The world has entered a global era of water bankruptcy: as of January 2026, UN scientists have moved beyond warnings of ‘stress’ or ‘crisis’ to declare our critical water systems effectively bankrupt: damaged past the point of easy recovery. In the UK, this manifests as a paradox: a nation famous for rain now faces an annual shortfall of billions of litres. We are coming to terms with the fact that floods and droughts are no longer just environmental issues; they are direct threats to our livelihoods, our local security, and our collective chance for a decent life.
At Challenge Works, we believe this hydrological overshoot requires more than temporary fixes. It requires a fundamental shift in how we fund and deploy innovation. Traditional R&D often rewards the promise of change from established players, but open innovation approaches level the playing field, prioritising the quality of an idea over the name recognition of the organisation behind it. By focusing on outcomes rather than rigid processes, we can unleash the human ingenuity needed to protect our most precious resource.
The power of this methodology lies in its ability to scale radical ideas for wide-scale impact. A great example: In 2013, our Dynamic Demand Challenge sought ways to manage renewable power. A finalist from that prize, Kraken (then known as Upside Energy), is now a £6.4 billion ($9 billion) British success story that helps keep energy costs manageable for millions.
Traditional R&D often rewards the promise of change from established players, but open innovation approaches level the playing field, prioritising the quality of an idea over the name recognition of the organisation behind it.
In the water sector, through Ofwat’s Water Innovation Fund, we are supporting a new generation of projects that move us toward long-term water resilience. Many of these pioneering solutions are featured in the Water Resilience: Innovation for the Built Environment exhibition at the Building Centre until 10 April 2026, showcasing how we can redesign our world to be water-secure:
- The BICE (Biopolymers in the Circular Economy) project turns wastewater into a resource, extracting biopolymers to replace fossil-derived chemicals, while the Industrial Symbiosis initiative has already diverted 57,500 tonnes of carbon by reusing water industry waste in other sectors.
- Kiacrete has developed a next-generation permeable pavement that absorbs ten times more water than conventional surfaces, protecting homes from flooding by storing stormwater for reuse.
- The Safe Smart Systems project uses AI to predict vulnerabilities and reduce leakage, ensuring a more reliable supply for households.
- The Fair Water project tests integrated pathways to help low-income and elderly households reduce both water and energy bills through task-based innovations.
- Projects like Enabling Water Smart Communities (EWSC) and Project Zero are redesigning how we live, ensuring that new housing provides a decent life for residents without increasing the total water demand on already stressed local supplies.
- In London, the Developing a Market-Based Approach to Deliver SuDS Through Streetworks is connecting SuDS providers with local authorities and other buyers seeking to implement SuDS cost-effectively, enabling the installation of rain gardens during existing streetworks to manage flood risks naturally. This novel approach reduces installation costs, minimises disruption, and creates a scalable, structured approach to urban drainage.
Time and time again, we have seen the most powerful solutions emerge when we convene experts from different sectors to think about problems differently.
We continue to partner with Ofwat, delivering more competitions to catalyse change in England and Wales: the Water Efficiency Lab (WEL 1) to drive household usage down to 110 litres by 2050; the Water Discovery Challenge 2, which welcomes non-sector experts to apply their unique expertise to water; and the upcoming Water Innovation Missions, a £40 million programme designed to bring diverse stakeholders together to co-design solutions for strategic challenges.
Our experience running the Innovation Fund has given us a front-row seat to the themes defining the future of water, from tackling PFAS to embedding the circular economy and nature-based solutions into the heart of utility management. Time and time again, we have seen the most powerful solutions emerge when we convene experts from different sectors to think about problems differently.
Challenge Works is now looking to connect with organisations and innovators, private and public, who are working on water challenges beyond England and Wales. We are seeking to design more programmes that can support international, multi-sector solutions addressing the world's most stubborn water challenges. If you are interested in supporting the high-impact social change required to secure a decent life for all, let’s tackle the global water challenge together.
