Shortage of freshwater jeopardizes the overall development and livelihoods of upstream and downstream communities, and ecosystems in many parts of the world. The source of all freshwater is precipitation. Depending on soil use and management, it may be lost as surface runoff, evaporate, or infiltrate into the soil where it either may be used by plants (green water) or recharge groundwater and stream base-flow (blue water).

Green water management comprises effective soil and water conservation practices put in place by land users. These practices reduce soil surface evaporation, increase (productive) transpiration through crops, control runoff, encourage groundwater recharge and decrease flooding. It links water that falls upstream on rainfed land, and is used there, to the water resources of rivers, lakes and groundwater further downstream: green water management aims to optimise the partitioning between green and blue water to generate benefits both for upstream land users and downstream consumers. Moreover, green water management increases carbon storage in the soil and thereby contributes to climate change mitigation. Green Water Credits (GWC) addresses poverty directly by diversifying income and enabling sustainable management that will bring food and water security.

GWC is a financial mechanism that supports upstream farmers to invest in improved green water management practices. To achieve this, a GWC fund needs to be created by downstream private and public water-use beneficiaries. Initially, public funds may be required to bridge the gap between investments upstream and the realisation of the benefits downstream.

Under the completed Phase II of the GWC project in Kenya, coordinated by ISRIC - World Soil Information in Wageningen, the Netherlands, stakeholders are now organized and funds are available, in order for work to start with assisting 400,000 smallholder farmers with soil and water management in the Upper Tana River Basin. Soil and water conservation practices introduced here will improve water availability in the lower areas, where the water is used for electricity generation, urban water provision and irrigation. According to project studies, annual downstream benefits of better soil and water management, at just 20% coverage of the upland, would amount to anywhere between US$ 6 and 48 million annually for hydropower facilities and urban water provision, whereas costs would be in the range of US$ 0.5 to 4.3 million. Other benefits will be higher production for upstream farmers, carbon sequestration and reduced flood damage in the Tana delta - where the mangroves are particularly vulnerable.

A similar activity was undertaken for the Sebou basin in Morocco, but at an exploratory scale (Phase I). ISRIC has also been preparing similar GWC proposals for river basins in Morocco, Algeria, Tunisia and China (the upper area of the Yangtze River, 1000 kilometres from Beijing).