“I’m … proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children.” – POTUS in 2013 State of the Union
Prompted by the flooding brought on by Hurricane Sandy, the Rockefeller Foundation, with the support of the White House, recently launched an initiative to develop a template for communities to attract private investment for public urban “green” water infrastructure. “Green infrastructure” projects include porous pavement, green roofs, rain barrels, and increased tree cover projects. These projects are recognized strategies to help a community better manage the quality and quantity of the water that falls on and off of it. Although easier to finance, a traditional centralized cement and pipe system is expensive and does little to reduce the root cause of most stormwater problems: impervious surfaces. Green infrastructure helps to reduce the number of impervious surfaces and manages stormwater on-site. But individual green infrastructure projects are diffuse across a community, not to mention a watershed, and investors that value environmental returns alongside financial, face high transaction costs in identifying and funding these projects individually. (Clean energy projects present a similar problem.)
To overcome this barrier, the Rockefeller Foundation has funded the RE.invest Initiative to adapt a public-private financial model used in community development to spur economic growth in underserved and disperse areas, to one for underserved and dispersed community infrastructure. The group hopes that the CIVics (Community Investment Vehicles) model will help cities meet public infrastructure needs by bundling projects and revenue streams across sectors in a way that makes traditionally public investments attractive to private finance. Currently, they are seeking eight U.S. cities to engage with a team of engineers, lawyers, and public finance experts to develop models of “locally-appropriate options for financing and building resilient and integrated urban infrastructure systems.” (The deadline for cities is March 15, 2013)
In addition to adapting a model from the world of community and economic development, the outcome of a “bottoms up” approach can have tangible economic benefits in addition to environmental ones. In fact, a recent post on this blog discussed The Economic Benefits of Protecting Healthy Watersheds. The “bundled” economic benefit of a green infrastructure can come in the way of increased land and property values, labor productivity, and tourism. And certainly, businesses have a real interest in avoiding the billions of dollars of economic losses caused by massive flood events, like those caused by Hurricane Sandy. And with a dearth of public funding on the horizon, financial partnerships will be important.
Mary Tiger was formerly on staff with the UNC Environmental Finance Center.
Steiger, Anna. 2008. “Linking Institutional Investors to Communities.” Federal Reserve Bank of Boston. Accessed online at: http://www.bos.frb.org/commdev/c&b/2008/summer/steiger_community_investment.pdf
Valderrama, Alisa, Larry Levine, Starla Yeh & Eron Bloomgarden. 2012. Financing Stormwater Retrofits in Philadelphia and Beyond. Natural Resources Defense Council. Accessed online at: http://www.nrdc.org/water/files/StormwaterFinancing-report.pdf