The summary discusses a Western Water Roundtable meeting focused on creatively capitalizing natural resources. Jeff Klein from the Department of Interior's Natural Resource Investment Center discussed several opportunities to increase non-federal investment in water infrastructure, conservation, and species/habitat protection through public-private partnerships, water markets, and impact investments. Examples of projects supported by the Center include the Yakima Integrated Plan and various conservation initiatives. The Center works to educate, advise, convene, advocate, and structure deals between various stakeholders.

1. WesternWaterRoundtable Meeting
“Creatively Capitalizing”
December 12-13, 2016
Las Vegas, Nevada
Jeff Klein
Executive Director
Natural Resource Investment Center
Department of the Interior

2. SpeciesandHabitat
Foster private impact investments
and support well-structured markets
that advance efficient permitting and
conservation of species, habitats,
and other natural resources.

3. Increase non-federal
investment in water
conservation and build up
water supply resilience by
facilitating water transfers
in the western United
States in partnership with
local, state, and tribal
governments
WaterMarkets

4. Increase non-federal
investment in critical
water infrastructure, both
major rehabilitation and
replacement of existing
infrastructure and
construction of new
infrastructure, for water
supply resilience.
InfrastructureInvestment

5. What we do
• Educate
• Advise
• Convene
• Advocate
• Structure
Natural ResourceInvestmentCenter

6. Who We Work With
• DOI Leadership and its Bureaus
• Irrigation Districts
• Investors
• Federal Family
• Non-Profits
• Government Entities
• Policy Makers
• Academia
NaturalResourceInvestmentCenter

7. Examples of Projects
• Yakima Integrated Plan
• Work to Establish Loan Programs for Irrigation Districts
• Water Reuse Project (Title XVI)
• Irrigation District Modernization Program
• Various Conservation Initiatives
NaturalResourceInvestmentCenter

8. NaturalResourceInvestmentCenter
“Whereistheincrementalrevenuecomingfromtoservicetheproject’scapitalization?”
Making projects financeable
• Numerous and diversified off-takers that present an acceptable
credit risk
• Ability to / history of increasing rates to meet system needs
Solid management team
• That has delivered solid projects, on time and on budget, and with
an “on plan” operating performance in the past
• Experience in servicing project debt

9. NaturalResourceInvestmentCenter
Optimize project plan
• Enough system capacity to meet present and projected needs
without being overbuilt
• Full vetting of multiple approaches to meet the need, and how this
was determined. Why is this alternative the best?
Other attributes
• Drought relief
• Climate change insulation
• Instream flow benefits
• Other

10. NaturalResourceInvestmentCenter
Investor universe
• Investment capital is plentiful
• Investors are hungry for yield given the recent interest rate
environment
• Socially oriented investment is a rapidly growing asset class
• Green bonds 1,2,3
• Impact Investment 4
• Foundation/Program Related Investment 5
• Traditional municipal bonds for water issues

11. NaturalResourceInvestmentCenter
Investor universe continued…….
• Specific programs available at EPA and USDA
• State revolving funds
• Water and waste disposal loans6
• Sewer, storm, and drinking water
• WIFIA/WRDA7
Existing Scenario
• Bureau of Reclamation no longer funding large
greenfield projects8
• More in an operating and maintenance mode with modest appetite
and pocket book for expansion of existing infrastructure

12. NaturalResourceInvestmentCenter
Existing Scenario continued……
• Projects are expensive as many need to move water long distances
• Federally-owned and operated projects are difficult to finance via
public-private partnerships due to OMB scoring rules
So……..
Does the project lend itself to alternative finance and delivery
approaches through use of a public partnership model?

13. Appendix1
1. http://Climatebonds.net/market/explaining–green-bonds
2. http://www.climatebonds.net
3. http://www.municipalbonds.com/news/2016/03/10/what-are-green-muni-bonds/
4. http://thegiin.org/impact-investing/need-to-know/#s1
5. http://www.conservationfinancenetwork.org/sites/default/files/FinalReport_YaleWaterPhilanthropy
6. http://www.rd.usda.gov/programs-services/water-waste-disposal-loan-grant-program
7. https://www.epa.gov/wifia/learn-about-wifia-program
8. https://www.texastribune.org/plus/water/vol-4/no-23/q-collins-k-balcombe/

14. NaturalResourceInvestmentCenter

15. NaturalResourceInvestmentCenter

16. NaturalResourceInvestmentCenter

17. NaturalResourceInvestmentCenter

18. NaturalResourceInvestmentCenter

19. 1 Research: SRF Drought Investments
Purpose of the Project:
• Why focus on State Revolving Funds (SRFs)?
• EPA’s largest infrastructure program
• Each state administers them differently
• Purpose
• Identify how states are addressing drought
related investments
• Quantify amount of assistance provided through SRFs
• Disseminate SRF successes, case studies, and highlight
opportunities to better market SRF drought-related
capabilities

20. 1 Research: SRF Drought Investments
Methodology:
• Geography: 13 western states often
affected by drought
• AZ, CA, CO, ID, MT, NV, NM, OK, OR,
TX, UT, WA, WY
• Timeframe: 2011 – 2015
• Projects Funded: number and value of
assistance provided in certain
categories:
• Water efficiency, water reuse,
irrigation modernization,
groundwater recharge, etc.
• Identifying SRF drought-related program
priorities and ranking criteria

21. 1 Research: SRF Drought Investments
Preliminary Findings:
• Clean Water SRF
• $612M for Water efficiency
investments
• $235M for Recycled water
distribution
• $50M for Agriculture
efficiencies/irrigation
modernization
• Drinking Water SRF – TBD
• Target Release: December 2016 EPA Region 10/Oregon DEQ, Farmers Irrigation
District Project

22. Opportunity 1:
USDA Water Program
• Provides financing to rural areas with fewer
than 10,000 people for drinking, waste, and
storm water systems
• Since 1957, originated $27 billion across 40,000
loans
• Current portfolio of $12 billion across 13,000
loans

23. Opportunity 2:
Partnership with Capital Peak and CoBank
• Public-private partnership launched in 2014
• CoBank committed $10 billion of its balance
sheet to lend and co-lend in support of rural
infrastructure
• Since inception, the fund has financed $3 billion
across 400 water, power, and community
facilities projects

24. Opportunity 3:
Rural Water Fund Pilot
• Target rural communities with
populations greater than 10,000,
but fewer than 50,000
• A sale of a participation interest in
USDA water loans to seed a fund
that would make a forward
commitment of $1 billion in rural
water lending
• Opportunity to bundle rural
projects for institutional scale per
Build America recommendations