Across the Middle East and North Africa (MENA), climate change is no longer a future environmental risk. It’s reshaping economic stability, food systems, infrastructure security, public health, and social resilience. And at the centre of this challenge lies water.
Rising temperatures, prolonged droughts, groundwater depletion, salinity intrusion, declining rainfall, and extreme weather events are converging to place unprecedented pressure on what is already one of the world’s most water-stressed regions, with 70% of climate impacts manifested through the water cycle.[1]
The challenge is not simply water scarcity. It is whether countries can mobilise the investment required to secure water systems before the impacts of climate change outpace adaptation efforts. And whether they can do so at the scale and speed required to maintain hard-earned economic and social gains under accelerating climate stress. In a region where water underpins food security, economic productivity, public health, and social stability, financing water systems is increasingly synonymous with financing climate resilience.
Yet despite its strategic importance, water continues to be underfinanced globally and regionally. Climate finance discussions tend to prioritise mitigation sectors such as renewable energy and transport, while adaptation – particularly water-related adaptation – remains structurally underfunded. This imbalance is becoming increasingly untenable in environmentally vulnerable regions.
In MENA, water is foundational climate infrastructure. Water systems underpin agriculture, energy, urban resilience, industry, ecosystems, public health, and economic productivity. Without resilient water systems, adaptation efforts across nearly all sectors become constrained. Recognising this requires a shift in how governments, financial institutions, and investors understand water’s role in climate resilience and sustainable development.
The climate-water-security nexus in MENA
MENA is home to nearly 6% of the global population but less than 1% of renewable freshwater resources.[2] Climate projections from the Intergovernmental Panel on Climate Change indicate that in the coming years and decades the region will increasingly experience rising temperatures beyond global averages, declining precipitation across many arid and semi-arid zones, increasing evapotranspiration, more severe drought cycles, and a heightened risk of desertification and ecosystem degradation. According to the United Nations Economic and Social Commission for Western Asia, Arab states require more than $570 billion by 2030 to meet combined climate mitigation and adaptation targets, with adaptation representing one of the most underfunded dimensions of climate action.[3]
At the same time, demographic growth, urbanisation, displacement, and economic diversification are increasing pressure on already fragile water systems. The implications are systemic. Water insecurity increasingly affects food security and agricultural productivity, energy reliability, urban resilience, public health systems, migration dynamics, and macroeconomic stability.
This is particularly acute in fragile and conflict-affected settings, when climate vulnerability intersects with infrastructure fragility, fiscal stress, and institutional constraints. In these contexts, humanitarian efforts for the provision of basic water and sanitation services are further challenged by simultaneous needs for resilience and peace building. Recent conflicts in MENA have exposed vulnerabilities in both conventional and non-conventional water systems, including desalination facilities and energy-dependent supply chains. In fragile contexts especially, resilience must be designed into systems from the beginning not added later during recovery.
Moving from water as a sector to water as an asset class
Water has traditionally been treated as a public service rather than an investable resilience asset. However, climate change is fundamentally reshaping this paradigm. Water systems now generate measurable economic value through reduced disaster losses, improved agricultural productivity, enhanced public health outcomes, strengthened energy security, and ecosystem services. The framing of its criticality matters because investment flows follow perception.
Recognising water as an asset class does not imply commodification. Rather, it reflects the economic reality that resilient water systems generate long-term, multi-dimensional (economic, environmental, and social) returns. Like energy or transport infrastructure, water should be treated as strategic infrastructure underpinning economic development and climate resilience.
The rapid acceleration of renewable energy investment demonstrates how repositioning a sector as an investable infrastructure linked to economic growth, energy security, and climate mitigation, unlocks capital at scale. Water has not yet undergone a comparable financial transformation, despite its equal importance for adaptation, climate resilience, and economic development.
Positioning water as an asset class means developing clear investment taxonomies and financing frameworks that recognise water infrastructure, ecosystem services, and resilience systems as long-term investments with measurable economic, environmental, and social returns.
The role of climate-blended finance and catalytic capital
Historically, water investments across the region have relied heavily on sovereign financing and public budgets. While these remain important, the scale of climate adaptation needs now far exceeds traditional financing capacity. According to the Organisation for Economic Co-operation and Development, global adaptation finance remains significantly below estimated needs, while climate-related economic losses continue to escalate.
Closing the adaptation and water financing gap will require new financing architectures capable of combining public, climate, development, and humanitarian finance streams to mobilise capital at scale. Climate-blended finance is increasingly emerging as one of the most important mechanisms for achieving this.
By combining concessional development and climate finance with public and private investment, blended structures can de-risk adaptation investments, improve project bankability and affordability, lower financing costs, support project preparation, and crowd source institutional and commercial capital. This is particularly relevant for large-scale climate-resilient infrastructure projects.
An example of this is the Aqaba–Amman Water Desalination and Conveyance Project in Jordan, which combines climate-resilient water infrastructure with blended finance to address one of the world's most water-scarce environments. Approximately $295 million in concessional climate finance is helping mobilise more than $5.8 billion in total investment to secure long-term water supplies for more than five million people.
Importantly, catalytic climate finance can also help address one of the region’s most persistent barriers: the gap between climate ambition and investment readiness. Across MENA, countries are increasingly embedding climate resilience into national development strategies and Paris Agreement commitments. Yet many adaptation investments remain constrained by limited preparation capacity, institutional fragmentation, and insufficient access to concessional finance. The challenge is not in regional ambition; it’s in scaling finance quickly enough to meet rapidly rising climate resilience needs.
Climate adaptation in water cannot succeed through isolated infrastructure investments alone. The region increasingly requires integrated, climate-resilient water systems that simultaneously address water scarcity, food system and energy resilience, ecosystems restoration, and urban infrastructure and livelihoods.
Regional cooperation as a resilience multiplier
Sustainable water management in MENA cannot be addressed solely through national approaches. Nearly two-thirds of freshwater resources in the Arab region are transboundary. This creates a growing need for regional cooperation around shared aquifers and river basins, drought preparedness, hydrological data systems, resilient desalination infrastructure, and non-conventional water resources. Importantly, water cooperation can also become a platform for stability, confidence-building, economic diplomacy, and long-term regional resilience.
As preparations advance toward the 2026 UN Water Conference in the UAE, the region has an opportunity to present a collective narrative; not one of vulnerability, but one of innovation, adaptation, and resilience under conditions of extreme scarcity.
The debate is no longer whether water deserves greater investment. The evidence is overwhelming. Water is increasingly becoming one of the defining investment challenges of the climate era. In MENA, the real question is whether financial systems can evolve to recognise water as the foundational climate infrastructure upon which adaptation, resilience, and sustainable development depend.
This requires moving beyond viewing water as a narrow sectoral issue. Water must instead be treated as strategic climate infrastructure and a resilience asset essential to sustainable development, economic stability, and human wellbeing. Ultimately, financing water is not about financing a sector. It is about financing the resilience of economies, societies, and future generations.
The opinions expressed in this article are solely those of the author and not Frontier25.
About the author: Dr. Amgad Elmahdi is the Head of the Middle East Region at the Green Climate Fund (GCF). He previously led the development of GCF’s global water security and climate resilience portfolio to address climate adaptation across developing countries. With more than 30 years of international experience, he has worked with governments, multilateral development banks, international organizations, and research institutions to mobilize transformative investments and strengthen climate resilience.
