Water is an essential part of supportingsustainable economic growth within a more equitable andinclusive society. Possessing about 14 percent of theworld's water, Brazil is rich in water resources, but70 percent is in the Amazon River and only 1.6 percent inthe State of Sao Paulo, where 25 percent of the populationresides and 33 percent of the country's gross domesticproduct (GDP) is generated. The Bank has recently approvedthe innovative Sao Paulo Water Recovery Project (REAGUA)which adopts output-based financing to tackle waterscarcity. This is the first Bank-financed project in thewater supply and sanitation (WSS) sector to implementcomprehensive results based scheme. Its objective is toincrease clean water availability in São Paulo but itslessons could be applied worldwide.