#18: Results-based financing mechanism

Results-based financing mechanism is a mechanism for the financial implementation of agreements such as multi-level

Governance can be defined as the various institutionalised modes of social coordination to produce and implement collectively binding rules, or to provide collective goods (Börzel & Risse, 2010,p. 114).

Börzel, T. A., & Risse, T. (2010). Governance Without a State: Can It Work? Regulation & Governance, 4(2), 113–134. https://doi.org/10.1111/j.1748-5991.2010.01076.x

contracts. 

This type of scheme can ensure flexibility for lower-level authorities and both control and ownership of the implementation process while ensuring the implementation of higher-level objectives. Policies can be adapted to territorial characteristics. Payments can be made annually, proportionally to the achievement of targets during the previous year, i.e. funding that is contingent on the successful implementation of what States have committed to undertake. 

The São Paulo Water Recovery Project (REAGUA) in Brazil tackles the problem of poor and inadequate level of water in the city of São Paulo through result based financing incentives. The recipients of the incentives are water service providers that can be either public companies, municipal-owned companies or State-owned companies. The funds are to be transferred under the condition of previously-agreed and verified outputs or performances, for example the volume of recovered water or the installment of new infrastructures.