Financing diversified water strategies for megacities: the case of Mexico City and rainwater harvesting

Abstract Megacities are increasingly confronted with water supply challenges, requiring innovative and diversified management strategies to ensure sustainability. This study examines Mexico City’s Cosecha de Lluvia program, a government initiative promoting residential rainwater harvesting (RWH). This case study offers valuable lessons for other megacities facing similar water security issues. The study particularly explores result-based financing (RBF) as a promising strategy to strengthen Mexico City’s RWH sector. Despite its potential, research on RBF for water supply diversification remains limited, especially from the perspective of practitioners. To address this gap, the study employs a systems thinking approach supported by qualitative methods, including a literature review and interviews. Thematic networks analysis revealed that RBF could enhance Cosecha de Lluvia by improving monitoring and results measurement, facilitating information exchange, and increasing transparency—key factors for successful water supply diversification. While these identified benefits do not address all of Cosecha de Lluvia’s challenges and RBF could have implementation challenges, there is a clear opportunity for this financial mechanism to enhance programs like the one studied and have a positive impact on several of its elements. As part of the RBF suitability assessment, three different funding sources were evaluated—public, private, and philanthropic—to determine their effectiveness in overcoming Cosecha de Lluvia’ s challenges. The findings suggest that no single source of finance markedly influences the program’s effectiveness alone. Instead, a blended financing approach that integrates all three sources is recommended as a strategy to explore further for implementing RBF in water supply diversification efforts. Overall, the study highlights the necessity of diversifying water supply to build climate resilience in megacities. While programs like Cosecha de Lluvia are crucial, significant room for improvement exists. RBF offers a promising mechanism to enhance such initiatives, and its potential merits further exploration.