Washington D.C. Green Infrastructure Fund

Stormwater run-off is the biggest and fastest-growing source of water pollution in cities worldwide, including in Washington D.C. where up to three billion gallons of run-off and sewage flow into local rivers that course into the Chesapeake Bay estuary each year.

Because of this threat to local waterways, the nation’s capital is among more than 700 U.S. cities that are required by Federal regulation to invest in new infrastructure to manage stormwater runoff. The District has one of the country’s oldest sewage systems, which during moderate rain, sends untreated waste and pollution-laden run-off overflowing into the city streets and watershed. This severely degrades aquatic habitat and impacts industries within the Chesapeake Bay, North America’s most productive estuary.

A Collaboration Using Impact Investment Funds to Leverage Stormwater Solutions

In an effort to reduce the polluting effects of stormwater in the area, Prudential Financial invested $1.7 million towards a new collaboration between NatureVest and Encourage Capital called District Stormwater LLC (DS). The pilot project spearheads new strategies to support the country’s first Stormwater Retention Credit (SRC) trading launched by the District in 2013 that created the market to trade stormwater credits.

The new enterprise—jointly managed by NatureVest and Encourage Capital—will help finance the development of green infrastructure projects on properties across the city that measurably reduce stormwater run-off through proven distributed nature-based solutions. These investments will create credits to boost the SRC trading market.

“The Nature Conservancy is committed to demonstrating that cities can become more resilient with strong, nature-based solutions. Through this new collaboration, we can show how innovative financing can bring such nature-based investments to Washington, D.C. where they can make a positive impact on the health of our watershed.” –  Dr. Elizabeth Gray, executive director of the Conservancy in Maryland/D.C.

How it works: Supporting the Stormwater Retention Market

The SRC market enables developers, who are required to manage stormwater runoff on projects, to meet their mandated requirements by purchasing credits from offsite designs that reduce stormwater runoff, like rain gardens, green roofs, permeable pavement and other green infrastructure practices. This approach combines science, financing expertise and local relationship building to tailor solutions that will help make the SRC market function.

Investments in green infrastructure for stormwater retention can bring income to landowners and provide a host of valuable co-benefits, including expanded green space, reduced localized flooding and jobs to build and maintain green infrastructure sites. In particular, offsite trading creates opportunities for investments in vulnerable and economically-challenged communities where property values are lower. Green infrastructure can also ease economic burdens on small businesses by mitigating the flooding that results from major storms.

Looking Ahead: Scalable Innovation

This market and investment structure is replicable and scalable to other areas around the country—and specifically throughout the Chesapeake Watershed.

Next steps include identifying priority sites around the District to implement strategically placed green infrastructure. The projects are anticipated to benefit the city’s waterways, provide social benefits for local communities, and financial return for investors.

D.C. Green Infrastructure Fund In the News

Financing Solutions for Storm Water Run-Off
Environmental Finance

Turning Stormwater Runoff Into Everyone’s Business
CityLab

Collaboration to Reduce Storm Water Runoff in Washington, D.C.
Storm Water Solutions

District stormwater pollution effort gets help from “The Rock”
Chesapeake Bay Journal

FACT SHEET: $2 Billion in New Private Sector Investments to Protect Natural Resources to be Announced at White House Conservation Roundtable
The White House

New Investment Model for Green Infrastructure to Help Protect Chesapeake Bay
The Nature Conservancy, Press Release

TNC Leverages Expertise to Advance Resilience and Green Infrastructure
Climate Change Business Journal
From big studies on how to protect New York’s vulnerable coastal neighborhoods, to small-town resilience workshops in New England, from building reefs on the Gulf Coast to aupporting new business models for green infrastructure, The Nature Conservancy is fostering knowledge, testing solutions and catalyzing investment and action for climate change resilience and adaptation.

Savings from Stormwater: How real estate developers can benefit from storm water credit purchases
Stormwater Solutions
Craig Holland & Jane Silfen
As of July 14, 2015, the revised regulation is fully in place, and private property developers now are required to bear some of the burden—and cost—of reducing storm water runoff into the waterbodies surrounding the District. DOEE also has implemented an innovative storm water credit trading program, however, which promises to provide financial benefit, design flexibility and community benefits to District-area property developers.

Green Roofs, Built on Private Investment
Bloomberg View
Mark Tercek & Doug Petno
As extreme weather events and rapid development strain existing capacity to cope with runoff, green infrastructure is one of the smartest investments cities can make. New financial models and access to untapped sources of capital can empower them to address a critical environmental challenge and build significant community value.

 

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Top Photo: ©Alan Eckert Photography