Key Points
- Ofwat’s Water Innovation Fund has launched an £8 million Agri-Water Cross-Sector Challenge to improve water resilience across agriculture and the wider water sector in England and Wales.
- The funding competition was launched on 10 November 2026 and will provide individual awards ranging from £200,000 to £2 million.
- The initiative aims to help farmers, growers, landowners and water companies develop practical solutions to drought, water shortages, unpredictable rainfall and agricultural pollution.
- The competition prioritises proven, mid-stage and mature innovations that can be expanded into wider commercial or practical use, rather than early-stage research.
- Eligible solutions include on-farm reservoirs, smart ponds, nature-based water management, environmental monitoring systems, data tools and improved mechanisms for sharing and allocating water resources.
- Projects must demonstrate benefits for both agriculture and the wider water environment, with credible plans for expansion across different regions, catchments and farming systems.
- Dr Jo Jolly, Ofwat’s Director for Natural Assets, Environment and Innovation, said farmers’ practical knowledge was essential to developing effective water management solutions.
- Water Net Gain is an existing project testing smart on-farm ponds that capture surplus winter rainfall for agricultural use during drier periods or release into rivers when water levels are low.
- Lucia Grimm of Westcountry Rivers Trust said the Westcountry had sufficient water but faced challenges in ensuring it was available in the right places and at the right times.
- PEDAL, another Water Innovation Fund-supported project, is developing technology to predict and detect harmful algal blooms in lakes and reservoirs using satellite observations, drones, monitoring equipment and citizen-science contributions.
- Diego Panici, PEDAL’s Project Lead, said the project was developing a digital twin to forecast harmful algal blooms and improve operational water-quality information.
- The Agri-Water Challenge forms part of Ofwat’s five-year, £40 million Water Innovation Cross-Sector Programme.
- Since 2020, the Water Innovation Fund has awarded £251 million to 156 projects involving 354 partners, with 65% of funding going to universities, charities, technology companies, engineering firms and wider businesses.
- The competition is being delivered by Challenge Works, part of Nesta, in partnership with Arup and Isle Utilities.
- A webinar for prospective applicants is scheduled for 17 November 2026, from 11 am to midday, while successful projects are expected to be announced in spring 2027.
- Successful applicants will also gain access to the Cross-Sector Water Innovation Network for knowledge-sharing, partnership development and support in scaling their solutions.
Why Has Ofwat Launched an £8m Water Resilience Fund for Farmers?
Ofwat’s Water Innovation Fund has launched an £8 million funding competition to help farmers and landowners tackle water shortages, drought, unpredictable rainfall and agricultural pollution through practical innovations. The Agri-Water Cross-Sector Challenge will provide grants ranging from £200,000 to £2 million to collaborative partnerships across England and Wales, supporting established solutions that can be expanded to improve agricultural productivity and protect the wider water environment. Launched on 10 November 2026, the initiative brings together agriculture, water companies, environmental organisations, researchers and technology businesses to address growing pressure on water resources.
As reported by the FarmingUK Team on 10 November 2026, the competition is designed to accelerate the adoption of proven water-management solutions rather than finance entirely new ideas requiring early-stage research.
The programme will focus on innovations that have reached mid-stage or mature development and demonstrate the potential for wider implementation. These could include infrastructure for storing water, technology for monitoring environmental conditions and practical approaches to improving how agricultural businesses and water companies manage shared resources.
According to WaterBriefing’s report on the launch, the initiative forms part of Ofwat’s wider effort to develop cross-sector partnerships capable of improving the resilience of the water system.
The competition recognises that water availability is fundamental to food production, rural livelihoods and healthy ecosystems. However, farmers and land managers are increasingly required to adapt to changing weather patterns while maintaining agricultural output and protecting natural resources.
Why Are British Farmers Facing Increasing Water Management Challenges?
The funding announcement comes amid growing concerns about the impact of unpredictable weather on agricultural operations and the wider environment.
Farmers face challenges from both insufficient and excessive rainfall. Prolonged dry periods and summer droughts can reduce water availability for irrigation, threaten crop production and create difficulties for livestock farming.
At the other end of the weather cycle, heavy rainfall can cause waterlogging, soil damage and runoff, potentially carrying nutrients from agricultural land into rivers and lakes.
The Ofwat announcement, reproduced by AZoCleantech in its coverage of 9 November 2026, also highlighted the environmental consequences of prolonged hot and dry conditions, including increased risks of fire, soil degradation and heat stress.
Agricultural runoff containing nitrogen and phosphorus compounds can encourage harmful algal blooms in rivers, lakes and reservoirs. These developments can damage aquatic ecosystems and create risks for human and animal health.
The financial consequences can also affect agricultural businesses. Runoff-related problems can contribute to lower crop yields and higher operating costs, while inadequate water supplies can disrupt normal farming activities.
The challenge therefore seeks solutions that address water availability and quality together, rather than treating them as separate problems.
Agriculture occupies an important position in this process because farms are both significant users of water and managers of land that influences the wider water system.
What Types of Projects Will Qualify for the Agri-Water Cross-Sector Challenge?
The Agri-Water Cross-Sector Challenge identifies three broad areas in which applicants can propose practical innovations.
Can Physical Infrastructure Improve Agricultural Water Storage?
The first area concerns physical interventions and land-based infrastructure designed to improve water storage, quality and resilience.
Potential projects include on-farm reservoirs, smart ponds and other systems capable of capturing surplus rainfall when water is plentiful.
These facilities could make stored water available during dry periods, reducing pressure on conventional water supplies and helping agricultural businesses maintain production.
Nature-based interventions are also eligible where they can improve water quality, support healthier catchments, and provide benefits that can be replicated across different farming environments.
The competition is interested in solutions that can establish practical frameworks for wider adoption rather than isolated projects that cannot be expanded.
How Can Data and Monitoring Technology Help Farmers Manage Water?
The second area focuses on monitoring, evidence, and data tools.
These technologies could help farmers convert environmental information collected in the field into practical decisions that improve water management and reduce operating costs.
Other potential applications include monitoring the condition of water resources on agricultural land, identifying pollution risks and supporting the restoration of water environments.
The programme also recognises the importance of building reliable evidence to demonstrate that successful technologies can be scaled across different agricultural settings.
Satellite observations, drones, monitoring equipment and digital systems are among the technologies already being explored through existing Water Innovation Fund projects.
Can New Commercial Arrangements Improve Water Allocation?
The third area involves market, allocation and governance mechanisms.
Ofwat is seeking approaches that make it easier for different sectors to collaborate on water management through commercial, regulatory and operational arrangements.
Examples include water trading, crediting systems and shared licensing arrangements.
Such mechanisms could help farmers, water companies and other organisations manage available resources more efficiently while establishing clearer structures for cooperation and investment.
The challenge is therefore not limited to engineering solutions. It also considers the commercial and regulatory arrangements needed to make successful innovations practical at a wider scale.
What Has Dr Jo Jolly Said About the New Ofwat Funding Competition?
Dr Jo Jolly, Ofwat’s Director for Natural Assets, Environment and Innovation, said farmers and land managers had an important role in identifying workable solutions because of their direct knowledge of agricultural land and local environmental conditions.
In the statement published by WaterBriefing and reproduced by AZoCleantech, Dr Jolly said:
“Farmers and land managers know their land better than anyone. They see the water pressures first-hand, from drought and changing rainfall, to the challenge of protecting water quality and safeguarding soil health.”
She added that promising solutions already existed but were frequently small-scale, bespoke or prevented from expanding.
Dr Jolly explained that the Agri-Water Cross-Sector Challenge was designed to scale this fragmented collection of innovations and create a wider impact across the country.
She said the initiative would combine the practical experience of farmers and landowners with expertise, technology and investment from the water sector and other industries.
According to Dr Jolly, this collaboration could help proven ideas grow and make it easier for effective solutions to be adopted across more farms and communities.
The programme also requires applicants to explain how their projects will address regulatory and operational barriers. Successful teams must demonstrate how their innovations can be implemented, expanded and supported by shared learning.
How Is the Water Net Gain Project Improving Farm Water Resilience?
One of the examples highlighted in the funding announcement is Water Net Gain, a project testing smart on-farm ponds designed to capture and store water when supplies are plentiful.
The project was previously supported through the Water Breakthrough Challenge 3 and brings together farmers, water companies, Rivers Trusts, regulators, researchers and technology partners.
Its approach involves collecting surplus water during wetter periods, particularly winter rainfall, and making it available when supplies become scarce.
Stored water could be used by farmers during dry weather to support agricultural production. Alternatively, it could be released into rivers when water flows are low, potentially helping maintain environmental conditions.
The approach could also reduce demand on mains water supplies while improving cooperation between farming businesses and water companies.
Lucia Grimm of Westcountry Rivers Trust, a partner in Water Net Gain, explained the regional challenge behind the project.
She said:
“In the Westcountry we have all the water we need, just not when and where we need it.”
Grimm explained that Water Net Gain was exploring networks of smart on-farm ponds capable of storing winter rainfall for use during the summer.
She said the approach could benefit farmers, water companies and the environment by reducing demand for mains water, retaining more water in rivers and supporting more sustainable food production.
Grimm also highlighted the contribution of Water Innovation Fund support, which had enabled the project to construct a demonstration pond and test the concept in collaboration with farmers and water industry stakeholders.
She said that, if proven, networks of smart ponds could help the water and farming industries manage resources more effectively under changing weather conditions.
The project demonstrates how local infrastructure and cross-sector cooperation could provide practical solutions to water availability challenges.
How Is the PEDAL Project Using Technology to Predict Harmful Algal Blooms?
Another example is PEDAL, a project supported through the fifth Water Breakthrough Challenge.
PEDAL aims to forecast and detect harmful algal blooms in lakes and reservoirs before they develop significantly.
Harmful algal blooms can create serious challenges for water companies by increasing treatment costs, affecting water quality and contributing to environmental degradation.
The project is developing a digital twin designed to support short- and medium-term forecasting of harmful algal blooms.
Its monitoring approach combines several sources of environmental information, including satellite observations, drones, monitoring equipment and data collected by volunteers.
During summer 2026, PEDAL mobilised its first group of citizen-science volunteers in the South West. Participants used smartphone cameras to monitor colour changes in lakes, providing additional observations to support the project’s water-quality monitoring activities.
Diego Panici, Project Lead for PEDAL, explained the problem the project intends to address.
He said:
“Harmful Algal Blooms (HABs) in reservoirs regularly cause problems for water companies, their customers, and the environment by increasing treatment costs and contributing to environmental degradation.”
Panici said the project aimed to address these challenges by developing a digital twin capable of detecting and predicting harmful algal blooms through short- and medium-term forecasting.
He also explained that the Water Innovation Fund had enabled the project to establish a diverse consortium of partners and develop the technical components needed to generate operational insights into reservoir water quality.
These components include satellite observations, volunteer- and drone-based observations, and high-frequency measurements collected using buoys.
The project illustrates how environmental monitoring and predictive technology can support water companies in identifying potential problems earlier and improving their response to changing water conditions.
How Much Has Ofwat Invested in Water Innovation Since 2020?
The Agri-Water Cross-Sector Challenge forms part of Ofwat’s five-year, £40 million Water Innovation Cross-Sector Programme.
The wider programme is designed to encourage industries to work together on shared water challenges and develop innovations capable of improving long-term resilience across the water system.
According to the figures published in the Ofwat announcement, the Water Innovation Fund has awarded £251 million to 156 projects involving 354 partners since 2020.
The funding has supported collaboration across a range of organisations, including universities, charities, technology companies, engineering firms and wider businesses.
AZoCleantech’s reproduction of the Ofwat announcement reported that 65% of the funding had gone to universities, charities, technology companies, engineering firms and wider businesses.
The Agri-Water Challenge will extend these established partnerships by bringing additional agricultural organisations and land managers into water innovation projects.
The programme recognises that water challenges vary between farming systems and geographical regions. As a result, collaboration between organisations with different forms of technical knowledge and operational experience will be important to developing solutions that can work in different environments.
Who Can Apply for the £8m Agri-Water Funding?
The competition is aimed at collaborative partnerships rather than organisations developing solutions in isolation.
Potential participants include farmers and growers, landowners, water companies, catchment and environmental organisations, regulators, researchers, technology providers, food and drink businesses, investors and supply-chain partners.
Applicants must demonstrate how their proposed projects bring agriculture together with other sectors connected to the water ecosystem.
They will also need to establish that their solutions can deliver clear benefits for agricultural businesses and the wider water environment.
A credible expansion plan is another important requirement. Projects must explain how their approaches could be adopted across different regions, catchments and farming systems.
Applicants are also expected to identify regulatory and operational barriers and demonstrate how they intend to address them.
The competition will prioritise solutions that have already reached a mid-stage or mature level of development, with the funding intended to accelerate deployment and wider adoption.
Successful applicants will receive more than financial support. They will also gain access to the Cross-Sector Water Innovation Network.
The network connects organisations across water, agriculture, industry, regulation and investment. It will provide opportunities for knowledge exchange, partner matching and shared learning, helping successful projects develop relationships and expand their work.
Who Is Delivering the Agri-Water Cross-Sector Challenge and When Will Winners Be Announced?
The Agri-Water Cross-Sector Challenge is being delivered by Challenge Works, part of Nesta, in partnership with Arup and Isle Utilities.
The competition is funded through Ofwat’s Water Innovation Fund and forms part of the wider five-year, £40 million Water Innovation Cross-Sector Programme.
A webinar for prospective applicants is scheduled for 17 November 2026, from 11 am to midday.
The session will explain the competition’s selection criteria and provide information about opportunities for cross-sector collaboration.
According to WaterBriefing, interested organisations can also access the competition’s entry form, assessment criteria and terms and conditions through the Agri-Water Cross-Sector Challenge website. Opportunities to book one-to-one surgery sessions with the delivery team are also available.
The successful projects are expected to be announced in spring 2027.
Individual awards will range from £200,000 to £2 million, with up to £8 million available across the competition.
What Could the £8m Fund Mean for the Future of Sustainable Agriculture?
The launch of the Agri-Water Cross-Sector Challenge highlights the growing importance of water resilience in agricultural planning and environmental management.
For farming businesses, access to reliable water supplies is closely linked to crop production, livestock management and operational continuity. More effective storage and allocation systems could help reduce exposure to prolonged dry periods and unpredictable rainfall.
The initiative also recognises that agricultural productivity and environmental protection are interconnected. Reducing runoff, improving water quality and protecting rivers and lakes can provide benefits beyond individual farms.
Existing projects such as Water Net Gain and PEDAL demonstrate how infrastructure, environmental monitoring and cooperation between different sectors can contribute to addressing these challenges.
However, the success of the new competition will depend on whether supported innovations can demonstrate measurable benefits and move beyond individual trials into wider practical use.
For organisations working in sustainable farming, water conservation and environmental protection, the programme also highlights the growing importance of professional knowledge in environmental and Agriculture, particularly in areas such as sustainable land management, environmental monitoring, water-resource planning and agricultural resilience.
Ultimately, Ofwat’s £8 million challenge seeks to turn established innovations into practical solutions that can be adopted across England and Wales, helping farmers, water companies and environmental organisations respond to growing pressure on water resources.