GCF, Barbados kick starts $110m water project
The Green Climate Fund and the Government of Barbados on Friday 14 March 2025 announced that a groundbreaking project that leverages an innovative financing model to scale up climate action and simultaneously avoid increasing the burden of public debt is all set to begin implementation.
The pioneering project, with huge positive implications for climate resilience in the region, was today greenlighted for its first injection of GCF finance.
The USD 110 million Barbados Climate Resilient South Coast Water Reclamation Project financed jointly by GCF (Green Climate Fund) and the IDB (Inter-American Development Bank) is the product of the world’s first debt-for-climate resilience conversion.
This investment will reduce water loss, improve sewage management, reduce marine and groundwater pollution, protect the quality of marine ecosystems, nearshore reefs, and groundwater resources and safeguard public health.
Prime Minister Hon. Mia Mottley, SC, MP:“In the face of the climate crisis, this groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados. With upfront funding from the Green Climate Fund and Inter-American Development Bank, together with support from other valuable partners, we are building a state-of-the-art facility to boost water management, food security, and resilience—showcasing how innovation and cooperation drive environmental and fiscal gains.”
GCF Executive Director Mafalda Duarte: ‘Today is a milestone moment that clearly signals Barbados’ regional and global leadership in innovative and effective climate action. This first-of-its-kind project will strengthen food, energy and water security for vulnerable communities without adding further public debt.’
Under the leadership of the Government of Barbados, the south coast sewage treatment plant will be upgraded into a crucial water reclamation facility for the region. The facility will produce water suitable for agricultural irrigation and groundwater recharge.
The pressing need for more climate-resilient infrastructure was painfully highlighted during last year’s 2024 hurricane season, one of the costliest ever. Hurricane Beryl devastated communities, particularly along the country’s south and southwest coasts. By 2050, climate-related disasters are projected to cost the Caribbean region USD 22 billion per year— roughly 10% of current GDP.
In July 2024, the Inter-American Development Bank (IDB) and the European Investment Bank (EIB) approved guarantees totaling USD 300 million to support the debt-for-climate operation, with each institution providing a guarantee of USD 150 million.
In October 2024, the Green Climate Fund Board approved USD 70 million in funding for the project, including a USD 40 million grant and a USD 30 million loan. The IDB is providing a USD 40 million loan to finance the South Coast Water Reclamation Project.
In December 2024, this support allowed the government of Barbados to successfully complete the debt-for-climate operation to replace outstanding, more expensive debt with more affordable financing, generating USD 125 million in fiscal savings, which will be used to enhance water resource management and increase water and food security.
