Results-Based Financing and Its Potential Role in Advancing the Nexus Approach - Governing the Nexus: Water, Soil and Waste Resources Considering Global Change - page 87

ne indicators that suit the need to measure and
verify the results easily. So, the selection of indicators that thoroughly represent the
intended results triggering RBF payments is an important element to ensure a
smooth reporting and veri

However, it is also critical to de

dence for the
agent that payments will not be delayed due to disputes about whether the results
were achieved or not.
In relation to the nexus approach, indicators that are speci

cation process leading to enhanced con

c to individual
projects can be used as building blocks for more complex indicators re

ecting how

those individual projects contribute to a higher level objective de ned from the

nexus perspective. As an example, indicators related to interventions focused on (1)
reduction in the use of pesticides and fertilizers, (2) improvement of wastewater
treatment and (3) adequate solid waste disposal could be combined in a higher level
indicator related to the improvement in the quality of water resources.
No matter how complex the concept behind any indicator may be, each indicator
should represent the associated result as closely as possible and should be easy to
determine or calculate. Whenever possible, existing indicators should be used
(national statistics, agency accounting systems, of cial records, etc.), provided that

they are trustworthy.

3.3.2 Enabling Environment

Besides other elements discussed in this section, other aspects contribute to an
adequate enabling environment. These are the legal and regulatory environments
such that principal and agent can exercise their rights and perform their obligations
in a trusting atmosphere and with certainty that any discrepancies in interpreting
any clause of the legal agreement will be resolved following acceptable legal
process. However, as the agent will take additional risks, as compared with that
taken in input-based projects, the design of the RBF project should provide more
certainty about the capacity and willingness of the principal to ful ll its obligations

in a prompt and fair manner.
From the strict RBF perspective, creating special vehicles for disbursement, like
escrow accounts, selecting fiduciary agents that will disburse automatically once the

speci ed, and preventing any political

intervention will go a long way in the desired direction. This would reduce payment
risk and give more con

ed conditions have been met and veri

dence to potential agents to enter into an RBF agreement.
From the standpoint of the nexus approach, the regulations should provide a
rational and mutually agreed framework to evaluate the effects of an intervention
that bene t a certain subset of stakeholders on the situation of the other

stakeholders.