Results-Based Financing and Its Potential Role in Advancing the Nexus Approach - Governing the Nexus: Water, Soil and Waste Resources Considering Global Change - page 86

Table 1 Good and bad approaches to de ning results and indicators
Problem Objective Result to

measure

Indicator Comment

Higher than
desired con-
sumption of
irrigation water

Reduce con-
sumption of irri-
gation water at
farm level

Installation
of water
ef cient
technology

Number of
systems
installed

Weak link
between objective
and result

Installation
of water
ef cient
technology

Number of
systems sold

Adds a weak
indicator

Lower vol-
ume pro-
vided to
tertiary
canals

Volume of
water pro-
vided to ter-
tiary canals

Strong links, but
' Free rider ' issue

needs to be
addressed

3.3 Preconditions

There are five aspects to be considered to determine whether it is possible to use an

RBF approach.

(1) The agent is capable of assuming additional risk.
(2) The agent has access to finances to fund the project until the RBF payments

are received (ESMAP 2013 ).
(3) The envisioned result can be captured in one or more indicators.
(4) The institutional environment enables the use of RBF.
(5) The crucial stakeholders have the capacity and competences to deal with the
RBF mechanism.

Even though there are ways to deal with these issues, if these conditions are not
met, using an RBF approach will not be possible. Notwithstanding this fact, for our
current objective of analysing the potential contribution of RBF in advancing the
nexus approach, the first two preconditions are not necessarily relevant, while it

might be worthwhile discussing the other three in more detail.

3.3.1 Use of Indicators

As mentioned above, a clear de nition of the problem and the possibility to resolve

it through the achievement of speci

able results is
determinant of the possibility of using RBF instruments to provide a solution to the
issues at hand. It is essential to ensure a direct link between the issue to be solved,
the objective of the project and the incentivized result to avoid negative incentives
that would prevent the project from achieving its objective.

c, easily measurable and veri