The Major Dividends Cities Reap from Investing in Green Infrastructure

Today NRDC released a new report on how local and state governments can stimulate potentially billions of dollars of private investment, to offset the costs of repairing our nation's broken stormwater infrastructure. It's worth a read for policymakers, investors, and anyone who receives a wastewater or stormwater bill from a local utility. In other words, anyone concerned with how municipalities and wastewater utilities will pay for much-needed water infrastructure investments.

Stormwater and sewage overflows are leading sources of water pollution that we must address to meet the Clean Water Act's goals -- first enacted forty years ago -- of fishable, swimmable, drinkable waters nationwide. And the overdue bill for our disinvestment in municipal water infrastructure over the last two decades totals in the hundreds of billions of dollars.

As NRDC detailed last November in Rooftops to Rivers II, cities across the country are using green infrastructure -- like green roofs, street trees, and porous pavement that soak up urban runoff -- to tackle these problems. These smarter water solutions work to clean up local waterways while creating healthier cities. Rooftops includes case studies of more than a dozen cities and spotlights Philadelphia, in particular, for leading the way, with a groundbreaking 25-year plan to deploy the most comprehensive network of green infrastructure found in any U.S. city.

Now, on the financing front, Philadelphia has a huge opportunity to lead the nation in applying innovative ways to fund these green infrastructure solutions. Many other cities, facing similar challenges, could be primed to do the same.

Our new report, titled "Financing Stormwater Retrofits in Philadelphia and Beyond," uses the City of Brotherly Love as a test case to explore how innovative financing mechanisms, currently being used for energy efficiency retrofits, can be adapted to the stormwater management context. The key is that Philadelphia, like many communities around the country, has a stormwater utility fee structure that calculates charges based on a parcel's impervious area and provides "credit" -- literally, up to a nearly 100% reduction in the fee -- for property owners who retrofit to reduce runoff into city sewers, using green infrastructure and related techniques.

Over the next 25 years, Philadelphia expects to spend at least $1.67 billion on public stormwater retrofit projects, toward meeting its legal obligation to capture the first inch of runoff from 10,000 acres of impervious surfaces. To meet that 25-year target, the city is also counting on thousands of acres of private, market-driven redevelopment projects, which must meet a new stormwater performance standard for new construction. But what's been missing from the city's approach, so far, has been an effective way to promote widespread investment in retrofits of existing developed sites -- properties where there is no plan for redevelopment in the foreseeable future, which comprise most of the built environment.

The incentives created by the city's stormwater fee and credit system provide a vital hook for stimulating these much-needed retrofits. But without access to private financing, most property owners will be unable to afford the upfront investment needed to take advantage of the stormwater retrofit credit. And that financing is not easy to come by in the traditional commercial lending market.

Our new report explains how innovative financing mechanisms already being used to underwrite the capital costs of retrofitting buildings to be more energy-efficient -- when combined with a stormwater fee and credit system -- can draw hundreds of millions in private investment to a city like Philadelphia. My NRDC colleague (and the report's lead author), Alisa Valderrama, has more on that in her latest blog post here.