation, especially during the inception phase. Together, these methods enabled the evaluation team to triangulate evidence across a wide range of sources, ensuring that conclusions are robust and grounded in multiple lines of inquiry. Consistency and comparability All four sub-sector reports addressed the same EQs and will contribute to the preparation of the synthesis report. To ensure comparability and enable aggregation across sub-sectors, all 3 These comprised individuals working at public research institutions both Finnish (6) and non-Finnish (2), MFA headquarters and embassies (14), Finnish consulting firms (5) and other private-sector actors both Finnish (3) and non-Finnish (2), international organisations (6), and Finnish non-governmental organisations (3). 15EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES performance judgements (i.e. on effectiveness, impact and sustainability) were required to be evidence-based and expressed in a standardised manner by using the following three-point scale as qualifiers where appropriate: • Strong performance – Finnish support was assessed as being successful in achiev- ing most (if not all) of its expected results, made a significant contribution to broader effects or impacts (i.e. through Finnish added value) and benefitted a substantial part of the intended target populations; • Moderate performance – Finnish support was assessed at being successful or at least partially successful in achieving several (but not all) of its expected results, con- tributed to broader effects or impacts (but only to a limited degree while the contribu- tion of others is likely to have been more significant) and benefitted the intended target populations; • Weak performance – Finnish support only achieved a small proportion of its expected results, likely did not contribute to broader effects or impacts (or only in a very limited and indirect manner) and did not manage to create any wider benefits for the intended target populations. The adoption of this limited range reflected the nature of the evidence available across the sub-sec- tor portfolio, which did not support finer distinctions. The same approach was applied across all the sub-sector evaluations to ensure coherence in synthesis. Throughout the reports, these as- sessments are put into context by a “realist perspective” offering insights on the circumstances and conditions in which Finland carried out its activities. In addition, further explanation is provided where needed to clarify specific cases or examples used as evidence, in particular where those might provide counter-examples and exceptions to the overall assessment, although these addi- tional descriptive terms informed the evidence base rather than the formal findings. The subject of the evaluation (and of each sub-sector) being particularly complex and broad, there is a wide range of variables and factors that impact on outcomes and broader effects. Therefore, the evaluation aims at providing evidence for Finnish contribution to these effects, rather than seeking to establish direct claims of attribution. Where a significant amount of Finnish funding was provided through multilaterals, international organisations and other partners, it was not possible to claim any effects as direct results of Finnish support. Finland’s share can, in fact, be relatively small, and – wherever feasible – the evaluation attempts to specify the (likely) weight of Finnish contribution in given contexts. For consistency, beneficiaries were defined as individuals and institutions who could reasonably be considered to have received some form of benefit from an action funded wholly or in part by the MFA. Benefits and beneficiaries are discussed in the findings in Chapter 4. 16 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES 3 Context Analysis 3.1 Global policy context and trends Global status of water as a natural resource The water sector is acutely problematic in many countries and is becoming more so with the degra- dation of catchment ecosystems and advancing climate change. Thus, “Freshwater use has been growing by just under 1% per year, driven by a combination of socio-economic development and related changes in consumption patterns, including diet. ... Roughly half of the world’s population currently experiences severe water scarcity for at least part of the year. One quarter of the world’s population face ‘extremely high’ levels of water stress, using over 80% of their annual renewable freshwater supply. ... Record rainfall extremes have been increasing worldwide, as have the fre- quency, duration and intensity of meteorological drought. Climate change is projected to intensify the global water cycle, and to further increase the frequency and severity of droughts and floods.” (UNESCO, 2024, p. 1). The figures for fresh water availability today are closely in line with United Nations (UN) predictions for the expected global expansion of rising national water deficits during this evaluation’s focal period of 2010–2025 (Figure 2). Figure 2 Water withdrawals as a percentage of total available water, 1995–2025 Source: UNEP-GRID Arendal (2009) 17EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES International agreements on water as a natural resource As difficulties and emerging crises in the availability of clean, fresh water have emerged worldwide, the international community has developed an array of goals and treaties to guide and coordinate corrective efforts. These include: • The Sustainable Development Goals, in particular SDG 6 (Water and Sanitation for All), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), SDG 14 (Life Under Water) and SDG 15 (Life on Land). Their associated targets all focus on meeting human needs fairly and sustainably at all levels, through wise and cooperative management of water and other renewable natural resources that depend on healthy ecosystems, while effectively addressing key threats to human wellbeing and security that arise from harm to such resources. • The European Union (EU) Water Framework Directive, which requires integrated river basin management, and aims to ensure clean rivers, lakes, ground water and coastal beaches throughout each member state. It sets high standards for river basin planning, and for the ecological quality and chemical purity of surface and ground waters. A Common Implementation Strategy requires each member state to make and measure progress and exchange lessons with each other and the European Commis- sion, thus providing a standard model for other treaties (such as the UNFCCC Paris Agreement) and an influential ‘gold standard’ for Water as a Natural Resource. • Water-related multilateral environmental agreements, including: (i) the Convention on Biological Diversity (Rio 1992), which inter alia promotes nature-based solutions to global water challenges and threats to inland water systems; (ii) the United Nations Economic Commission for Europe (UNECE) Water Convention,4 which encourages sustainable management of shared water resources, regional integration, and conflict prevention; (iii) the Bonn Convention,5 which is key to protecting wetlands and river/ lake systems that support migrating populations of waterfowl and aquatic organisms; (iv) the Convention on Wetlands,6 which fosters the protection of seasonal and tidal wetlands; (v) the UNCCD,7 which furthers action to combat desertification and mitigate the effects of drought; and (vi) the UNFCCC8 (Rio 1992), which provides the foundation for multilateral action to combat climate change and its impacts on humanity and eco- systems. 4 Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Helsinki 1992). The Watercourses Convention (Convention on the Law of the Non-Navigational Uses of International Watercourses, New York 1997) supports the UNECE Water Convention by validating key principles and compiling relevant international law but lacks specific implementation mechanisms such as a secretariat or decision-making conferences. 5 Convention on the Conservation of Migratory Species of Wild Animals (Bonn 1979), which is particularly relevant to transboundary water agreements and where dams are being built on rivers, as was the case in the Mekong Basin during MFA’s support for the Mekong River Commission. 6 Convention on Wetlands of International Importance Especially as Waterfowl Habitat (Ramsar 1971), driven by the knowledge that wetlands are key to many ecosystem goods (such as biodiversity, fisheries and amenity) and services (such as flood control, groundwater recharge and carbon storage). 7 United Nations Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or Desertification, Par- ticularly in Africa (Rio 1992), which encourages and enables the development of drought early warning systems, vulnerability and risk assessments, and practical drought risk mitigation measures involving sustainable irrigation and water harvesting schemes, drought-tolerant crops, crop insurance schemes and alternative livelihoods. 8 United Nations Framework Convention on Climate Change (Rio 1992), which has a twin focus on reducing net greenhouse gas emissions (‘mitigation’) and on strengthening social and ecological systems against the impacts of climate change (‘adaptation’). The latter includes actions such as developing national hydrological maps and Water as a Natural Resource models, defining indicators for the health of water catchment ecosystems, diversifying water supply and storage systems, and developing legal and institutional frameworks for effective Water as a Natural Resource management, for all of which countries define targets. 18 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Role of EU in water as a natural resource The EU dimension is imperfectly visible in the MFA portfolio data, since inter alia: (a) Finland’s financing of the European Bank for Reconstruction and Development is recorded as multilateral support to an international financial institution; (b) Finland’s financing of the Institute for European Environmental Policy is recorded as support to civil society organisations; (c) Finland’s share of the EU development cooperation budget is not managed by MFA and is recorded as other official development assistance (ODA) disbursements; (d) it is not clear how Finland’s contributions to the EU’s Neighbourhood, Development and International Cooperation Instrument or the European Development Fund are recorded, and (e) OpenAid entries for Finnish contributions via the Global Gateway contain no data. Thus, Finland’s share of EU ODA is only visible as its total amount in the Finnish ODA statistics, and therefore it is not possible to determine how much of the Finnish contribution to the EU budget has been allocated to any sub-sector. The relationship between Finland and the EU is nevertheless deep, complex and influential within the sub-sector, both in funding and policy terms. Table 2 highlights areas of synergy between the European Green Deal and recent Finnish development policy. The practical effects of this conver- gence in the Water as a Natural Resource sub-sector mean that the EU is mentioned repeatedly in this report, with reference to: (i) the Water Framework Directive (e.g. mutual influence with the Finnish Water Way in favour of bioregional holistic treatment of water-bearing ecosystems and groundwaters); (ii) the co-financing of specific interventions (e.g. of Phase III of the Rural Village Water Resources Management Project, Sustainable WASH for All, and Local Adaptation to Climate Change, all in Nepal, and of a potential groundwater recharge management project in Vietnam); (iii) the development of private sector engagement (e.g. the emerging role of the Global Gateway, and funding from the EU’s Water Expertise Growth and Export Programme for water sector pro- jects by Finnish companies within – and in some cases outside – the Finnish Water Forum); and (iv) support for EU Special Representatives in trans-border water disputes through the Water for Peace network of Finnish Water Diplomacy. Collaboration between Finland and the EU is likely to grow and diversify in coming years. For example, Finland participates in the implementation of the Global Gateway strategy that was launched in 2021 (see Section 3.4). 19EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Table 2 Priorities relevant to the Water as a Natural Resource sub-sector of the European Green Deal and Finnish development cooperation. EUROPEAN GREEN DEAL FINNISH DEVELOPMENT COOPERATION Water and ecosystems. “Ecosystems provide essential services such as food, fresh water and clean air, and shelter. They mitigate natural disasters, pests and diseases and help regulate the climate. ... The EU and its global partners need to halt biodiversity loss [from] worldwide erosion of biodiversity, caused primarily by changes in how land and sea are used, direct exploitation of natural resources, and with climate change” (EC, 2019, p. 13). Water and food. “Food production still results in air, water and soil pollution, contributes to the loss of biodiversity and climate change, and consumes excessive amounts of natural resources. ... Measures such as eco-schemes should reward farmers for improved environmental and climate performance, including managing and storing carbon in the soil, and improved nutrient management to improve water quality and reduce emissions.” (EC, 2019, pp. 11–12). Water and pollution. “Creating a toxic-free environment requires more action to prevent pollution from being generated as well as measures to clean and remedy it. To protect Europe’s citizens and ecosystems, the EU needs to better monitor, report, prevent and remedy pollution from air, water, soil, and consumer products. ... To address these interlinked challenges, the Commission will adopt in 2021 a zero pollution action plan for air, water and soil. The natural functions of ground and surface water must be restored. This is essential to preserve and restore biodiversity in lakes, rivers, wetlands and estuaries, and to prevent and limit damage from floods. ...The Commission will propose measures to address pollution from urban runoff and from new or particularly harmful sources of pollution such as micro plastics and chemicals, including pharmaceuticals. There is also a need to address the combined effects of different pollutants.” (EC, 2019, p. 14). Water, digitalisation and the green transition. “The Commission will explore measures to ensure that digital technologies such as AI, 5G, cloud and edge computing and the internet of things can accelerate and maximise the impact of policies to deal with climate change and protect the environment. Digitalisation also presents new opportunities for distance monitoring of air and water pollution, or for monitoring and optimising how energy and natural resources are used.” (EC, 2019, p. 9). “Finland promotes the sustainable management, use and protection of renewable natural resources and ecosystems, including forests and water resources, and the halting of desertification and soil degradation. ... Peaceful transboundary water resources management is part of Finland’s foreign and development policy. ... Climate change and biodiversity are considered as a whole. Diverse, well-functioning ecosystems store carbon and are vital for climate change mitigation as well as for ensuring food and nutrition security, clean air and water access. ... Boosting circular economy systems is taken into account in development policy and development cooperation, including efforts to strengthen food and nutrition security, agriculture and sustainable use of natural resources. Sustainable management of waste and chemicals is an essential element of a circular economy.” (MFA, 2021, p. 13) “Climate change and biodiversity loss are global problems and their mitigation and prevention require closer international cooperation. The ongoing economic transition to a production model that is not based on fossil fuels and overconsumption of natural resources creates high demand for clean energy, environmental technology and bioeconomy and circular economy solutions.” (MFA, 2021, p. 18). “Climate change, biodiversity loss and pollution affect all countries. ... Finland supports the efforts of developing countries in the mitigation of climate change and adaptation to it, and halting biodiversity loss in accordance with its international obligations. International climate targets also create markets for environmental and climate technology and increase demand for the products and solutions of Finnish companies. Development funding can be allocated to companies that develop innovative technologies and service models for developing markets. ... Sustainable forest management mitigates climate change and helps to adapt to it.“ (Government of Finland, 2024, p. 27). “Finland has world-class expertise in digital transformation. ... Relevant expertise can be found in both the public and private sector, and include expertise in connectivity, cybersecurity, digital public services, data economy, smart cities, innovation ecosystems, Geographic Information Systems, e-learning and digital skills. Competitive expertise also includes digital solutions in support of the green transition.” (Christensen et al, 2025, p. 38) Source: references within table 20 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Emerging science of a climate emergency The biosphere encompasses all places where life exists on Earth, from deep underground to high in the atmosphere. All life exists within ecosystems, and water is essential to all life, so there is a close relationship between water and the integrity of ecosystems (Caldecott, 2009). Water avail- ability is a function of how ecosystems work, at all scales up to and including the biosphere, with pervasive cycles of water changing back and forth among its three phases (gas, liquid, solid) and flowing between locations and ecosystems under the influence of heat arriving from the sun. All major Earth systems (such as the oceans and atmosphere and their currents, major biomes like forests and grasslands, and large river basins and polar regions) are now under severe stress (Richardson et al., 2023). A leading factor is solar heat trapped on Earth by the greenhouse effect driven by greenhouse gases in the air, including carbon dioxide (CO2) and methane (CH4) which in recent decades have been released by human activities at rates that far exceed the biosphere’s ability to render them safe. The result is global heating and climate change, and the approach of stressed Earth systems to their tipping points (Lenton et al., 2018; Caldecott, 2022; Kemp et al., 2022; McKay et al., 2022; Rockström et al., 2024), at least one of which – that of warm-water coral reef survival – may now have been reached (Lenton et al., 2025). Of particular urgency is that the Arctic Ocean is likely to be effectively ice free in summer by about 2032. The exceptional heat-wave experienced by the Nordic countries in July 2025 is one sign of this coming about (Niranjan, 2025). Since ice takes 80 times more heat to melt than water takes to heat up, an ice-free ocean will heat rapidly in the summer months. This would be expected to accelerate the release of methane that is currently stored as frozen clathrate in shallow sea-beds or available for release through bacterial metabolism from melting permafrosts. Were these sources to be fully mobilised, they would release hundreds of billions of tonnes (hundreds of gigatonnes) of CH4, which is about 86 time more potent as a greenhouse gas than CO2 over 25 years. Thus one gigatonne of methane released in a year could greatly exceed the combined heating effect of all other greenhouse gases released in that year. Even a small share of this methane escaping into the atmosphere each year in 2030–50 could therefore overwhelm all current net zero plans. Assessing this risk and finding ways to recapture methane at scale from the open air would be wise precautions. Since all Earth systems are connected and influence one another, a cascade of tipping points is dis- tinctly possible, with potentially catastrophic consequences for life on Earth. Human beings evolved during the last 250,000 years of the Ice Ages, under very unstable climatic conditions. Hence we are flexible and robust, but even we have adaptation limits and these could be challenged over much of the world’s surface in coming decades. This is an essential biophysical context for thinking about Water as a Natural Resource issues, in which climate change adaptation and disaster risk reduction are necessary elements in a strategy to increase the resilience of human communities and populations to increasing hazards. 3.2 Finnish policy and institutional context Finnish policies shaping development cooperation in the sub-sector The abundant availability of clean, fresh water has an important place in Finnish peoples’ sense of well-being, and an ethical commitment to help others share this well-being has ensured that 21EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES substantial Finnish ODA has been dedicated to the water sector. This has taken the form of di- verse project-delivery and enabling water sector interventions since the start of Finland’s official aid programming in the 1990s (Matz et al., 2010). Successive Finnish development policies were thereafter clear: (i) that “balanced and integrated management of water resources is a prerequisite for ensuring the various needs for the use and protection of waters as well as human well-being” (MFA, 2012, page 38); (ii)  that “Finland’s actions strive to promote that peoples possibilities to produce or buy food have improved; the number of people with access to high-quality water supply has increased and more people have access to and use decent toilets” (MFA, 2016, page 22); and (iii) that “Finland promotes the sustainable management, use and protection of renewable natu- ral resources and ecosystems, including forests and water resources ... Peaceful transboundary water resources management is part of Finland’s foreign and development policy” (MFA, 2021, page 13). These commitments and associated priorities provided the context for the summative (retrospective) aspects of the present evaluation. There was a significant change in context in 2024, however, when new policy called for increased Finnish private sector engagement in development cooperation. Specifically, a policy analysis by Government of Finland (2024) focused on the fact that transitions now underway in many coun- tries, towards sustainability and circularity in all aspects of the economy and the use of all natural resources, contain within them “significant opportunities for Finnish companies” (page 18). This policy advance was followed in 2024–25 by major cutbacks in ODA by the United States, United Kingdom, Germany and Canada (Huckstep et al., 2025). This also happened in Finland (Ranta & Kaskinen, 2024) where, following steady growth in ODA appropriations in 2016–2021 (MFA, 2022, p. 13), cuts were announced in 2024 to MFA’s ODA budget for 2024–28 that included EUR 500 million from country-specific and regional cooperation, EUR 60 million from multilateral coopera- tion, EUR 130 million from humanitarian aid, and EUR 240 million from loan-based development financing (YLE News, 2024). A further EUR 50 million cut in ODA was announced in 2025 (Helsinki Times, 2025). These events add urgency to the quest for a greater private sector engagement role, as well as the knowledge that past assumptions about ODA commitments and relationships involving any country are no longer necessarily valid. This new situation is the context for the formative (for- ward-looking) aspects of the present evaluation. The aim going forward, therefore, is to harness the creativity of the Finnish business sector to speed progress in effective but also sustainable and profitable ways, and especially in all sectors where Finland has a competitive advantage. So the forward-looking elements of this report give specific attention to the potential for Finnish private sector engagement in the sub-sector. Finnish institutions responsible for development cooperation in the sub-sector The theory of change for the sub-sector is complex and involves multiple parallel and inter-con- nected pathways of cause and effect within systems that embrace land use within water catch- ments, the treatment of surface and sub-surface waters, and the operation of service-delivery systems, all of them subject to human decisions and dependent on the capacity of responsible institutions. Sub-sectoral concerns therefore permeate many aspects of development coopera- tion both as a focus and as a cross-cutting objective linked to multiple environmental and social dimensions. 22 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Although MFA is ultimately responsible for Finnish ODA spending on Water as a Natural Resource, supported by departments and units with necessary expertise,9 various other actors also have key roles. In terms of overseas implementation, among public institutions these include: (i) Finnish re- search centres10 and universities with Water as a Natural Resource interests and expertise11 that carry out ICI projects or participate in applied research in support of Water as a Natural Resource interventions in target countries; (ii) Finnish non-governmental organisations such as WaterFinns and the World Wide Fund for Nature (WWF) Finland and international organisations including the International Union for Conservation of Nature (IUCN); and (iii) participants in Finnish water diplo- macy12. The ministries in the water diplomacy group13 also collaborate in leading and managing the Finnish Water Way, which has a key role in orchestrating Finland’s internal and international Water as a Natural Resource strategy. Integral to it is the Water Stewardship Commitment (Vesivastuusi- toumus) by which institutions promise to help reach the goal of Finland’s and Finnish companies’ having the highest level of water responsibility in the world by 2030. Also spanning both internal and external dimensions, as well as the interface between the public and private spheres, is the Finnish Water Forum14 which features prominently throughout this report. A similar spanning role is also taken by the Finnish consulting firms, which advise internal Finnish stakeholders (including municipal and regional governments and Centres for Economic Development, Transport and the Environment) and also often manage MFA-funded overseas development cooperation projects such the bilateral interventions in Table 1. In addition to governmental and research actors, Finnish non-governmental organisations also contribute to the sub-sector, both through direct interventions and by building the human resource base for future cooperation. Two Finnish non-governmental organisations were investigated by the Water as a Natural Resource evaluation team: WWF Finland and WaterFinns. Interviewees confirmed that water comprises a relatively small (although strategic) part of WWF Finland’s MFA- funded programme portfolio, since its main focus during the evaluation period was on forests and community forestry, climate change adaptation and governance (WWF Finland, 2025). With resources from MFA, WWF Finland has supported the WWF network’s efforts on freshwaters, in collaboration with: WWF Bolivia, for which protection and management of the Rio Blanco RAMSAR site is a focus; WWF Tanzania, which has a major intervention based on a ‘water tower’ approach in the East Usambara Mountains; WWF Nepal’s Indrawati sub-basin project; and the Living Him- alayas Initiative of WWF-Bhutan/-India/-Nepal, which sees water as the ‘currency’ of regional transformation. The International Cooperation Programme Director of WWF Finland (like several 9 Including the units for Climate and Environmental Diplomacy and Development Finance and Private Sector Cooperation in the Department for Development Policy, geographical departments, and special advisers and counsellors at Finland’s embassies abroad. 10 Including the Finnish Meteorological Institute, Geological Survey of Finland (GTK), Natural Resources Institute Finland (Luke), Finnish Environment Institute (Syke) and Technical Research Centre of Finland (VTT). 11 Including Aalto University, Kajaani University of Applied Sciences, Oulu University of Applied Sciences, University of Helsinki, Häme University of Applied Sciences, University of Eastern Finland, Lappeenranta University of Technology, Laurea University of Applied Sciences, University of Oulu, Savonia University of Applied Sciences, Environmental School of Finland, Tampere University of Technology, Turku University of Applied Sciences, and the University of Turku. 12 MFA hosts the Centre for Peace Mediation which has a leading role in the Water for Peace initiative through the Special Envoy for Water, but works in partnership with all five ministries responsible for the Finnish Water Way. 13 These include MFA itself, the Ministry of Agriculture and Forestry (which also handles transboundary Water as a Natural Resource relationships with Finland’s neighbours and collaboration on the Water-Food-Energy-Ecosystems Nexus with the secretariat of the Water Convention), the Ministry of Economic Affairs and Employment, the Ministry of the Environment, and the Ministry of Social Affairs and Health. 14 The Finnish Water Forum is funded partly by MFA (the largest public contributor), partly by Ministry of Agriculture and Forestry, Min- istry of Social Affairs and Health and Ministry of Environment, partly by membership fees, and partly (increasingly in recent years) by charges levied on development cooperation (not always Finnish) and other projects in which it participates. As of Sep 2022 the Forum had 133 members, 80% of them private water sector companies and the rest comprising the five Water Way ministries, five key research institutions (footnote 10), 14 universities (footnote 11), and various non-governmental organisations, trade associa- tions and the Finnish Innovation Fund (Sitra, which is a leading actor in promoting the circular economy). 23EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES other interviewees in senior positions, including the Special Envoy for Water) is an alumnus of WaterFinns, a charity that exists to help early-career Finns to gain experience in the water sector. It does this using its own field projects, which are 85% funded by MFA and have been located in Nepal, Vietnam, Tanzania and Ethiopia where long-term Finnish bilateral projects were underway (Table 3). The WaterFinns portfolio is an important complement to MFA’s Water as a Natural Re- source portfolio, and through its strategic contribution to career establishment has had a vital role in building Finnish competence in the sub-sector. Table 3 The WaterFinns project portfolio during the evaluation period (2010–25) PROJECT LOCATION, DATES, LINK PROJECT AIMS Nepal (2025–28), Climate Smart WASH To improve the management of water resources, reduce the adverse impacts of climate change and improve the level of water supply and sanitation in Devchuli Municipality, Nepal. Nepal (2023–25), WASH Model Village To capacitate rural communities and Devchuli Municipality to reach Nepali national total sanitation standards, and to demonstrate replicable procedures for reaching total sanitation at community and municipality level. Ethiopia (2021–24), Halaba zone To improve access to drinking water for over 18,000 people by rehabilitating three water supply schemes in three villages in Halaba zone, Southern Nations, Nationalities and Peoples’ Region (SNNPR), Ethiopia. Nepal (2019–21), Navalparasi To provide a sustainable, community-maintained and healthy water supply alongside better sanitation. Vietnam (2017–19), Lao Cai Province To build water distribution systems in two communes (Hop Thanh and Ta Phoi), and to introduce ways to monitor water quality. Nepal (2014–19), Navalparasi & Palpa To continue previous WaterFinns involvement in WASH sector development in Nepal, focusing on six villages in the ‘Lumbini- zone’ of Western Nepal. Tanzania (2012–15), Mtwara Rural District To improve the sustainability of water supply and sanitation in selected villages through user-managed water supply systems. Vietnam (2012–15), Lao Cai Province To improve community health amongst ethnic minorities by promoting hand-washing and other hygiene behaviour change. Nepal (2010–14), Kanchanpur To research and implement sustainable water supply solutions in areas with arsenic-rich groundwater, and to enhance sanitation conditions in target villages. Source: http://waterfinns.fi/#projects This complex ‘ecosystem’ of public and private actors in the Water as a Natural Resource sub-sec- tor, like the diverse actions that they undertake, is resistant to being meaningfully aggregated and simplified, and this helps to shape how the findings of this evaluation are presented in Chapter 4 below. 24 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES http://waterfinns.fi/#projects 3.3 Portfolio review Main features of the water as a natural resource portfolio Quantitative portfolio data of ODA commitments in the Environment and Natural Resources policy priority area in 2015–22, that was made available to the evaluation, indicate a total commitment of EUR 967.72 million.15 Of this sum, 43% was made to ‘general’ interventions that do not clearly fall under any of the four sub-sectors but were distinctly related to Environment and Natural Re- sources and/or climate change (Figure 3a). Excluding them clarifies that water is the third-largest sub-sector within the Environment and Natural Resources portfolio under review, with commitments amounting to EUR 74.45 million between 2015 and 2022 (Figure 3b). Figure 3 Water as a Natural Resource portfolio share from Environment and Natural Resources portfolio (commitments, EUR million) 420.39 246.65 147.01 74.45 50.44 28.78 Portfolio per SS ('general' included) General Energy Forestry Water DRR/M Private Sector 246.65 147.01 74.45 50.44 28.78 Portfolio per SS ('general' excluded) Energy Forestry Water DRR/M Private Sector 420.39 246.65 147.01 74.45 50.44 28.78 Portfolio per SS ('general' included) General Energy Forestry Water DRR/M Private Sector 246.65 147.01 74.45 50.44 28.78 Portfolio per SS ('general' excluded) Energy Forestry Water DRR/M Private Sector (a) Portfolio by sub-sector (‘general’ included, commitments in EUR million (b) Portfolio by sub-sector (‘general’ excluded, commitments in EUR million)) Source: MFA/evaluation team Only interventions explicitly focused on Water as a Natural Resource are used in the following portfolio analysis, along with those that had a distinct private sector emphasis within the sub-sec- tor. This sub-sector does not have any further subdivisions. Interventions that focused solely on sanitation and hygiene aspects of WASH without a clear link to Water as a Natural Resource were excluded from the portfolio, in accordance with the scope defined in the terms of reference. Figure 4 shows a decline in Water as a Natural Resource commitments in the period 2015-18, coinciding with the closure of a number of water-related programmes (e.g. in Vietnam in 2017, UNCCD support in 2017, and Mekong River Commission support in 2015). A similar picture is seen in the Forests, Ecosystems and Biodiversity sub-sector, where the same period was marked by the closure of many more programmes, including three in Zambia in 2017–19, two in Vietnam in 2018, at least three in Lao PDR (People’s Democratic Republic)/Mekong in 2015–19, and two in 15 Finland’s exclusive ODA budget is administered by the MFA and excludes Finnfund investments. 25EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES the Americas in 2016 (see Forests, Ecosystems and Biodiversity report). That all these ‘ecological’ (water and ecosystem) interventions ended at a similar time suggests a change in direction by the Finnish government in general and MFA in particular. The 2015–19 period in fact coincides with the time in office of the Sipilä government, which had a more ‘technological’ and ‘bioeconomy’ focus on a ‘fourth industrial revolution’ (e.g. Sipilä, 2016) than an ‘ecological’ one (NAO, 2019). It fell from power in 2019 at least in part because it was perceived as responding inadequately to global envi- ronmental issues, specifically climate change which was then a very potent issue in European and Finnish politics (Palonen, 2020). Ironically, a circular bioeconomy focus later became recognised as a key part of the solution to global sustainability (see Section 3.2 and Finding 15), and the 2018 Finnish Water Way itself had a deep influence in the Water as a Natural Resource sub-sector (see Section 3.2 and Findings 6, 11 and 15). In any case, an inverse effect was seen in the Disaster Risk Reduction and Meteorology and Energy, Circular Economy and Critical Minerals sub-sector portfolios (see the respective sub-sector evaluation reports), which show increased commitments in 2015–19 consistent with a more ‘technological’ approach to development cooperation. Figure 4 Water as a Natural Resource commitments in 2015–2022 (EUR million) 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 2015 2016 2017 2018 2019 2020 2021 2022 Figure 4 Source: MFA/evaluation team Figure 5 illustrates the net effect of refocusing MFA’s major commitments in the Water as a Natural Resource sub-sector from a range of countries (Vietnam, Kenya, Zambia, Uganda, Ethiopia, Nepal) and regions (Mekong, Nile, North Africa) to only two (Ethiopia and Nepal). It also shows the effect of expanding commitments in Ethiopia and Nepal in around 2019, which in turn responded to the Finnish success in Ethiopia by integrating their WASH activities within the One WASH National Programme in 2017 (COWASH, 2022, p. 66) and in Nepal by adapting effectively to the post-2015 federalisation process (and especially the post-2017 election period), which also attracted very strong counterpart support (Finding 3) and later EU co-financing (Table 1). In other words, MFA responded to its own successes and the enthusiasm of partner governments by investing more in these two focal countries while disengaging elsewhere. 26 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Figure 5 Water as a Natural Resource portfolio by country (%) 67% 22% 2% 2% 2% 5% Figure 5 Ethiopia Nepal Tajikistan Viet Nam Uzbekistan Other * Category “Other” includes country-specific commitments < EUR 1 million. Source: MFA/evaluation team Figure 6 shows the clear dominance of bilateral support in the period concerned, which grew as major regional and multilateral commitments and minor bilateral ones declined and the two major bilateral programmes (in Ethiopia and Nepal) continued. Small (but strategic) multilateral support and non-governmental organisation commitments also continued – especially to the UNECE Water Convention and the Finnish Water Forum – as did a portfolio of small (but effective) ICI and private sector (especially Finnpartnership) interventions. Figure 7 that follows does not quite reflect the events known to have occurred in the sub-sector (see Table 4) – for example, showing 100% of commitments being bilateral in 2015, a complete lack of multilateral support in 2017 and a large dominance of ICI in 2021. These are presumed to be artefacts of the selection of interventions for examination, and differences between commitments and expenditures in any given year. Figure 6 Water as a Natural Resource portfolio per instrument (%) 86% 8% 3% 2% 1% Figure 6 Bilateral support Institutional Cooperation Instrument Support to civil society organisations Multilateral support Private sector instruments Source: MFA/evaluation team 27EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES Figure 7 Use of instruments over time in Water as a Natural Resource (%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 2016 2017 2018 2019 2020 2021 2022 Figure 7 Private sector instruments Multilateral support Support to civil society organisations Institutional Cooperation Instrument Bilateral support Source: MFA/evaluation team The sub-sector portfolio examined As described in Section 2.2 and Annex 1, the proforma technique was applied to selected past (since 2010) and ongoing (in 2025) interventions in the Water as a Natural Resource sub-sector. Table 4 presents all interventions examined in this way, organised according to four distinct strate- gies of engagement that emerged from the review. Each has a descriptive statement of its theme, a thumbnail portrait of its strategy, a note on how it relates to the sub-sectoral theory of change, and a list of the unique cases that were judged to be following that strategy. Table 4 Themes and strategies of MFA support in the Water as a Natural Resource sub-sector. THEME 1. ENTERPRISE PARTNERSHIPS Strategy. To bring together financial, intellectual and institutional capital in a way that stimulates and responds to Finnish enterprise in creating new business opportunities that also contribute to Finnish Environment and Natural Resources goals. Links to theory of change. Connects short-range results (ecosystem knowledge, water governance knowledge, resilience knowledge) to medium-range results (institutional improvements, economic improvements) and onward to long-range results (economic systems) and SDG/multilateral environmental agreement impact. Cases. (i) Support to the Finnish Water Forum (2009–25, 4 ministries – MFA, Ministry of Agriculture and Forestry, Ministry of Social Affairs and Health, Ministry of Environment). (ii) RiverRecycle Oy (Finnpartnership, ca 2020–23). (iii) Circulate Capital, Finland-International Finance Corporation Blended Finance for Climate Program, ca 2020–2023). 28 EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES EVALUATION ON FINLAND’S DEVELOPMENT COOPERATION IN ENVIRONMENT AND SUSTAINABLE USE OF NATURAL RESOURCES, AND PRIVATE SECTOR OPPORTUNITIES THEME 2. WASH PARTNERSHIPS Strategy. To concentrate resources to enable improved WASH services under accountable local governance within a small number of partner countries (by today’s date only Ethiopia and Nepal). They are further focused within subnational regions, often particularly challenging ones where change is most needed, and where there are also important shortfalls in gender equity, disabled and social inclusion that attract special Finnish interest. Links to theory of change. Connects short-range results (water governance knowledge, WASH system actions) to medium-range results (institutional improvements, climate change adaptation improvements) and onward to long-range results (social systems) and overall SDG/multilateral environmental agreement impact. Cases. (i) Rural Water Supply & Sanitation Project in Western Nepal (RWSSP-WN, 2008–19). (ii) Rural Village Water Resources Management Project (RVWRMP, Nepal, 2006–22 + EU in Phase III). (iii) Sustainable WASH for All (SUSWA, Nepal, 2021–27, + EU). (iv) Community-Led Accel