Innovative Financing and Partnerships for Water Initiatives

Report
1
A Green Thumb for the Invisible Hand
Green Infrastructure and Beyond
2
Who Are We?
Founder and Partner of EKO Asset
Management
Merchant Bank for Ecosystem Services
We invest in people, projects, and
companies in this space
Backed by investors such as Wolfensohn
and Co., David Blood, Rothschild Family,
etc.
Match patient capital to people, projects,
and expertise on the ground
Flexible in investment approach
3
Who are we Really?
4
Where are We?
5
The Man-made Planet
6
Two Systemic flaws
First we don’t value nature...
We neither see nor pay for the
services it provides
It doesn’t show up on anyone’s
books
Secondly, we don’t learn from
nature...
We don’t see it as technology to be
emulated... and valued
Bio-mimicry to a new level
7
“Irrigation of the land with
seawater desalinated by...
... fusion power is
ancient. It's called rain”.
Michael
McClary
Natural
Infrastructure
•
Why does Infrastructure always have to be
man-made?
•
Nature provides infrastructure solutions:
• Flood control
• Pollination
• Clean air
• Clean water
• Stormwater management
•
Cities and businesses are beginning to
realize that these “natural infrastructure”
solutions are better, cheaper, more efficient
•
Can we invest in “natural infrastructure” the
way we invest in “grey infrastructure”?
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9
Grey vs. Green Infrastructure
10
The Stormwater Opportunity
Stormwater runoff generates 10 trillion gallons of untreated,
polluted water each year
Federal “Clean Water Needs Survey” has identified over
$100 billion of infrastructure investment needed over the next
twenty years to address stormwater and sewage overflows
Decline in traditional funding sources for municipal stormwater
improvements (municipal budgets and federal funds)
Traditional “gray” infrastructure has proven environmentally
and economically costly, integration of green infrastructure
(GI) can help:
Reduce the costs of clean water compliance
Improve urban quality of life
Create green job growth
Encourage economic revitalization
11
Philadelphia’s Answer
Over the next 25 years, Philly is committed to deploying the
most comprehensive network of green infrastructure found in
any U.S. city. Plan is unique among US cities because it:
Invests more in green infrastructure than in traditional
(“gray”) infrastructure
At least $1.67 billion -- potentially up to $2 billion – for
greened acres.
Relies on green infrastructure for a majority of the
required reductions in sewage overflows.
Leverages investments from the private sector to help
satisfy pollution reduction requirements
Substantial portion of greened acres will come from
redevelopment projects, which must meet local
stormwater performance standards.
Plan dovetails with various programs that incentivize
private property owners to retrofit existing development –
including stormwater fees and credits.
12
Green Infrastructure: From
this..
13
Green Infrastructure: To this...
14
Green Infrastructure: From
this..
15
Green Infrastructure: To this...
16
Green Infrastructure: From
this..
17
Green Infrastructure: To this...
18
Green Infrastructure: From
this..
19
Green Infrastructure: To this...
20
So How do you Fund it?
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Financial Challenges
Most commercial owners will seek third-party financing for retrofits due to longer
payback periods (~10 years)
Similar challenges to financing as energy efficiency sector
Lack of collateral, existing mortgages on property, unproven track record of project performance
Early investment will likely require some combination of the following:
Long term stormwater fee structure and discount longevity assurance
Utilization of existing revenue collection streams - property taxes and utility bills
Given performance uncertainty: some form of credit enhancement to insulate early investors from
potential losses
22
Pay-for-Performance
• Reaps most cost-effective GI investment opportunities
city-wide, across full range of land types, and facilitates
project aggregation on city-scale
• Example: Government entity contracts to make a
regular payment to a private or nonprofit entity which,
under the terms of the PfP contract, will deliver and
manage a specified number of greened acres for a fixed
period.
• Benefits:
• Lower the costs of construction and maintenance
• Accelerates project implementation (aggregators can bundle
projects, not rely on individual owners’ decisions to retrofit)
• Access new sources of investment capital
• Preserve municipal balance sheet capacity
• Incentivize optimal performance by shifting performance risk to
private partners where payments are tied directly to performance.
23
Galileo Galilei
“What greater stupidity can be imagined
than calling jewels, silver, and gold
‘precious’ and earth and soil ‘base’?
People who do this ought to remember
that if there were a greater scarcity of
soil as of jewels or precious metals,
there would not be a prince who would
not spend a bushel of diamonds... to
have enough soil to plant a jasmine in
a little pot, or to sow an orange seed
and watch it sprout, grow and produce
its handsome leaves, it fragrant
flowers, its fine fruit.”
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“In theory there is no
difference between theory and
practice.
... In practice there
is.”
Yogi Berra

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