An £8 million funding competition has been launched to help farmers tackle water shortages, drought and pollution through practical agricultural innovations.
The Ofwat-backed Agri-Water Cross-Sector Challenge will offer awards of between £200,000 and £2 million to partnerships developing solutions across England and Wales.
Launched on Tuesday (10 November), the initiative aims to bring farmers, landowners and water companies together to address growing pressures on water supplies and quality.
The competition is seeking proven, mid-stage to mature innovations that have the potential to be expanded or introduced into wider use, rather than entirely new ideas requiring early-stage research.
Applicants must demonstrate collaboration between agriculture and other sectors, with potential partners including water companies, environmental organisations, researchers, technology businesses and food producers.
The funding comes as farmers face increasingly unpredictable weather, with prolonged dry spells, heavy rainfall and growing pressure to protect rivers and water quality.
Water shortages can threaten crop production and livestock farming, while excessive rainfall and agricultural runoff can damage soils and carry nutrients into waterways.
The challenge aims to support innovations that help farms manage these pressures while delivering wider environmental benefits.
Projects could include on-farm reservoirs and smart ponds designed to capture winter rainfall, nature-based measures to improve water quality, or systems that allow farms and water companies to share resources more efficiently.
Other potential innovations include technology to monitor water quality, tools that turn environmental data into practical information for farmers, and measures to reduce agricultural runoff.
The competition will also consider commercial and regulatory approaches that make it easier to manage and allocate water resources across different sectors.
Successful projects must demonstrate clear benefits for both agriculture and the wider water environment, alongside a credible plan 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 would be essential to finding workable solutions.
"Farmers and land managers know their land better than anyone," she said.
"Promising solutions already exist, but are often small-scale, bespoke or blocked from growing."
Dr Jolly said the competition would bring agricultural experience together with technology, expertise and investment from the wider water sector, helping successful innovations reach more farms and communities.
Applicants will also need to show how their projects could overcome regulatory and operational barriers, with lessons shared to support wider adoption.
The initiative builds on existing Water Innovation Fund projects demonstrating how collaboration between farmers and water companies can improve water resilience.
One example is Water Net Gain, which is testing smart on-farm ponds designed to capture surplus water during wetter periods and make it available when supplies become scarce.
The stored water could support agricultural production during dry weather or be released into rivers when flows are low, potentially reducing demand on mains supplies.
Lucia Grimm, from Westcountry Rivers Trust, a partner in the project, said: "In the Westcountry we have all the water we need, just not when and where we need it."
She explained that the project was exploring networks of ponds capable of storing winter rainfall for summer use, benefiting farmers, water companies and the environment.
A demonstration pond has already been developed with Water Innovation Fund support to test the concept alongside agricultural and water industry partners.
Another supported project, PEDAL, is developing technology to predict harmful algal blooms in lakes and reservoirs, helping protect water quality and reduce treatment costs.
The initiative combines satellite observations, drones and monitoring equipment with volunteers using smartphone cameras to track changes in water conditions.
The new Agri-Water Challenge forms part of Ofwat's wider five-year, £40 million Water Innovation Cross-Sector Programme, designed to encourage industries to work together on shared water challenges.
Since 2020, the Water Innovation Fund has awarded £251 million to 156 projects involving 354 partners.
Successful applicants will also gain access to the Cross-Sector Water Innovation Network, offering opportunities for knowledge-sharing, partner matching and support with expanding their innovations.
The competition is being delivered by Challenge Works, part of Nesta, in partnership with Arup and Isle.
A webinar for prospective applicants will take place on 17 November, from 11am to midday, covering the selection criteria and opportunities for cross-sector collaboration.
Winning projects are expected to be announced in spring 2027, with individual awards ranging from £200,000 to £2 million.
