The dismantling of USAID signals a shift—and an opportunity to break the inertia in safe water access

The dismantling of USAID may seem drastic, but it reflects a broader trend: wealthy nations are shifting their focus inward and adopting a more transactional approach to global engagement. Countries like Canada, Australia, and the UK have already restructured their bilateral aid agencies, and foreign assistance levels are declining.

For lower-income countries, these shifts present both challenges and opportunities. In the water sector, external funding is shrinking, yet an annual financing gap of $140 billion persists (World Bank, 2024)—making the dream of universal piped water coverage increasingly unattainable. This reality check could serve as a much-needed catalyst to move beyond outdated paradigms that have consistently failed to deliver.

Off-grid water businesses are already filling the gap

At the same time, a quiet transformation has been reshaping water access across LMICs since the early 2000s (Aquaya, 2009), and it isn’t led by international development programs. Instead, local water treatment and vending businesses have emerged to meet public’ demand for safe drinking water. Entrepreneurs are leveraging increasingly sophisticated water treatment technologies to sell treated water in bulk or packaged forms.

The poor performance of public service providers and shifting consumer expectations are driving this phenomenon. Across Asia and Latin America, packaged water is increasingly the default drinking water source, even for low-income families. In parts of Africa, sachet water—affordable, single-use packets—has become widespread solution, providing millions with cleaner drinking water.

As this market-driven response to an urgent public health need expands, it also raises concerns. These businesses, which are generally small and fragmented, often operate with limited oversight, leading to questions about quality control, affordability for the most vulnerable, and environmental impacts.

A cost-effective, actionable inflection?

In many settings, supporting and regulating these businesses may prove a more cost-effective approach to expanding access to safe drinking water than solely investing in traditional infrastructure. In fact, the natural growth of entrepreneurial initiatives, consumers’ willingness to pay for treated drinking water, and the relatively low capital and technical requirements compared to centralized infrastructure suggest that this alternative safe water model provides a strong complement to piped water services (1001fontaines).

A pragmatic strategy would involve establishing tailored quality standards and regulations to safeguard public health while allocating a small portion of water sector investments toward decentralized treatment capabilities to enhance affordability for the poorest. Rather than viewing small water providers as competitors to public utilities, governments could leverage their strengths to support existing services. A compelling example of this integration is Mexico City’s recent launch of a municipality-owned, 19-liter reusable bottled water service aimed at reaching communities beyond the piped network’s reach through multiple decentralized production units.

A desirable new normal for development

This is just one example of the novel public-private partnerships that could flourish in the evolving landscape of international development. As donor-driven aid declines, locally led solutions that are actionable, adaptable, and responsive to public needs must take center stage. If governments implement smart policies—ensuring quality, affordability, and environmental sustainability—and development actors support the structuring of these markets, these emerging models could drive universal access far more effectively than traditional infrastructure projects.

With over four billion people still lacking access to safely managed drinking water, the need to rethink water access strategies has never been more urgent.

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