World Water Day with Matt Damon and Gary White

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Robin Pomeroy: I'm joined on Radio Davos by Matt Damon and Gary White to talk about World Water Day. Hi, Matt and hi, Gary. How are you both?

Matt Damon: Hi, Robin. Great, thank you.

Gary White: Doing well, Robin, good to be here.

Robin: Gary, you're in Arizona. Matt, you're in Australia. I'm in Geneva. We've got the world covered.

Matt: Thank God for Zoom!

Robin: Tell me how either of you got involved in water and bringing water to the poorest people around the world.

Gary: I got involved with water at a fairly young age. I was an undergrad in university and was studying engineering. I was just captivated by the fact that even though we in the United States had really solved the water and sanitation challenge, discovering literally that at that time billions of people didn't have access to safe water or proper sanitation.

And I just found that as a way to kind of marry up my engineering skills, that I was developing with what I thought was one of the world's greatest needs. And that really came together for me. But, I think as this evolved, you know, recognizing that engineering is important, but, as we'll probably get into today, it's the financial aspect of this crisis that is really going to be the root of the solution.

Robin: And Matt, how did you get involved, you were each working on this separately before you joined together. So what was your route into this?

Matt: I was really interested in these issues of extreme poverty, and I started to kind of study them more seriously. I went on a trip that was arranged for me by Bono's organization, DATA. It was like a college mini-course and every day had a different learning focus. I just was shocked at how water underpinned everything and undergirded all of these issues of extreme poverty. Yet nobody was talking about it.

And nobody in the West could really relate to it, because for us, we're always just a few steps away from a clean drink of water. And yet people were dying of entirely preventable diseases because they lacked access to clean water and sanitation. I just found that absolutely staggering. As I engaged with the issue, I found it endlessly interesting and complex and that led me on this journey that that ended up with me finding Gary and partnering with him and and starting water.org.

Robin: What is it about water? I mean, for those of us who are used to it just being there the whole time, why have you found actually that working on that as a kind of a building block to bringing people out of poverty? Why is it so fundamental?

Matt: To start with, you've got a million children dying of entirely preventable things every year like diarrhoea, which is a ridiculous idea to those of us in the West whose kids might miss a day of school from something like that. But the actual impact is incalculable when you start to look at the lives.

The very first water collection I ever went on 15 or so years ago, was with this little girl, she was 14 years old and I was waiting for her when she came home from school in rural Zambia. There was a bore well about a mile from her house - and she put her book bag down and we went for this walk together.

It was just the two of us with the translator. And through the course of our conversation, I was asking her if she was going to live in this in this village for the rest of her life. She kind of confessed to me that she was getting out of there and she was going to go to the big city. She was going to go to Lusaka and she was going to be a nurse. And she had all these great dreams and plans. And it reminded me of how I was when Ben Affleck and I were 14. We were going to go to the big city of New York and we were going to be actors. And that's exactly what a teenager should be doing, right? Thinking about what their life might be and this world of possibility in front of you.

And it wasn't until I left this kid that I went: had someone not had the foresight to sink the bore well a mile from her house, she would be spending her entire day searching for water and collecting water for her family. She wouldn't be in school and she would have no hope, no dreams. So the actual impact of not having access to water is truly incalculable. It just prevents people from living there from living up to their full potential.

Robin: Interesting that you cite a girl there, because often a lack of access to water impacts girls and women more than boys and men. Can you say something about that?

Matt: Well, yeah, the water collection is left to the women and the girls. And so girls are missing hundreds of millions of hours of school as we speak all around the world because they're collecting water. Women are leaving jobs where they could be earning more money because they're standing in line waiting for water or going off and collecting water. And so it disproportionately affects women and girls. And their outcomes are are far less rosy because of this issue.

Robin: Do you think we're making progress on the issue? You've both been working on this for a number of years. Are you seeing progress or are you seeing things getting worse in any way?

Gary: I definitely see progress - the past year notwithstanding, we can come back to that - but certainly over about two and a half decades, more than 2 billion people have gotten access to water and sanitation improvements. So you can see the tracking in the right direction. Now, of course, with COVID, there's so many more people at risk now because of loss of income.

And because of climate change, more people are at risk and there is the potential to backslide. As we look at climate change and where it's going to have the greatest impact, not surprisingly, the people that are among the poorest in the world are going to be the most affected by this.

If we talk about climate change, we're really talking about water in so many contexts, too much and flooding in some areas, drought in others. And so even those folks who have that tenuous access to water every day are going to be affected. Today, everyone in the world woke up and got water somewhere, right? The question was, how far do they have to walk? How contaminated was it, or how much did they have to pay for it in an urban area? You are often paying 25% of your income.

With climate change, it's like that water hole you're going to all of a sudden during the dry season isn't a mile away, but it's seven miles away. Then that's going to dramatically impact your life and eventually it's going to lead to much more migration.

I think we see in terms of 'climate refugees', we're really talking about 'water refugees'. And so I'm hopeful that we're going to bounce back from this. I'm hopeful that we'll work for ways to help adaptation in terms of some of the poorest populations and give them more resilience. But I'm concerned that if we don't really put more resources behind this, it's going to get worse.

Robin: And you're an engineer. So when you're out in the field in these places, where does engineering come in to provide water? What are the kinds of things you can do to help?

Gary: The engineering part of this is not complicated, right? We've known how to do this for more than a century in terms of sourcing water, treating it and distributing it. I see this more through the lens of a finance model right now.

What we need to do is figure out how to connect the global capital markets to water and sanitation solutions. That sounds a bit unexpected, right? How can some of the world's poorest people benefit from the global capital markets in terms of solving their water and sanitation issue?

That's what we've proven with our water credit model. What we've done is to help people like one woman in Kenya who got a water credit loans from one of our partners so she could install a water tank and a water pump. Well, before this, she was having to go collect water, to water her animals and water her crops crucial to her income.

Then during the dry season, she had to pay $60 every month for the water she needed. So she took out a loan. She installed that tank and her loan payments are now $20 a month. So she's pocketing forty dollars every month. That value allows us to do things like tap the capital markets and provide loans to those partners that give her that loan and then get a financial return to investors.

So it's a little bit more complicated than just sinking a bore well. But we're able to see that value created for that person living in poverty, and then capturing some of that value and getting it back to investors so that we can scale this up tremendously with the capital markets.

Matt: It really is just about nudging the market towards this community of the world's poor. The great success story of our work is that these loans pay off at 99%. These women who are taking the loans are amazing and 94% of our borrowers are women.

They're paying these loans back. And really it's just with the slightest nudge of the markets these people are able to take control of their own lives and solve their own problems. So we need to stop looking at it as a charity issue and rather look at these people as customers to be served, with agency and the ability to solve their own problems.

Robin: Right. Because a lot of these people, as Gary mentioned, are already paying a lot of money to access water in certain urban environments.

Matt: Exactly, and let's step back for a minute, I think we probably missed that. That was really the key insight that Gary had years and years ago: the insight that the world's poor are paying for water already. And so if we just can help them in a more traditional way to do that, they can pay off a loan quite easily.

A lot of times you're buying somebody's time back because women will take time away from a job to go collect water. And you buy that time back and they're able to pay the loan off really easily, actually, as Gary just pointed out, paying less money than they were anyway. And then suddenly have all this extra income.

Robin:Why does it take you two guys to put this in motion? Why wasn't this, or maybe it was, already happening? Why did it need you two to step up and push this forward?

Matt: I think it took Gary figuring it out. He's very humble and he won't say that. But look, it took an entrepreneur like Muhammad Yunus pioneering this work, right? I mean, why didn't anybody think of it before he did? This idea of microfinance was about living in that community and he understood it.

Gary spent his entire adult life in these communities and went, "Wait a minute, hang on. There's a market correction to be had here. This problem can completely be solved."

So it took that insight and then it took understanding of what Yunus had done and then repurposing that work and applying it to the water sector, which was another thought leap for the microfinance institutions, because this is not an income-generating loan we're talking about.

It's an income enhancing loan, sure, it's about buying somebody's time back, but it's not the traditional way of even doing the non-traditional thing that Muhammad Yunus invented. So it's another iteration. And it took somebody like Gary to figure that out.

Robin: Can we talk about COVID-19? It's a year just passed since it was declared a pandemic. Has that had any impact on your work?

Gary: It certainly accentuated the need for water much more. When you look at the instruction that we got from the public health officials about 'wash your hands often and stay at home'. Those are two things that people who don't have access to water at home aren't able to do. So, right away, those basic things that need to happen weren't able to happen for them.

We did see a slowdown in our work. We saw a slowdown in terms of our microfinance partners and the loans that they were able to make. But thankfully, that's bounced back now and we're on track to meet the goals, the targets that we had for this year. We project that we'll be able to reach about 8 million people this year with access to to water and sanitation.

And I think it also just drives home the fact that we're all neighbours. If someone half way around the world is the tipping point for spreading disease like COVID because they didn't wash their hands, that then shows up in our own neighbourhood here in the US a few weeks later. And I think that's what makes us recognize that we're all in this together in so many different ways, if not just ethically, certainly very pragmatically.

Robin: What can the average person, people in different parts of the world, in the developed world, in the developing world? What can they do to help this problem of lack of access to water and sanitation.

Matt: Come on over to water.org and make a donation!

Robin: Certainly that was your moment for a plug.

Matt: Yeah, that was a shameless plug and we'll take it! But that's one very easy, actionable thing to do - it's a mouse click away and we'll put it to good use.

Gary: It is just going to come down to that, right? I think that what we're trying to do is to kind of redefine what philanthropy is in terms of water and sanitation and don't see philanthropy as the end, but see that as an engine to unleash some of this capital that then allows the people you reach to be multiples of what it would be otherwise.

Just look at an example: if you sum up over a 15-year period all of the philanthropy that went into water and sanitation, we exceeded that with the capital mobilized for water credit. So $2.6 billion in these micro-loans has been catalysed by by water.org. That's more than all of the philanthropy in the world over a 15-year period. So you see what we can do is we can be smarter about philanthropy and catalyse it.

Even for $5 we can reach somebody with access to safe water because of that 'multiplier effect' that we have. And for people who are seeing or listening to this, it can be a very straightforward way to go to water.org and make those donations so that we can continue this journey.

Robin: Are there things you've learnt personally over the years you've been involved in this.

Matt: You just touched on it. I think the biggest takeaway for me and the one takeaway I would like your listeners to have is that there is a solution. The problems of the world can seem so daunting - this cascade of problems we have. This issue is entirely solvable and fixable. It's one of the Sustainable Development Goals - number six. We've got this one.

And I think that's the key takeaway. It's about getting the word out - on podcasts like this - and letting people know that in this case, this solution, this finance solution, the only bottleneck is access to affordable capital, which is why we created WaterEquity.

We're trying to tap the social impact markets: all that money that's just sitting there, all this Giving Pledge money that's just sitting around looking for a good place to go. These loans pay back at 99%. And our MFI (microfinance institution) partners all report that the only issue for them - there's plenty of demand - it's just access to affordable capital.

Robin: Gary, anything you've learnt over the years?

Gary: I've learnt a lot. I learnt that maybe that, instead of getting three engineering degrees, I should have got an MBA that may have helped me more in this work!

I just remember this really coming home to me when I was meeting with a woman in India. She was probably about 80 years old. And she had lived on this hillside, this rocky hillside. She would have to wait for the cover of night to walk down and go out by the river to defecate. So she had installed this toilet. And I'm like: 'Wow, that's great. How did you get the money to do that?' And she said she had taken out a loan from a loan shark. And she was telling me how much her payments were and how much the loan was. I did the maths, and she was paying 125% interest to a loan shark because she wanted that toilet so badly.

When you hear those stories repeated over and over again, you recognize how much people value this and how much it contributes to their life and how that's just buying their time back. It's like an 'aha' moment - let's think about the problem differently. Let's think about philanthropy not as an end to itself with this, but think of philanthropy as the bridge to the capital that would allow her to get an affordable loan, still have that same impact, be better for her and it would also allow the capital markets to be activated, particularly with social impact investors.

If you just look at all the money that is locked away right now in family foundations and donor-advised funds, think about if that money could just be invested in a water equity fund where those foundations would actually earn a return on their money while they're waiting to give it away. And, in the meantime, it's having this social impact on people around the world.

That's what I think is that the potential of the water and sanitation solution: those funds can have impact as investments while the people are waiting to give it away philanthropically. So maybe instead of just being all invested in blue chip stocks, you might be invested in a water equity fund that's able to do that.

Robin: Matt was very optimistic there - that we can do this one of all these the big challenges. But will there ever be a moment when you can say: 'Yes, we've achieved this,' and you can pack up and walk away.

Matt: That's actually in our mission statement: to do this in our lifetime and put ourselves out of work. That's what we're all working towards, trying to put ourselves out of work. So yes, we do believe that. And we're hopeful. A lot of it is about activating these capital markets, as Gary said, getting the attention of these big investors and helping them understand that all it takes is their engagement, and we're off.

Gary: It will require more philanthropic capital. I think of this model that we generated and we know that we can take the leap to the next step. If we can generate $50 million in philanthropic capital to be able to build a pipeline of investment further, we believe we could put a billion-dollar fund to work. And so we look to venture philanthropists and venture capitalists to see this almost like a private equity investment. If you think of what someone in private equity would see here: a $50 million investment - the multiples on that invested capital is dramatic.

It's in the billions.

If we can just reframe how philanthropists think about placing big bets, not just on the next start-up in Silicon Valley but on something like this that has the potential to have that type of social impact, we can reframe this for philanthropists.

Jack Dorsey's done that with his Start Small Foundation. He's out there placing big bets. We were fortunate that he provided us with a $4.7 million grant recently for working in Africa. MacKenzie Scott - she's setting an example by giving away big bets on organizations in an unrestricted way, oftentimes to allow them to grow these big ideas. So we need to to bring that type of risk capital into this so that it can have the impact in the social sector that we see in the private sector.