April 2024 presented an unprecedented challenge for the city of Bengaluru. The temperature scorched to 39.2 degrees on April 25, making it one of the hottest April in the last few decades. As per the Indian Express report, out of 13,900 public borewells in the city, 6,900 had dried up. Most IT companies that depend on the Cauvery water supply had to declare work-from-home to prevent excess water use. Housing apartments, on the other hand, implemented minimal water usage strategies such as water meters to control the water supply.
While water scarcity has plagued major Indian cities, its impact is even more severe in rural India. Among the 600 million farmers in the country today, approximately 85% are smallholder farmers facing significant water stress while trying to cultivate their land. While one-third of the land is irrigated through ground systems and canals, about two-thirds of cultivation in India still depends on monsoons. As per the study conducted for the AgWater Challenge by The/Nudge Prize, it is estimated that by 2030, India’s agriculture will consume 78% of freshwater.
In recent years, water scarcity has presented itself as a complex challenge affecting the country’s rural and urban parts. It has grown into seemingly insurmountable problems draining incomes, particularly of the marginalised, as they struggle to cope with it. The interconnectedness of water with social, economic, and environmental issues, collectively impacting millions of people at scale with no definitive solution, makes it a wicked problem.
Need for philanthropic capital to unlock market potential
Historically, pivotal moments like the Industrial Revolution in the West and India’s White and IT Revolutions have demonstrated the transformative power of markets in addressing large and complex challenges. However, this ability is often affected by two key bottlenecks:
- Reaching underserved populations remains a challenge as it involves high customer acquisition costs due to geographic fragmentation and limited awareness of market-based solutions.
- Solutions for the underserved typically require longer gestation periods to show measurable impact and generate financial returns.
These challenges increase the risks of market entry, discouraging the early investments needed to catalyse a space.
Grand challenges or incentive-driven competition formats are effective models for deploying philanthropic capital to align both economic and pro-social incentives that can act as powerful orchestrating instruments. They help to induce markets to develop or scale solutions in a competitive environment, demonstrate real evidence of impact and growth, and foster development within an aligned, mission-driven ecosystem. They also minimise the risk of channelling philanthropic capital to markets by only paying for solutions that have demonstrated impact on the underserved. Inducement challenges can thus greatly accelerate the deployment of solutions by markets. Let’s understand this through a widely recognised grand challenge.
Grand challenge in global health
On January 30, 2020, the World Health Organisation’s (WHO) Director General officially declared the outbreak of the novel coronavirus 2019 (SARS-CoV-2) as a Public Health Emergency of International Concern. By March 11 of the same year, COVID-19 was officially labeled a pandemic. In response to the pandemic, the scientific community embarked on an extraordinary journey of discovery and innovation. With remarkable speed and ingenuity, the COVID-19 vaccines were developed, produced, and distributed harnessing cutting-edge mRNA technology. By December 2020, a mere year after the initial detection of COVID-19, the first doses of these groundbreaking vaccines were administered in several countries. By July 2021 alone, nearly 85% of vaccines had been administered in high- and upper-middle-income countries. By 2022, more than 30 vaccines had been approved for general or emergency use globally, and over 13 billion doses had been administered worldwide (refer to the brief history of vaccines here).
The rapid production of COVID-19 vaccines, facilitated by advanced mRNA technology, owes its success to a 20-year-old Grand Challenge for Global Health initiated by the BMGF (Bill & Melinda Gates Foundation) on 26th January 2003. In collaboration with the National Institutes of Health, the BMGF granted $200 million to the Foundation for National Institute for Health (FNIH), empowering the application of cutting-edge innovation in science and technology to tackle the most pressing health issues in the developing world. About 14 Grand Challenges were identified from over 1,000 suggestions put forward by scientists and health experts worldwide. By October 2003, more than 1,500 submissions were received from scientists and institutions in 75 countries.
The Grand Challenge in Global Health sparked innovations across various health domains and played a significant role in reducing the cost of vaccine production around the world. The challenge exemplifies the many grand challenges throughout history that have driven markets to innovate and scale rapidly.
How is The/Nudge Prize equipping India to solve its biggest social problems?
Referring back to the problem of water stress discussed at the beginning of the article, The/Nudge Institute launched two unique challenges to address the water issue: the Clean Water Challenge in partnership with Ashirvad Pipes in 2022 and the DCM AgWater Utilisation Challenge with DCM Shriram Foundation in 2023. The Clean Water Challenge promoted a range of solutions, including purification to remove metal contamination and impurities, storage and distribution for sustained availability, recycling such as water source recharge and wastewater treatment, and desalination. It also addressed clean drinking water in difficult terrains and removing social barriers to access, aiming for a long-term impact on increasing clean drinking water access for rural households, thus improving health and hygiene in these communities.
Smarterra, the winner of The Clean Water Challenge, introduced an AI-based Leak Analytics solution and an AI-driven platform to monitor urban waterways and detect faulty meters. During the pilot phase of the challenge, they identified 11 invisible leaks and exhibited 77% accuracy in localising losses. Similarly, Urdhvam (finalist) presented a technology that boosts the quantity, quality, and duration of borewell water supply using an Artificial Injection Recharge Technique for irrigation, domestic, drinking, and industrial use. This solution enhances groundwater recharge and increases borewell water supply for an additional 1 to 6 months.
The challenge not only highlighted scalable solutions to address water stress but also stimulated the ecosystem by unlocking opportunities and investment in the water sector. Furthermore, the challenge aided in facilitating the expansion of copyrights, patents, and trademarks for technological innovations.
Similarly, the ongoing AgWater Utilisation Challenge is acting as an innovation catalyst for water-smart agriculture to achieve water security and prosperity for small-holder farmers. This 12-month-long competition, with a prize purse of INR 2.6 crore, is witnessing leading AgTech innovators and agri-entrepreneurs from around the globe developing and scaling demonstrable solutions for Indian smallholder farmers (SHF). These solutions aim to improve cropping water efficiency or reduce water consumption by 40-60%, enhance farmer profitability by 40-50% through better SHF practices, and establish a verifiable pool of 5,000 SHF (or 5,000 hectares) by the end of the challenge.
Although the challenge is still in progress and the winner will be announced soon, there is early evidence of momentum in the sector. Multiple organisations have shifted their focus from horticultural crops to fine cereals and cash crops. Consequently, their customer profiles increasingly include smallholder farmers, leading to a deeper understanding of one-acre economics. Moreover, there is a push from the broader ecosystem to enhance the investability of solutions in this space, bridging the funding gap for irrigation technology and laying the foundation for long-term, sustained change.
India presents a vast opportunity for incentive-driven competitive challenges to foster market-led innovations in addressing wicked social problems. The markets can heavily drive large-scale social transformations, and The/Nudge Prize aims to tap into market potential to foster innovation for the underserved. By doing so, it seeks to create a ripple effect of downstream capital that can help bridge the gap between market capabilities and social needs.
Stay tuned for the next part of the series, where we’ll explore the art of designing grand challenges, focusing on crafting impactful problem statements and inducement strategies.