Green infrastructure and payments for ecosystem services can provide new sources of funding for water protection. Traditional sources include water rates and bonds. Regulation-driven programs include water quality trading and mitigation markets that generate funds from developers. Voluntary social marketing programs and carbon markets also provide funding. However, integrated planning is needed to ensure funds are directed to high priority areas and projects. More research is required to understand site-specific impacts of green infrastructure techniques on water flows and quality.

1. Green Infrastructure Finance
What’s Old is New and What’s Really New
Bill Holman and Lydia Olander
Nicholas Institute, Duke University
Urban Water Sustainability Leadership Conference
October 3-5, in Milwaukee WI

2. Sources of Water Finance
• Your money – water rates
– Base fees and volumetric fees
– Revenueshed
• Other people’s money – leverage
– Credits
– Markets
– Incentives

3. Historic Source Water Protection
Boston & Asheville

4. Ongoing Source Water Protection
Utah & NC

5. Willingness to Pay
• Assured supplies of clean water
– Essential to public health, environment ,economy
and electricity
• Value of water is increasing
– Water risk is a business issue
• Protect water quantity as well as quality
– Value of capacity
• Utility $ leverage other $
• No public awareness = No willingness

6. Source Water Protection Theory
• Identify risks
• Increase public awareness & support
• Implement policies to reduce risks
– Adopt rules, conserve land, clean up sites…
• Limited program success
• How could this program be improved?

7. Terms
Financing for Green Infrastructure
can include:
• Payment for Ecosystem Services
• Payment for Watershed Services
Interchangeable terms for common ideas
Ecosystem Service Markets are a variation on
this theme

8. Why Payment for Ecosystem Services?
• Need to engage
private landowners
• Need new money for
watershed services

9. Types of financing
1. Traditional financing
2. Regulation driven ES financing
• Water quality trading (developers); wetland and stream
mitigation
3. Privately funded social marketing
4. Other ES programs that provide watershed
services

10. Traditional financing
• Funding (public)
– User fees, bonds, state or federal funds
• Actions
– Conserve lands (easements, fee simple purchase)
– Manage lands (implement BMP)
– Buy water rights/permits
• Drivers
– avoid regulation, reduce risks, save money
(filtration waver, avoid sediment and pollutant loads)

11. Traditional financing – New design
• Auctions/ Bidding
– Conestoga Watershed Reverse Auction (PA) -P loading- CIG grant
to test new payment approach- paying for best bids (P/$)
– Flint River Drought Protection Auctions (GA)- state auction pays
landowners to retire water permits
• Revolving fund for BMPs
– Conserve to Enhance (Tucson AZ) – EPA grant pays subsidies for
participants to install water harvesting features in homes,
participants track water use and pay amount saved on water
bills back to the program
• Cross boundary PES
– The Upper Neuse Clean Water Initiative (NC) – City of Raleigh is
paying the neighboring (upstream) county for land conservation
and resulting water benefits using water fees.

12. Regulation driven ES financing
• Funding (regulated entities)
– Clean Water Act
• Land developers for wetland and stream mitigation
• Wastewater dischargers (NPDES and State) – water quality trading
– Endangered Species Act
• Land developers for habitat mitigation (Salmon in NW; others?)
• Actions
– Mitigation for damages (restore or create required ecosystem
acreage and services; often conservation)
– Offset for pollutant discharges – trading permits to pollute
(Management to reduce pollutant loads or impacts)
• Issue
– How to harness all of this funding and activity so that it
provides benefits for your watersheds?

13. Becca Madsen et al.
2010; Ecosystem
Marketplace.

14. Water Quality Trading
• Active NPS trading only
happening in a few places.
• Often to meet state rules
• Funding is from: (1)
treatment facilities, (2)
developers; or (3) grants
• Examples
• Southern Minnesota
Beet Sugar Cooperative
P trading
• NC Tar-Pamlico storm
water offsets
• Great Miami Watershed
WQT Oregon’s Tualatin Basin – Temperature trading program
• Tualatin Basin in OR
• Want benefits in critical
parts of watershed

15. Regulation driven activity
• Harnessing potential benefits of mitigation
and trading programs
• Needs integrated planning and management
across federal, state agencies, municipal govts
and other funding opportunities.
– Way to encourage priority siting and types of
projects (value adder; service/trading area
priorities)
• New money from developer funded activities

16. Voluntary -Social benefits market/PES
• Bonneville Environmental Foundation “Water
Restoration Certificates”
– Private entities pay for water restoration certificates for
their marketing/social benefits
– Pay landowners to take actions that restore water flow
– Credits are retired, not traded
– Avoids potential regulatory risks
• Wal-Mart’s Acres for America program – voluntary
program to permanently protect an acre for every acre
of land developed for its stores (no specific intention to
match quality of habitat)

17. Other payments/markets
• Carbon Market for Avoided Conversion and
Land Management (water benefits)
– Avoided forest conversion; afforestation; forest
management (CAR)
– Urban forestry (CAR)
– Avoided grassland conversion
– Agricultural management (croplands, ranch lands,
and animals)
– Wetlands (avoided loss and restoration)
• Using federal cost share programs (was 6
billion/yr; NRCS- CSP, CRP) to help meet water
quality objectives

18. For more information
http://nicholasinstitute.duke.edu/

19. What we know about GI/ES
• We know general relationships
– Wetlands slow down and clean up water
– Forests moderate flow and reduce sediment loads
• We don’t know (without research)
– Specific production functions
– What type of wetland, how big and where will
have how much impact on water flow and quality
– How much forest and where will have how much
impact on water flow and sediment loads