Ofwat launches £8m Agri-Water challenge to scale farm water innovation

Ofwat‘s Water Innovation Fund has launched the Agri-Water Cross-Sector Challenge, which will award up to £8 million to partnerships in England and Wales that bring agriculture together with the water sector and other industries. Awards of £200,000 to £2 million will support proven, mature to mid-stage innovations, helping them accelerate, scale or move into real-world deployment.

The challenge opened on 10 November 2026, and winners are due to be announced in spring 2027. It is aimed at existing solutions rather than early-stage ideas.

Pressures on farming and water

According to the fund, farmers and land managers face mounting challenges from too little water, too much rain and growing pressure to protect water quality. It said prolonged hot, dry spells and summer droughts are exposing the natural environment to fire, soil degradation and heat stress.

Agricultural runoff can cut crop yields and increase costs for farmers. The nitrogen and phosphorus compounds it carries into rivers and lakes encourage algal blooms that damage ecosystems and pose risks to human and animal health.

The fund described agriculture as both a primary user of water and a key steward of the water system. It said no single organisation or sector has all the knowledge, relationships or capacity needed to address these problems alone.

What the Agri-Water Cross-Sector Challenge is looking for

Potential solutions could include, but are not limited to:

• Physical interventions: on-the-ground infrastructure and land-based solutions, including nature-based approaches, that create replicable frameworks for improving water storage, quality or resilience.
• Monitoring, evidence and data tools: for example, tools that turn field-level environmental data into actionable insights that lower farm costs, or that monitor and restore the health of the water environment on agricultural land.
• Market and allocation mechanisms: commercial, regulatory and governance structures such as trading, crediting and shared licensing.

Projects must deliver clear benefits for both agriculture and the wider water environment, address regulatory and operational barriers, and show a credible pathway to scale across regions, catchments and agricultural settings. Teams will also need to explain how learning will be shared so that others can follow.

Dr Jo Jolly, Director for Natural Assets, Environment and Innovation at Ofwat, said: “Promising solutions already exist, but are often small-scale, bespoke or blocked from growing. The Agri-Water Cross-Sector Challenge is designed to scale this fragmented patchwork of innovation to have nationwide impact.”

Partnerships and support for entrants

Partnerships could bring together farmers and growers, landowners, water companies, catchment and environmental organisations, regulators, researchers, technology providers, food and drink businesses, investors and supply-chain partners. A webinar for prospective entrants will take place on 17 November 2026 from 11am to 12pm. It will cover the selection criteria and opportunities for cross-sector partnership.

Successful applicants will be able to draw on the Cross-Sector Water Innovation Network for knowledge exchange, partner matching and shared learning. The network brings together organisations from across water, agriculture, industry, regulation and investment.

Projects already backed by the fund

Since 2020, the Water Innovation Fund has awarded £251 million to 156 projects involving 354 partners. Universities, charities, technology companies, engineering firms and wider business received 65% of the funding. The fund is investing £600 million over 10 years.

Water Net Gain, a winner of Water Breakthrough Challenge 3, is testing smart on-farm ponds. These capture water when it is plentiful, either for use by farms or for release to rivers when water is scarce. Lucia Grimm of Westcountry Rivers Trust, a project partner, said: “In the Westcountry we have all the water we need, just not when and where we need it. Water Net Gain is exploring the development of a network of smart on-farm ponds that save winter rainfall for summer.”

PEDAL, a winner of Water Breakthrough Challenge 5, aims to forecast and detect algal blooms in lakes and reservoirs before they take hold. This summer the project mobilised its first group of citizen science volunteers, who used smartphone cameras to measure colour changes in lakes in the South West.

Diego Panici, project lead for PEDAL, 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. The PEDAL project aims to tackle these issues by creating a digital twin to detect and predict HABs through short- and medium-term forecasting.”

H2O Global News has previously reported on agricultural water innovation elsewhere, including root-zone water retention trials in the UAE’s Al Miyah Challenge.

How to enter

The challenge is delivered by Challenge Works, part of Nesta, in partnership with Arup and Isle. It forms part of the Water Innovation Cross-Sector Programme, a five-year, £40 million Ofwat initiative to drive collaborative innovation across industries.

The entry form, assessment criteria, terms and conditions and booking for one-to-one surgery sessions with the delivery team are available on the Water Innovation Fund challenges website. Ofwat also runs StreamLine with the Environment Agency and the Drinking Water Inspectorate, a joint service that gives innovators informal regulatory advice.

Frequently asked questions